Larry Montgomery, chairman and chief executive officer of Kohl's, has his company positioned squarely in the middle between discounters on one end and upscale department stores on the other, and that's exactly where he wants to be.
In an interview with The Wall Street Journal, Mr. Montgomery said, "On the lower end, Target has done a great job of owning that discount business; [meanwhile,] a lot of the traditional department stores have spent the last five or six years in a consolidation mode, and the better guys like Nordstrom and Neiman Marcus Group have just done a great job with content on a much higher level. It has created a huge opportunity for us. Our locations have made us the neighborhood guy -- being located in strip centers and power centers [shopping hubs that have a grocery store and national retailers]. It is much more convenient for the customer to come and shop for their family and their home with us than ever before."
Mr. Montgomery is looking to build on the opportunity he sees by continuing to focus on Kohl's core strengths of offering mid-tier designer brands while broadening its appeal to new consumers with exclusive lines from Vera Wang, Elle magazine, Candies and others.
"The customer wants the quality, wants the fashion and wants the contemporary and updated styling," he said. "But they want to make sure that we are keeping the value equation there [by keeping prices below typical department-store levels]."
Kohl's has also been investing in improving the shopping experience of customers.
"In October, we opened up a number of 'innovation' stores. We started with the whole look of the building -- we put some windows up front, created a bigger opening and brought more light in...When you come in to the store, we created a merchandising area for lines like Candies, and Chaps and Tony Hawk...From a fixture point of view, we are much more upscale than we have been in the past. The lighting is a little different. We've created a bank of fitting rooms that probably is as nice as you are going to find, certainly in any moderate department store," he said.
Discussion Questions: What is your assessment of Kohl's strategy? Where do you see the greatest opportunities for the chain to improve its top and bottom line performance?