Dive Brief:

• Hosting Amazon returns is bringing a return to Kohl's, according to data from Earnest Research emailed to Retail Dive. Comparing Kohl's stores in Chicago, where most locations are participating in the tie-up, to Kohl's stores elsewhere, Earnest found that "Chicago sales, transactions, and customer growth all outpace the same metrics nationwide for 2018," after the stores began taking Amazon returns.

• In Kohl's Chicago operations, revenue growth tops 10%, compared to 5% elsewhere in the U.S., according to the report. But, in announcing the controversial partnership, Kohl's executives said they were aiming to boost traffic, and that, too, may have panned out. New Chicago-area Kohl's customers (those who hadn't shopped at Kohl's in the previous year) — rose 9% in 2018, versus 1% for the rest of the U.S., Earnest found.

• While Kohl's is expanding the Amazon returns initiative to more stores, Amazon is shuttering the kiosks it was running in some Kohl's stores. The e-commerce giant shuttered those 87 locations and is "instead expanding Amazon Books and Amazon 4-star," according to an earlier email to Retail Dive.

Dive Insight:

This data offers correlation rather than causation, but it's a striking set nonetheless. 

Earnest examined the percentage of Kohl's customers that also made an Amazon return within seven days of a Kohl's purchase (three days before or after) and compared Kohl's-in-Chicago against Kohl's-elsewhere (except Los Angeles, where many Kohl's locations also take returns).

Between January 2015 and November 2017, those percentages mostly aligned, but in early 2018, a few months after Amazon and Kohl's launched their returns process, Earnest recorded an uptick in returns that by the summer included 7% to 8% of Kohl's customers in Chicago, compared to 3% in the rest of the U.S. So far, so good, for Amazon. The real reason the program is expanding is found in the boosts in sales and new shoppers for Kohl's.

While several observers scoffed at the idea when it was first announced, the tie-up is a win-win, and could be why Kohl's has escalated its outreach to third-party partners, Earnest noted in its report. Kohl's in recent months has announced initiatives with WW (formerly Weight Watchers), Planet Fitness and grocer Aldi — which help it leverage its excess space and, as with Amazon returns, bring in new customers.

"By leveraging its considerable physical footprint (more than 1,100 stores nationwide), Kohl's is able to offer these companies ready-made retail (or workout) space," Earnest researchers wrote. "In return, Kohl's gains a new base of customers who, in finding a quality gym and/or grocery store, are very likely to make repeat visits to those locations. This is a situation where, potentially, everybody wins."

While the Amazon kiosks may be gone from Kohl's stores, the retailer is taking returns at even more stores and continues to sell the Echo and other Amazon devices. 

"We continue to be encouraged and learn a great deal through our returns pilot that we have now in approximately 100 stores," CEO Michelle Gass told analysts during its most recent quarterly conference call, according to an email from a Kohl's spokesperson to Retail Dive. "We've also been partnering with Amazon in selling devices within our stores, both in our traditional wholesale relationship as well as in 30 store within store concept. Going forward and in partnership with Amazon, we've made the decision to transition from the store within a store concept to a more robust wholesale relationship with Amazon as we founded a better way to serve our customers. As a result, we will be extending our assortment of Amazon branded products into over 200 stores."