If you can't beat them, join them.
That appears to be the motto that Kohl's Corporation (KSS) is living by, choosing to cooperate and coexist with Amazon rather than fight an uphill battle against it.
The partnership in the pilot program for Amazon Returns and Smart Home in Kohl's stores, which was announced in September 2017, allows for the return of certain items purchased on Amazon at Kohl's stores, in a play to increase store traffic.
D.A. Davidson & Co. senior research analyst Tom Forte thinks that there might be more synergies for the two businesses moving forward.
"When I think of the physical footprint for Amazon and I think about Kohl's footprint, I see Kohl's as a compliment to Whole Foods," Forte told Real Money. "Whole Foods has a lot of what I'd call A and B locations and Kohl's has a lot of B and C locations and there is not a lot of overlap between where Whole Foods and Kohls' are located."
The program was lauded by CEO Michelle Gass in this morning's earnings presentation, as it expanded the program in the last quarter.
The companies expanded the program by 21 stories to more than 100 locations.
For Kohl's, the theoretical advantage is more foot traffic, because, "omni-channel retailers like Nordstrom, Inc. (JWN) will talk about how in store returns of online sales drive in store purchases," D.A. Davidson & Co. senior research analyst Tom Forte told Real Money.
Forte, who covers Amazon (AMZN) , explained that Kohl's decision to let Amazon customers return products is mutually beneficial due to this factor.
The details on the plans to expand the partnership were slim, according to Jim Cramer's Action Alerts Plus. Kohl's is an AAP portfolio holding.
"We view a meaningful expansion of the partnership as a potential catalyst for KSS because the ability to return Amazon-purchased goods at Kohl's stores is an incremental driver of foot traffic, which in turn is a natural driver of increased sales," Jim Cramer and AAP research team said in a note on Tuesday. "Though we were hoping for more commentary, it's possible that management remained somewhat limited because they did not want to divulge Amazon's sales return trends."
Still, Kohl's management conveyed an amicable relationship so far.
"We feel really good about the customer experience we are creating so far and our partners at Amazon are happy too," CEO Gass, who assumed the role in May 2018, said on the call.
We have yet to see if Kohl's partnership with Amazon will expand to other verticals, but at the very least the partnership so far is getting positive reviews.
- Martin Cassidy contributed to this article.