Amazon department stores are rumored to not ruin the relationship

Kohl’s chief executive, Michelle Gass, said there is plenty of room for the retailer and Amazon to operate physical stores, although the two are already working together in Kohl’s stores.

“The retail business is big and there’s a lot of market to be had,” Gass told CNBC’s Courtney Reagan Tuesday afternoon during a live event on CNBC Evolve. “We must always raise the bar.”

Gass’s comments come after a Wall Street Journal article said Amazon plans to open large locations that look like department stores, marking the e-commerce giant’s latest experiment with brick-and-mortar retailing and of mortar. The stores should resemble the size of a TJ Maxx and contain both clothing and tech products, according to the newspaper. Asked by CNBC at the time of the report, Amazon declined to comment.

Shares of Target, Walmart and Best Buy fell on the news, as investors feared that an Amazon department store of around 30,000 square feet could face these big box retailers in malls.

Kohl’s stores are also largely found in these types of malls. But the department store chain has a unique relationship with Amazon. Kohl’s accepts returns from Amazon at its nearly 1,200 locations. According to Gass, this relationship would not change if Amazon sued this business.

Kohl’s credited the Amazon partnership with helping drive foot traffic to its stores. Once there, a customer returning an Amazon item may end up purchasing something else from Kohl’s. In March, Gass said the relationship helped Kohl’s add 2 million new customers last year.

“Amazon… they’re always experimenting. They’re innovating,” Gass said Tuesday. “And so we’ll see, but I don’t think that changes our partnership. And frankly, we were sort of competing with them before on their online business.”

Kohl shares rose nearly 3% in trading on Tuesday afternoon. The stock has risen 47% year-to-date, bringing its market cap to $ 9.35 billion.