Dive Brief:

• Kohl’s announced on Wednesday​ that, starting in October, it will feature a new "Amazon smart home experience" at 10 Kohl’s stores in the Los Angeles and Chicago areas.

• Within those select stores, customers will be able to purchase Amazon devices, accessories, and smart home devices and services directly within 1,000-square-foot zones dedicated to Amazon and staffed by Amazon associates, according to a Kohl’s press release.

• The spaces will feature a hands-on and interactive array of smart home products, including Amazon Echo, Echo Dot, Amazon Fire TV, Fire tablets and more. Customers can also schedule an Amazon expert to come to their home, evaluate their needs and install smart home products, as well as accessing Amazon Home Services, a marketplace of local services professionals that offer home care like cleaning and plumbing.

Dive Insight:

Ever since Amazon’s takeover of Whole Foods, speculation has only swelled about which other retailer the e-commerce giant might partner with (if not outright acquire) next. While location analytics company Foursquare recently made a splash with data-fueled musings that Amazon may be interested in scooping up home improvement retailer Lowe’s, eyewear startup Warby Parker or department store Nordstrom, it turns out to be Kohl’s that will, at least, bring Amazon into its space. 

Could Kohl's be a takeover opportunity for Amazon? Such talk is premature, according to Jim Fosina, CEO of Fosina Marketing Group. For one thing, Kohl's is no Whole Foods. "A potential deal with Kohl's is vastly different from the Whole Foods deal, as the frequency of in store shopping visits is much lower in Kohl's," he said in an email to Retail Dive. "Perishables drive greater frequency of shopping and potentially much larger aggregate margins per customer than the non-perishable Kohl's customer visit."

Still, the tie-up will yield information about an expansion of any kind, Fosina says. "I suspect that Amazon will get a full understanding whether Kohl's is the right partner based on unit sales within the Kohl's stores and by gaining insight from the data they receive from Kohl's customers (including their email addresses) as to the profile of the Kohl's /Amazon customer," he said. "Are the bulk of these customers already Amazon customers? What percentage? What is the value of the Amazon/Kohl's customer currently in the Amazon file? Amazon will determine whether the presence in store warrants further investment. on their part."

If Amazon finds that having an in-store presence in Kohl's with a limited set of products allows them to sell newly acquired customers an even wider range of products and services online, they'll continue, he also said. "If not...they will end the relationship in these stores quickly."

This is an chance for Amazon to explore customer acquisition from a set of consumers who aren't likely to be Prime members, Fosina also said. "Amazon has a HUGE opportunity to acquire new customers," he said. "Amazon obviously sees the profile of the Kohl's customer as a market segment they are desirous of having. Amazon won't settle until the day that they can say that more than 80% of the consumers in the USA and the world spend a significant percentage of their product related purchases within the control of the Amazon interface."

At minimum for Amazon, of course, it’s an opportunity to showcase its devices, many of which serve as shopping conduits via its Alexa voice assistant. Electronics, like apparel, benefit from the brick-and-mortar shopping experience and Amazon has had precious few opportunities — outside of a few pop-ups, its nascent bookstore fleet and now its Whole Foods stores — to display them for customers to try.

"When it comes to electronics, you have to see it — remember how much those Apple stores helped Apple?" Howard Davidowitz, chairman of New York City-based retail consulting and investment banking firm Davidowitz & Associates, told Retail Dive about Amazon’s bookstore-based device sales. "I applaud them. I think it’s exactly the right thing to do, and it will help grow their business."

For Kohl’s, the tie-up is fraught with risk, considering how Amazon has taken market share in a number of categories, including electronics, apparel and footwear. Plus, Amazon's devices aren't just nifty speakers. They also serve as passageways into its formidable retail juggernaut, with Alexa suggesting things to buy from Amazon and its Marketplace — not from Kohl's.

"Everyone was shocked and amazed at Amazon’s bookstore, but the bookstore is a Trojan horse to get devices into consumers’ hands," retail futurist Doug Stephens, author of "Reengineering Retail: The Future of Selling in a Post-digital World," told Retail Dive last year. "Everything Amazon does is aimed at that — getting their consumer into their ecosystem."

But in a statement Wednesday, Kohl’s chief merchandising and customer officer Michelle Gass insisted that it’s a mutually beneficial marriage of forces and an opportunity for Kohl’s to differentiate its assortment. "We believe in the power of our store portfolio and know that our future as a best-in-class omnichannel retailer will be driven by how inventive, compelling and unique we can make our store experience," Gass said. "Kohl’s and Amazon share a customer obsession and we’ve joined together to leverage each other’s strengths and deliver a great experience customers can only find at Kohl’s."

Cooper Smith, head of Amazon research at digital insights firm L2, does see it as a win/win. Kohl's will likely see more shoppers on Black Friday thanks to the popular devices, and Amazon gets that physical retail distribution, which is all-important amid the scramble for traction in voice, he said. The number of Americans using a voice assistant device is forecast to increase 129% this year to 36 million, with Amazon alone capturing 70% share, according to L2.

"The Echo was the top-selling item on Prime Day and will likely continue to be a hot item this holiday shopping season," he said in an email to Retail Dive. "When it comes to voice assistants, the market is still nascent enough that the number one priority for Amazon, Google, and Apple at the moment is to increase the installed based of their voice platforms, so that in the future they can layer services such as advertising onto those platforms and generate revenue that way."