Kohl’s Opens 46 Stores in One Day
By Tom Ryan
Kohl’s Corp. opened 46 stores in one day last week as part of an aggressive effort to grab market share from competitors just as a likely brutal holiday season gets under way. CEO Kevin Mansell told The Wall Street Journal, “We’ve been in a period now for over a year where the customer is shopping less. You’d better start figuring out how you’re going to take more from the other guy.”
In total, the middle-market chain will open 75 stores this year to bring its count to 1,004, closing in on J.C. Penney’s 1,083.
“Our strong balance sheet and financial position continue to give us tremendous flexibility to make the right long-term decision and avoid being short-term focused,” said Mr. Mansell.
Particularly seen as vulnerable to Kohl’s expansion is California-based Mervyns, which is in bankruptcy proceedings, and northeast regionals, Boscov’s and Bon-Ton. More financially secure Macy’s and J.C. Penney are expected to feel less pressure.
California, where two stores opened last Wednesday, is seen as the biggest opportunity for Kohl’s.
“Where they’ve got stores in California, they’ve overlapped with Mervyns’ markets,” said Bill Dreher, an analyst with Deutsche Bank Securities. “Mervyns is likely to be a donor of market share to Kohl’s.”
The store opening bonanza is being combined with increased holiday-season marketing, especially online advertising. Deep discounts are also expected to arrive at the stores well before Black Friday.
“We’re very focused on making sure that we can show [customers] that their dollar is going further,” said Mr. Mansell. “This is going to be a good holiday season to be a consumer. There are going to be some incredible deals.”
Not everything is ultra-aggressive for Kohl’s. Only 50 stores are planned for 2009, and a former goal of reaching 1,400 stores by 2012 has been dropped. This holiday, plans call for lower inventories and comps sliding between two to four percent.
“For the foreseeable future, we see a tough economy, a tough environment,” said Mr. Mansell. “We have to be focused on outperforming the competition and gaining share at their expense.”
Discussion Questions: Is now the right time for Kohl’s to be so aggressive in going after market share? What’s the risk in such a strategy? What are the right conditions to go on the offensive rather than stay defensive during tough times?