Image Courtesy of Kohl’s
March 13, 2025
What Near-Term Fixes Does Kohl’s Need?
On his first quarterly analyst call since being named Kohl’s CEO, Ashley Buchanan announced a number of “tactical, short-term, no-regret moves” to help stabilize the retailer’s business, including rebalancing assortments, improving in-stocks, and reducing coupon exclusions.
Buchanan, who most recently served as the CEO of Michaels and previously held leadership roles at Sam’s Club and Walmart, said that since taking over as CEO in mid-January, he’s learned that Kohl’s is “built on a solid foundation” that includes more than 1,100 stores across the country serving over 60 million customers, with about half signed up as loyalty members.
However, efforts over the last few years to attract a new customer have “caused friction with [the retailer’s] core customer.”
The initial phase of Kohl’s turnaround will focus on three areas:
- Offering a curated, more balanced assortment that fulfills needs across all customers.
- Reestablishing Kohl’s as a leader in value and quality.
- Delivering a frictionless shopping experience.
On curation, Buchanan said Kohl’s will continue to prioritize newer key categories that are resonating with customers, including Sephora, home décor, and its impulse departments near cash registers. However, the addition of new products to attract new customers resulted in a deemphasis of “products and categories that our core customers love.” A refocus last year on categories that had lost traction, including fine jewelry, petites, and proprietary brands, is showing improvement and will continue. Buchanan said, “Our goal will be to drive improved assortment clarity across all categories with a purpose behind each brand and each product.”
In reestablishing its value proposition, a primary focus will be on elevating proprietary brands that stand for quality and value while also offering an exclusive reason to shop at Kohl’s. Buchanan said, “Kohl’s has amazing proprietary brands such as Sonoma and FLX that our customers love. They serve an important purpose in our value proposition, offering lower price points on great products for our customers.”
New brands will be added that “fill a purpose” for customers and “drive productivity” for Kohl’s. National brands will remain a core focus. Buchanan said, “We know our customers love national brands, and they trust to buy these brands at Kohl’s knowing they got a great deal.”
In pricing, Kohl’s will continue to emphasize promotions, coupons, and Kohl’s Cash but “simplify” them by reducing the number of brand exclusions. Buchanan said, “Over the years, our list of excluded brands on our coupon has grown too large with the percent of sales that are excluded from coupons reaching an all-time high in 2024. This has created confusion and frustration with our loyalist customer.”
Kohl’s website reveals proprietary or exclusive brands, which are largely the only ones currently eligible for coupons.
The retailer will further “continue to work to simplify our messaging by reducing the complexity of our offers as well as amplify our great prices as we have seen this start to resonate with our customers.”
The third priority involves delivering a “consistent experience across all channels,” including reducing out-of-stocks for high-volume items, particularly basic and essentials. In-store layouts are being realigned to improve category placement and “create an easier shopping experience for customers to find their frequently purchased items and discover new and relevant choices.” Kohl’s is also looking to better capitalize on synergies between online selling and the store.
Shares of Kohl’s fell around 25% after the retailer posted its fourth-quarter results this week due to a warning that same-store sales for the current year are expected to slide in the range of 4% to 6% following declines of 6.5% in 2024, 4.7% in 2023, and 6.6% in 2022.
Buchanan cautioned that his team is “still developing” the long-term view of Kohl’s value proposition and go-to-market strategy while noting that any merchandise changes won’t arrive until next year given long lead times. He stressed, “I want to set the expectations that this turnaround, while very achievable, is going to take some time.”
Discussion Questions
Which of the initial turnaround steps undertaken by Ashley Buchanan will do the most to win back Kohl’s customers?
How should Kohl’s be rethinking its long-term approach?
Poll
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David Biernbaum
Founder & President, David Biernbaum & Associates LLC
Jeff Sward
Founding Partner, Merchandising Metrics
James Tenser
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
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Kohl’s has lost 1.3 million customers over the past five years. So, a good start point would be to understand why those people defected. When we look at our data there are some clear priority reasons: assortments not being relevant, hard to shop stores, poor value for money, and a lack of interesting products. Unfortunately, all of this adds up to a pretty broken proposition which needs to get back to basics. What Kohl’s is doing right now is throwing a lot of product out there without a central vision of who the customer is and what they want. That isn’t enough to differentiate against rivals. It isn’t enough to excite the consumer. And it isn’t enough to make Kohl’s a destination.
