Over the next three years, Kohl’s will boost investment in a strategy designed to improve the store experience for customers and associates with everything from smaller stores to automated returns.
In one manifestation of the strategy, Kohl’s will open about 100 new, smaller format stores over the next four years in markets where the company doesn’t have a physical presence.
The expansion of the format follows a successful pilot of more than 20 smaller stores. The average Kohl’s store at about 80,000 square feet can be too large for many smaller markets. By introducing the scaled-down concept, most at approximately 35,000 square feet, Kohl’s gets the flexibility to enter new neighborhoods while also providing a localized experience that caters to the community’s needs, it asserted. Kohl’s will open a brand-new store in Bonney Lake, WA, in June.
Four additional new small-format stores will open in San Angelo, TX, Morgantown, WV, Tacoma, WA, and Lenox, MA. The new smaller stores also will be among the first scaled-down locations to test Sephora at Kohl’s. As a data-centric company, Kohl’s is using information technology to create a highly localized experience in its smaller stores, the company stated, such as establishing an assortment at the Tacoma store that emphasizes active lifestyle merchandise including a more focused assortment of outdoor gear. In total, new smaller stores represent more than $500 million in sales opportunity as they ramp to full productivity, according to the company.
The strategy as developed calls for Kohl’s to modernize its stores to provide customers with convenient services, opportunities for discovery and an overall inviting experience. Services such as in-store, drive-up and self-pickup, as well as Amazon Returns, help Kohl’s provide the convenience customers expect from a retailer today and going forward, the company maintained.
By 2023, Sephora departments will operate 850 locations, reflecting a new and more modern Kohl’s. Stores that incorporate Sephora by Kohl’s departments feature them prominently at the front of the store to make for easy access but also to draw shoppers into the vicinity of expanded categories merchandised in adjacent spaces such as active and casual as well as new brands such as Draper James RSVP.
Kohl’s store initiatives also call for adding dedicated discovery zones highlighting curated cross-category products and brands, including those from diverse- and female-owned suppliers, that meet the expectations of customers seeking newness and inspiration. Although known for its national and differentiated private-label assortment, the company indicated that the new discovery zone initiative allows Kohl’s to leverage its robust omnichannel platform and invest in emerging brands. As such, Kohl’s stores will feature fresh approaches to style in unique discovery destinations. Since the inception of its emerging brand program in 2019, Kohl’s has introduced more than 70 new labels. Store flow will facilitate shopper encounters with discovery zones every time a consumer walks into a Kohl’s location
As part of ongoing investments in technology across its physical footprint, Kohl’s will roll out self-serve buy online, pick up in all stores by the end of the year. The company has been testing self-serve returns in over 100 stores.
Kohl’s integration of store and digital technology enables the company to support enhanced discovery and easy shoppability with new functionality being released continuously, it noted. Stores play an integral role in Kohl’s omni operations, with approximately 40% of the company’s digital orders fulfilled by physical locations. The integration allows Kohl’s to convert more customers to omnichannel patrons. Those who shop Kohl’s across channels, the company reported, are at least four times more productive than store-only or digital-only shoppers.
Stores are the foundation of Kohl’s omnichannel platform, the company adds. In 2021, 99% of Kohl’s 1,165 stores were four-wall cash flow positive and about 95% generated more than $1 million in four-wall cash flow. The health and profitability of stores is partly due to their strategic locations, set to provide convenience for the 80% of Americans who live within 15 miles of a Kohl’s store, the company observed.
“Kohl’s began with roots as a brick-and-mortar company, and these 60 years of experience have set the company up to become a leading omnichannel retailer,” said Mark Griepentrog, the company’s chief property officer, in announcing the strategic moves. “Our strong and productive off-mall store base can continuously evolve with our customer’s expectations and demand, and we see substantial opportunities to leverage our real estate in producing long-term growth.”