Dive Brief:

• The Chicago-area stores that are part of Kohl’s experiment to take Amazon returns and sell Amazon devices have been the boon that Kohl’s executives hoped for, according to a study from Gordon Haskett Research Advisors reported by Bloomberg. Gordon Haskett studied 13 Kohl’s stores (five that were part of the pilot) in Chicago from July 1 through April 14, according to the report.
• The stores have seen an 8.5% bump in traffic since the tie-up, and more than half (56%) were either new Kohl’s customers or customers who hadn’t been to a store in a while, according to the report. That’s also more than the 43% in new customers seen in other stores.
• Kohl’s has “had initial discussion with Amazon about how and where we will expand the pilot and we'll share the details on that when they're finalized,” then-Kohl’s CEO Kevin Mansell told analysts in March, according to a transcript from Seeking Alpha. 

Dive Insight:

Kohl's executives have been adamant and consistent in their insistence for months that the retailer's partnership with Amazon has a simple objective: driving traffic to stores.

Amazon now has space carved out in 10 Kohl's stores in the Los Angeles and Chicago areas, dedicated to the "Amazon Smart Home Experience," plus an area for Kohl’s to take returns. In all, more than 70 other stores will be taking Amazon returns.

It's working, and Gordon Haskett analyst Chuck Grom called the effort "a no-brainer," according to Bloomberg's report. But so far Kohl's executives have been circumspect about when, where or how much the experiment will be expanded.

"I know there's continued interest in the results around our pilot with Amazon on returns and Amazon shops within Kohl's," Mansell said in March. "Given that the pilot has now been running for only four months and most of that time was in the holiday season, we need more time to draw conclusions that could be applied more broadly. In fact, package-less returns which is a key element of the overall return experience, has been in place only since late January."

The Amazon concessions are staffed by Amazon employees, while returns are processed by Kohl’s employees, a setup that the two retailers reportedly quietly worked out beginning last spring. Once it became known last year, many analysts hailed the program, calling out the benefits for Kohl's. 

Grom last year called the Amazon announcements "intelligent" in an email to Retail Dive, while Jeffries analysts told Retail Dive back then that the tie-up reflects "thought leadership" at Kohl's and predicted the collaboration would spread to more stores. But Howard Davidowitz, chairman of retail consulting and investment banking firm Davidowitz & Associates at the time warned that "Amazon is the enemy" and the partnership could hurt Kohl's in the long run.