The only ‘codicil’ I would attach to the above is that I am encouraged that Ashley Buchanan has quickly put his finger on some of the issues. Previous management at Kohl’s was in denial about some of the issues. To resolve problems, you first need to admit to them.
What does that mean? Sounds like marketing speak to me.
Former CEO Kingsbury poo-poohed online channel…mistake. He also brought in a Europe line of merchandise for Home Decor that did not sell…mistake…His predecessor Gass made a deal with Amazon that created a culture of returns inside Kohl’s and ate up store resources that were needed elsewhere ….mistake. Sephora—great decision. But the losses have outnumbered the wins by a huge margin at the C-Suite level. Leadership is as much a problem as consumer uncertainty.
It means what it says: that there is a view that the central problem is with products and the proposition. That view is correct. Now we need more details about how it will be fixed and to see this put into action. As for Amazon: it has driven foot traffic. It has not driven sales. That speaks volumes about the broken proposition. Sephora is different because it is revenue generating in and of itself and has boosted beauty sales significantly at Kohl’s. What it has not done is create a spill-over effect to boost sales in other categories. Again, that speaks to the issues I noted in my comment.
Spot on!
So the thinking – if that be the word for it – is to reverse most of the polices of the past few years? That plan might have some merit, if the rest of the world hadn’t moved over that same time period….but of course it has; which makes “let’s do 2016 (or ’18 or…whatever) again!” not a very compelling concept. Truth be told, I’ve never been a Kohl’s fan: bland stores – what AI would design if the Programming wasn’t very good – with higher-than-I-would-expect prices; but they did well , so I thought it must just be me….guess it wasn’t.
The pricing is all over the place. They sell products that are similar (sometimes identical) to those at other retailers. And other retailers will be significantly cheaper.
Just one example from our price auditing over the holidays:
A pack of 12 Northlight vintage baubles at Kohl’s cost $43.99 (reduced from $54.99 regular). The exact same product at Target cost $29.99 (reduced from $36.24 regular).
And this is in a store where there is a Target that’s a 3 minute walk away. And this is just one example with one competitor.
My guess is that their reliance – fascination? obsession? – with coupons has a lot to do with this; and that makes sense for someone like macy*s, which historically was a full-price/full service store. But when you’re – allegedly – offering up a value proposition, it seems like unnecessary pricing clutter. As you said: get the basics right!
That’s exactly right. Unfortunately, Kohl’s Cash just doesn’t trump having the right prices on the ticket. Maybe it did in the past, but it certainly doesn’t now.
I think that’s the issue—you used to walk out of Kohls where you “saved” a $160 on a $279 purchase and felt you paid a fair price, but the receipt confirmed your “shopping savviness.” Now with all the brand exclusions, those opportunities have diminished. Also, the hard sell card approach troubles me. Is your consumer value proposition: “You may think we make our money from selling goods, but we really are more interested in making money from late fees and service charges once we sign you up for a card.” Seems condescending to me —not a long term strategy for attracting new customers..
Fair enough. Return to basics is a good first step.
Amazon weaponized returns—many Amazon customers “rent” items and then return them at Kohl’s. Amazon pays nothing for the backend support that Kohl’s stores provide to process and fill a truck of returns. And Kohls never allocated enough resources to offset the additional work. The conversion metrics from Amazon returner to Kohls consumer was always sketchy—at least now they are shutting Amazon returns down in some stores. I am sure the original intent was to have this lead to a more strategic partnership as Amazon was considering a bricks and mortar presence at the time. But this level of strategic thinking has not been a Kohl’s strong suit.
Investing in targeted marketing campaigns focused on customer preferences will likely be the most effective for Kohl’s.
Understanding customer preferences will allow Kohl’s to tailor their marketing strategies to meet the specific needs and desires of their customer base, which has been largely lost.
