In this month’s issue of VMSD, you’ll see an article on “Department Store Trends” – the ways in which certain department stores, here and internationally, are trying to stave off irrelevance through location, design, architecture, space planning and inventive merchandise choices.
One of my sources on the article, veteran store designer Sandy Stein (St. Paul, Minn.), talked about the initiative by Kohl’s Department Stores (Menomonee Falls. Wis.) to partner with Amazon.com Inc. (Seattle).
He felt that, in this difficult environment for department store operations, linking up with the world’s best-known brand could be a positive for the mid-level chain.
The partnership involves Kohl’s accepting Amazon returns. It will also sell some of Amazon’s gadgetry.
“We’ve got a really simple objective – to improve traffic in our stores,” Kohl’s CEO Kevin Mansell said at the time of the deal. “The objective right now is to improve traffic, which would lead to an expansion of the program.”
Mansell didn’t say it, but the deal will also connect Kohl’s in people’s minds with the Amazon powerhouse. That’s a nice place to be, public relations-wise.
And for Amazon? Ah, there’s the rub! What does Amazon need with Kohl’s 1155 stores, other than Kohl’s 1155 stores? It’s probably advantageous for Amazon to suddenly have a physical presence in 49 states.
Kohl’s has often received props for some of the brand partnerships it has forged: most successfully with Vera Wang (New York) and most recently with Under Armour (Baltimore). It would seem to be a strategy for growth.
“Under Armour liked Kohl’s off-mall locations, loyal customer base, solid online offering,” Stein told me. “So does Amazon.”
The stores are nice, newer, cleaner and smaller. They’re mostly off-mall. The pricing is competitive. And the customers are sturdy. Are they Prime potential for Amazon? Honestly, I have no idea what Amazon considers its demographic sweet spot, especially for its Prime upgrade.
Mostly, it seems, Amazon has been flailing away at figuring out this retail business. They’re kind of like the Babe Ruth of commerce. Ruth famously hit more than 700 home runs; he also struck out more than 1300 times. Which do we most celebrate Ruth for? Amazon takes a swing at everything, and connects powerfully often enough that we’re dazzled by its brilliance.
Stein suggested that maybe Amazon’s long-term plan is eventually to change the sign over Kohl’s doors. “The conjecture is that Amazon is courting Kohl’s,” he said. “It could be argued that it would be a good pickup for Amazon.”
In other words, said Stein, “The deal with Kohl’s is a bit of a Trojan horse.”
The New York Times recently reported on Amazon’s last big retail takeover, the 2017 deal with Whole Foods Market (Austin, Texas). Maybe the headline is the most instructive part of the entire article: “Bit by Bit, Whole Foods Gets an Amazon Touch.”
Amazon has added some changes that, frankly, just make good grocery store sense, like free home deliveries and, here and there, more moderate prices. Mostly, though, it has not tampered with the strength of the Whole Foods model. The stores are still upscale, and the food offering is still healthy and tempting.
However, there are now kiosks containing Amazon gadgetry. “Not far from the Honeycrisp apples and bulk bins of granola,” stated the article, “shoppers can now pick up an Echo, a Fire TV or a Kindle.”
And there’s an equally unsubtle melding of Whole Foods shoppers and Prime members. Prime members now get a 5 percent refund on Whole Foods purchases made with the Amazon Visa card. Said the article: “[Amazon] has said that Prime will eventually become the Whole Foods customer rewards program.” There are signs about the offer over the checkout counters.
Nothing wholesale. But then again, like the headline said, “bit by bit.”
Does Kohl’s look at Whole Foods and see its own future? The Trojan Horse reference is apt. Amazon is feeling its strength these days. Maybe it’s all that organic spinach.
As a journalist, writer, editor and commentator, Steve Kaufman has been watching the store design industry for 20-plus years. He has seen the business cycle through retailtainment, minimalism, category killers, big boxes, pop-ups, custom stores, global roll-outs, international sourcing, interactive kiosks, the emergence of China, the various definitions of “branding” and Amazon.com. He has reported on the rise of brand concept shops, the demise of brand concept shops and the resurgence of brand concept shops. He has been an eyewitness to the reality that nothing stays the same, except the retailer-shopper relationship.