Kohl’s CEO rejects department store tag
In an interview with The Wall Street Journal, Michelle Gass said Kohl’s bears little resemblance to struggling department chains (include your list here). She believes the company’s success is largely a result of coming up with different solutions to the same challenges faced by every other retailer in the market.
Ms. Gass, who became CEO of Kohl’s in May, told the paper that the company’s management team doesn’t “think of ourselves as a department store.” She pointed to location (Kohl’s operates standalone stores outside of malls) and layout (a racetrack design with checkouts at the front) as distinguishing features from rivals that operate department stores.
While others have closed stores in large numbers to reduce costs, Kohl’s has focused on repurposing its sites to reduce its footprint while bringing in complementary retailers to offset space costs. Earlier this year, Kohl’s announced it had reached an agreement to reconfigure between five and 10 stores so that it could lease adjacent space to Aldi, the hard discount grocery chain.
In her interview with the Journal, Ms. Gass explained her company’s willingness to work with Amazon.com. Kohl’s is continuing to test dedicated Amazon shops inside 30 of its stores and accepting product returns bought on the e-tail giant’s site at 100 locations. The test stores are located in the Chicago and Los Angeles markets.
“Based on the volume of returns we are getting, people are using the service,” Ms. Gass said. “What we are trying to determine is, of the people coming in and returning something from Amazon, how many are crossing the aisle and buying something from Kohl’s?”
In another zig where others zag approach, Kohl’s decided to get out of the gift registry business. Ms. Gass told the Journal that she didn’t think it makes sense for Kohl’s to offer a service if not distinctive from what’s available elsewhere.
“We’ll probably bring it back someday, but it will look a lot different,” she said. “When you do things like that, it forces you to think about making a sea change versus an incremental change.”
In August, Kohl’s reported that its second quarter same-store sales were up 3.1 percent, better than the 2.7 percent gain expected by analysts. The retailer’s earnings were up 40 percent year-over-year for the quarter at $1.76 per share, above the consensus $1.64 forecast by Wall Street.
- How Kohl’s Is Succeeding Where Other Chains Haven’t – The Wall Street Journal
- Kohl’s shares slide despite topping Wall Street earnings, sales expectations – CNBC
- Aldi to open grocery stores next to Kohl’s – RetailWire
- Kohl’s to accept product returns for Amazon – RetailWire
- Is Kohl’s giving away the store to Amazon? – RetailWire
DISCUSSION QUESTIONS: What do you think are the primary reasons for Kohl’s success at a time rivals are struggling? What will management need to do to keep Kohl’s business on the upward curve?