More personalization can lead to increased customer satisfaction and loyalty, ultimately driving higher sales and revenue. Additionally, by focusing on what customers truly want, Kohl’s can optimize their advertising spend and achieve a higher return on investment.
By leveraging data analytics to understand their own shopper’s behavior, Kohl’s can tailor promotions and product offerings to better meet customer needs. Additionally, enhancing the in-store and online shopping experience will help re-engage lapsed customers and attract new ones.
Not to be a jerk but what they most need short-term is cash. I think they did well when their private label brands were interesting so that’s what I’d use the cash for. A relative used to do the visual merchandising for Chaps, which was Lauren”s private label for Kohl’s. She was laid off before the pandemic, as the company began heading downhill.
hopefully their forecasting software is solid
What near-term fix does Kohl’s need? A personality. A Brand Promise that offers some kind of distinction and differentiation. Product curation that gives people a reason to drive past Target and shop and Kohl’s. Maybe a series of high profile collaborations. And i would buy all the planners and buyers new calculators. Their end of season residue inventory levels are consistently crazy. Aisles packed with warehouse fixtures just so everything can see daylight. I know it’s tough to buy into negative comps, but the markdowns on that residue inventory have to be astronomical.
Note to the editor- we need an “all of the above” option on the poll for this one. Kohls has lost their differentiation factor. There are a lot of headwinds for Kohl’s. It starts with the value prop: great assortments and great prices. As Neil Saunders pointed out in this thread, bringing in Amazon returns increased traffic but didn’t increase sales. That’s a pretty telling metric. More customers in the store, and they decided to walk past the items on offer. Don’t forget when you do return something to Amazon at Kohl’s you get a pretty generous coupon to use that day, and still not enough.
The good news is Mr. Buchanan has focused on assortment and value. That’s at the core of their issue. I would add differentiation to this focus. They need to resonate with younger shoppers and they need to keep their base, which is not going to be easy. Their assortments have to offer a clear value and differentiated choice over discounters and Big Box stores.
The assortment has to come first, then the pricing and coupons can be leveraged to win back market share.
On the men’s side of the floor, at least, Kohl’s assortment was basic and bland the last time I visited. In-stock seemed sufficient, judging from range of sizes and fit options. Display was functional and neat. What was lacking was shoppers.
Nothing about the experience made me eager to return. Like Jeff S. said, Kohl’s suffers from a personality crisis.
Many of the comments discuss pricing, assortments, and so forth. I’ll focus on some businesses that were “downsized” during the Sephora rollout. The new management acknowledges that categories like Fine Jewelry and Intimate Apparel need to be revived or even reintroduced. (I’ll note for the record that I ran these businesses along with the rest of Women’s Accessories during my 24 years at Kohl’s.) Kohl’s had an opportunity to gain market share in Cosmetics, but the Sephora introduction had some unintended consequences that sacrificed sales volume instead of increasing it.
My head hurts just thinking about all the challenges Kohl’s has to deal with. Answer this simple question, “why shop this store, what makes the experience worthy of a visit”? Almost nothing in the comments shared by the new CEO tells me why Kohl’s and not any one of a number of direct competitors. Sephora is a reason to visit, now how do you get the shopper to explore the rest of the store? What about the atmosphere in store? Do you feel anything? No. Is there a music bed playing making the experience “entertaining”? No. Is the Kohl’s Cash or Yes2You program compelling? The answer is yes, but as they recognized creating a negative experience with exclusions. The program needs a total and complete re-fresh. Why do I have to come back so soon after spending to earn a bounce back savings? Start there. Are there exclusives for me as a “member”? No. And please get rid of the entire section near the checkout with stuff no one wants nor needs it actually drags down the brand image. Why do I have to check myself out? And what happened to the Amazon return desk being a big win? Lastly, make the store a true department store by stocking small appliances and more.
Kohl’s is a MESS. their merchandise mix and offerings have become uninspired and booring. Their private labels are nothing like they were ten years ago. The stores I have been in of late are a disaster— packed with all sorts of merch — in and out of season, much marked down. The stores are Very difficult to simply shop in. A MESS!