Fortune

MICHELLE GASS IS CRACKING THE CODE AT KOHL’S

BIG-BOX RETAILERS HAVE TRIED FOR A DECADE TO PROTECT THEIR REVENUES FROM THE ONSLAUGHT OF E-COMMERCE—AND HAVE MOSTLY FAILED. BUT MICHELLE GASS MAY HAVE FOUND A WINNING FORMULA. (SPOILER: IT INVOLVES MAKING NICE WITH AMAZON.)

THE YOUNG WOMAN WALKED into the Kohl’s store in Grafton, Wis., dressed to run errands, in Ugg boots, yoga pants, and a hoodie. She was pushing a stroller and looked to be in her twenties—barely half the age of the chain’s average customer. Kohl’s CEO, Michelle Gass, who was showing a reporter around the store, interrupted the tour to watch the younger woman intently. “This is the quintessential Kohl’s shopper we want to see in the future,” she said.

The top compartment of the woman’s stroller held a cute baby, who was duly cooed over by store workers. The lower compartment, on the other hand, was overflowing with Amazon boxes—brick-and-mortar retail kryptonite.

But while an Amazon super-shopper might seem to be the last person a department store CEO would want to see, the young mom’s presence was a small victory for Gass. As part of a daring experiment begun a year ago, Kohl’s handles returns of Amazon online orders at 100 of its 1,158 stores. (It also sells Amazon’s smart-home products at branded kiosks in about 30 stores.) Kohl’s has made it a mission-critical priority to get more shoppers to its stores, particularly the younger, more affluent customers Amazon tends to draw. The idea is that, when an Amazon shopper comes into a Kohl’s to return, say, an ill-advised adult onesie, she’ll see items she needs, like Nike running shorts or a waffle iron, and make a purchase at Kohl’s.

Gass has heard a million times that bringing apex predator Amazon into her stores is akin to bringing a fox into the henhouse. But that, she says, is the kind of antiquated thinking that got many retailers into trouble, and she’s betting Kohl’s will prove to be crazy like a fox. The Amazon gambit is meant to be a shock to the system, she says: “The big idea is that this is teaching us to think differently.”

Thinking differently has only recently become a priority at Kohl’s. Over the past five years, the venerable retailer has steered clear of the retail carnage that accompanied the rise of e-commerce, helped by customer loyalty and its low exposure to malls’ problems, and developed a best-in-class reputation for its tech and inventory management. But it also failed to win over many new shoppers, and its revenue

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