Stein Mart has become the latest retailer to partner with Amazon, betting that increased traffic to the ecommerce giant’s lockers in the back of its stores for order pickup and returns will translate to sales for the struggling discount chain.
Unlike Kohl’s recent in-store Amazon returns program, however, Stein Mart’s process is self-serve and doesn’t involve labor costs.
The lockers will be located in about 200 of Stein Mart’s 283 stores, with the rollout to be completed by early June. Each hub contains about 40 individual lockers.
Linda Tasseff, director of investor relations for the discount chain, said the Amazon program was a win-win as it comes at no cost and will drive traffic and hopefully conversions.
“Amazon approached us earlier this year, seeking locker partners in shopping centers, department and specialty stores,” Tasseff said. “They liked our locations and the look of the stores. So, we’re working on growing our sales through higher traffic and new customer acquisition. It was an easy decision.”
With some headlines saying Stein Mart is “embracing the enemy” by partnering with a company that has negatively impacted the retail sector, Tasseff said that’s not how Stein Mart sees it.
“Why not participate in the program?” she asked. “The lockers will bring new customers into our stores. From there, we have the opportunity to introduce that common customer to Stein Mart’s great brands and great prices and keep them coming back.”
Tasseff shared an anecdote about a woman visiting an Orlando, FL store who was sent to pick up her husband’s Amazon order, and ended up spending $400 in the store.
“She told the cashier at checkout, ‘This is the first time I’ve been here – I love the store and the great brand name merchandise,’” she said. “What’s most important, we gained a new customer. We’re introducing Amazon customers to Stein Mart that may have never visited before.”
While Kohl’s partnership with Amazon is quite different, with associates there processing returns in store – a major contributor to its $25 million increase in selling, general and administrative costs for 2019 – Tasseff stressed that the lockers are self-serve and cost-free for both pickups and returns.
“Amazon provides and installs the lockers, and if we need electric, they install that too, anything else that’s needed,” she said. “All we provide is floor space in an unproductive area of the store.”
Amazon will also give Stein Mart weekly stats on packages delivered to each location. But tying that to incremental sales will be difficult, Tasseff admitted, short of seeing a significant quarter-over-quarter sales bump in those locations.
She said Stein Mart has a number of other initiatives underway to increase sales, including adding product categories this fall (children’s wear and fine jewelry) and expanding omnichannel capabilities like endless aisle and BOPIS at all locations.
The company has also implemented smart fulfillment logic to optimize online order sourcing, added personalization and targeted offers based on POS and shopper history data, implemented real-time traffic and conversion tracking and streamlined and improved its loyalty program. “This is all being done to increase sales by improving the customer experience,” Tasseff said.
Asked about the Amazon partnership in the context of the company’s recent performance, Tasseff said Stein Mart had “stabilized the business and grew profitability in 2018.” For the year, the company reported a net loss of $6 million, a quarter of its $24.3 million loss in 2017.
“Now we’re focusing on driving sales by investing in new product categories, expanding our ecommerce capabilities and increasing store traffic,” she said. “This program is one of several initiatives to drive new customers and traffic in our stores.”
For the first quarter of 2019, Stein Mart’s revenue fell 3.5% to $319.4 million, while net income was down 46% to $4 million. CEO Hunt Hawkins said on an earnings call that the company was looking to the back half of the year for improved results, based on many of the initiatives outlined by Tasseff.
In 2018 Hawkins said Stein Mart was exploring “strategic alternatives,” which in many cases means finding a buyer.