Kohl’s/Amazon – Win/Win?

Written by:

Share

Facebook
Twitter
LinkedIn
Pinterest
Email
Print

\"\"Or…Is Amazon Envisioning a Future Acquisition of Kohl’s?

I have to hand it to Kohl’s CEO, Kevin Mansell, and his team. The Midwestern Vince Lombardi mindset is usually associated with blocking, tackling and gaining a few yards up the middle. Midwestern Kohl’s deal with Amazon looks like a long pass to a touchdown. And I believe it scores, big time. Certainly the 1000 square-foot Amazon shops within 10 of Kohl’s stores in LA and Chicago will increase foot traffic — from current customers, competitors and from many other demographic groups. The synergy will also add a revenue boost for both. It is a brilliant marketing move that differentiates Kohl’s from its competitors in a big way.

Beginning in October, the Amazon shops will be manned by Amazon experts who will sell Amazon devices, accessories and smart home products, including the Echo, Echo Dot, Fire TV and Fire tablets. Customers can also schedule Amazon experts to come to their homes and install their smart home devices. Additionally, Kohl\’s will promote Amazon Home Services, which offers customers access to local service professionals who will help with tasks like cleaning and plumbing. Does Amazon also have a “pick-up” space in their Kohl’s shops? And how long will it be before apparel appears in these shops?

In my opinion, the Amazon shop model will expand to all 1155 Kohl’s locations before you realize this was not a test. I believe this because, while this may be a brilliant marketing move for Kohl’s, I believe it’s an even more brilliant, yet diabolical strategic move for Amazon. The predatory mind of Jeff Bezos no doubt envisions the rest of Kohl’s 1155 buildings as a perfect acquisition strategy, buying his way into a huge chunk of brick-and-mortar commerce, becoming phase two of this initial “shop” roll out. Acquiring 1155 shopping and shipping locations provides several competitive advantages quicker than building out organically. Furthermore, by acquiring and ultimately replacing Kohl’s nameplate with Amazon’s, they buy their way into the apparel business overnight. This would fulfill Bezos’ declaration from the get-go that Amazon had to master both apparel and grocery. Bezos has been well on his way to achieving his apparel goal. Even without Kohl’s, it has been estimated that Amazon will own about a 20 percent share of the apparel market by 2020.

Without having to build his own stores (requiring billions of dollars and many years), Amazon would also have 1155 shopping and shipping points almost overnight (further speeding up his last mile delivery and BOPIS capabilities). While this is not as big as Walmart’s 4700 locations, if Bezos plans to operate additional book and grocery stores, possibly adding other vertical categories (his own long tail), he will be meeting Walmart (now becoming his biggest nemesis), head on.

What’s Kohl’s Long-Term View?

So, what’s the long game win for Kohl’s? What is their strategic objective? Is this the marketing touchdown pass that will win the game in the long run? In other words, can this partnering model with Amazon as a huge marketing differentiator sustain itself, and even grow over time? And, in reality, is this a major preemptive distribution model for both?

Am I speculating too much on what’s in Jeff Bezos’s predatory mind? I don’t think so.

In the short term, this is a visionary move for Kohl’s. It’s as innovative as their preemptive distribution strategy in the 1990s of locating their stores in neighborhoods where their working mom customers lived, so they would not have to waste the 20-minute drive to the mall. This big idea stole about $10 billion in revenues from mall anchor JC Penney, as Kohl’s opened stores across the U.S. during that decade.

Some of Kohl’s competitors are probably asking themselves why they didn’t think of the Amazon partner potential. Having said this, and back to my mantra, think of Amazon as the world’s Pac-man, chomping on all markets, categories, services, media – simply all of commerce.

A note to Kohl’s: Watch your back.

Related

Articles

Scroll to Top
Skip to content