Stein Mart adds Amazon lockers to 200 stores

Dive Brief:

Stein Mart on Tuesday announced that it is installing self-service Amazon Hub Lockers in nearly 200 of its stores across 28 states. The retailer operates 283 stores across 30 states, according to a Stein Mart press release.
By early June, Amazon customers will be able to pick up and return Amazon packages in "secure, self-service kiosks." During checkout, users will be able to select a locker at the nearest Stein Mart as their shipping address. When the package is ready, the customer will receive an email with a barcode that can be used to pick it up during store hours, the retailer said.
Stein Mart joins Kohl’s — which is taking and processing returns at all its locations nationwide as of July — in sharing store space with the e-commerce giant.

Dive Insight:

Partnering with a rival as massive and disruptive as Amazon may seem like a dubious move, but, as with Kohl's, Stein Mart says it hopes to drive traffic to stores through this initiative.

"We are thrilled to offer this innovative delivery experience to Amazon customers while introducing new shoppers to Stein Mart," said CEO Hunt Hawkins in a statement.

That's good in theory and even in execution, though it doesn't leave the partnering retailers off the hook when it comes to the fundamentals that should be bringing in customers in the first place, according to P.K. Kannan, Ralph J. Tyser Professor of Marketing Science in the University of Maryland's Masters of Business Administration program.

"It makes sense. With over 120 million Prime customers and return rates of 10 to 20 percent, there is a great demand for such physical return facilities," Kannan told Retail Dive in an email. "Customers may buy things in these retail stores and thus the stores may benefit from what I call 'Amazon spillover.' Whether it actually happens or not is an empirical question. This depends on how good the assortment and prices in these stores are and how they appeal to these Amazon customers. So the ROI on renting out this space may actually be good if customers buy stuff from these stores while making returns."

While any retailer competes with Amazon, there isn't much overlap in Stein Mart and Amazon customers, and that bodes well for Stein Mart, according to Jonathan Treiber, CEO of offer management platform RevTrax. "Kohl's is much more directly competitive with Amazon than Stein Mart, given that Stein Mart can compete effectively on price with Amazon with a similar 'discovery' shopping model to TJMaxx," he told Retail Dive in an email. "The lesser the overlap, the greater the opportunity to win new customers and lower the risk of eroding market share to Amazon for products available in both places. Now Stein Mart bears the responsibility for making it enticing enough for Amazon customers to walk through the front doors into the store to explore its varied off-price offerings."

The tie-ups are certainly helpful to Amazon, which has a dearth of physical locations for customers to access for pickup or returns. Kohl's deal is somewhat different: The discount department store provides space and employees dedicated to taking and processing the e-retailer's returns. But in general, the spread of this trend could dilute Kohl's strategy, at least in areas with both Kohl's and Stein Mart stores, Kannan said.

"Kohl’s would have certainly benefited a lot more had this deal of lockers been done exclusively with them. It might have seemed pretty special," he said. "But it might not matter if Kohl’s and Stein Mart stores are not located close to each other. If shoppers in these various locations are also very different, then Kohl’s and Stein Mart may not have to compete much for these Amazon shoppers, in which case they both benefit. In general, there is not much negative for either with this deal. Since the competition for these shoppers depends on local geography and how these two stores are located, it is possible that the competition may be minimal."