You can now walk into a store and check out an Amazon Echo before you buy it, if you are in Los Angeles or Chicago. The Amazon Connected Home Experience rolled out yesterday at 10 Kohl’s stores and 72 more stores are planned. A key feature of the store-within-a-store concept is that Amazon.com users can bring in their returns and Amazon staff will package up their shipment. That may induce some Amazon shoppers to stop by Kohl’s. When they do, these shoppers will be treated to a new Amazon experience, a physical retail environment promoting Amazon products such as Echo, Echo Show and Echo Dot. This is Amazon’s first try-before-you-buy experience for electronics.
What Does Kohl’s Get? Foot Traffic.
Kohl’s CEO-elect Michelle Gass explained Kohl’s rationale during an interview with CNBC.
It provides a new way for an existing or new customer to have that touchpoint with Kohl’s. And then surely they are making a trip inside the store and we hope they are taking advantage of being in the store and checking out all of the amazing products that we offer.
CNBC reporters and several analysts view this as a risky move by Kohl’s because they will be introducing more shoppers to Amazon which means these shoppers could bypass Kohl’s in the future and order direct. That sentiment seems short-sighted. Americans overwhelmingly shop at Amazon.com already. Online shopping is no secret. This move is likely to benefit Kohl’s a great deal, because Amazon’s customer base now will have a reason to go to Kohl’s. You can bet some great promotional displays and Kohl’s apparel discounts will be offered within eyesight of the Amazon Connected Home area.
Amazon Gets Physical
The Federal Reserve Bank of St. Louis shows that online commerce retail accounted for just 8.9% of total U.S. retail sales. That is a big number and accounted for about $360 billion in purchases in 2016. But, everyone can do the math. Annual online sales are equal to about one month of the nearly $5 trillion retail sales in the U.S. Physical retail remains 12 times larger than online retail and it represents a tremendous growth opportunity for Amazon.
Amazon’s move to acquire Whole Foods earlier this year shocked many people because the company was trading in the clean and efficient online world for the messiness of physical locations. However, the physical presence provides Amazon with a new outlet for sales and access to new customers and purchase habits. What was available for sale at Whole Foods the first day after the Amazon acquisition was complete? Amazon Echo. Amazon sees physical retail as an opportunity to cross-sell products in different categories and Kohl’s moves past grocery to apparel shoppers.
Finding Larger Markets with More Shoppers
When you get as large as Amazon, revenue growth typically becomes elusive. The best way to keep the growth train going is to find a new larger market to enter. Amazon’s move into physical retail certainly will have challenges. However, it also provides a new revenue growth path for the retail giant. It will also expose even more people to the value of Amazon’s Alexa line of products. Shoppers today can go into a Walmart or Target and put their hands on a Google Home. Now they can go into a Kohl’s and put their hands on an Echo.
If you want to check out the Amazon Connected Home Experience at Kohl’s, here are the first 10 stores where it was launched.
- Bucktown, 2140 N. Elston Av., Chicago, IL 60614
- Harlem-Irving, 4220 N. Harlem Ave., Norridge, IL 60706
- Chicago Ridge, 9700 S. Ridgeland Ave., Chicago Ridge, IL 60415
- Highland, 10353 Indianapolis Blvd., Highland, IN 46322
- Elmhurst, 303 S. Route 83, Elmhurst, IL 60126
- Tinley Park, 7500 W. 191st St., Tinley Park, IL 60477
- Huntington Beach, 7777 Edinger Ave., Ste. 140, Huntington Beach, CA 92647
- Upland, 1923 N. Campus Ave., Upland, CA 91784
- Redlands, 27540 Lugonia Ave., Redlands, CA 92374
- Torrance, 25375 Crenshaw Blvd., Torrance, CA 90505