Kohl’s CEO says company is ‘stronger coming out of the pandemic’

Discussion
Photo: Kohl’s
Jun 25, 2021

Kohl’s CEO Michelle Gass believes that steps the retailer took before the onset of the pandemic and those it has taken since have positioned the department store retailer to achieve new levels of success going forward.

Ms. Gass, speaking at NRF Retail Converge earlier this week, said Kohl’s was stronger for a number of reasons, including its fundamental business strength, an empathetic culture that supports and empowers associates, improved shopping experiences and merchandising that aligns with the needs and wants of consumers.

She said that three major trends — comfortable/casual clothing, easy shopping experiences and value for the dollar — were all present prior to the onset of the pandemic and later accelerated as COVID-19 spread across the country.

Ms. Gass said, as a result of the pandemic, the bar has been raised on consumers’ demand for “ease and convenience” but that hasn’t taken away from their desire “to score” when they are on a shopping trip. “If you’re coming into a store, you want to be surprised, you want to see new things,” she said.

Kohl’s CEO said that “stores are key and we are thinking about them differently” as they become the center of the chain’s physical and digital activity. Customers who buy from Kohl’s stores and online are “four to six times” more productive from a sales generating standpoint. These customers also are loyal, as the added convenience of being able to shop when and how they want creates deeper relationships.

The retailer is also making its customers’ lives more convenient through partnerships with Amazon.com and Sephora. The chain, which began offering returns on Amazon orders in 2019, has found that the relationship has helped drive traffic and acquire new customers over that time. Kohl’s plans to have around 200 Sephora shops inside its stores by the fall with 400 more to be added next year and around 850 in place by the end of 2023.

Ms. Gass has said that Kohl’s has made shopping easier and more convenient with reimagined store layouts that offer more space within aisles and racks. The chain was able to achieve this, in part, because of an aggressive assessment of its inventory that resulted in a significant reduction in SKUs. The result has been higher turn rates for Kohl’s inventory and the ability to run more full-price sales and fewer clearance ones — all good top and bottom line news for the retailer.

DISCUSSION QUESTIONS: Do you see Kohl’s in a strong position relative to its primary competition at this point and time? Where do you see the retailer’s greatest opportunities and challenges over the next couple of years?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
" Reimagining merchandising, stepping up e-commerce/mobile, and 'right-sizing' promotions have all contributed to a very healthy retail operation."
"They have a strong private label beauty product line that will be even better with their recent partnership with Sephora. But their in-store experience needs a lot of work."
"...there is significant systemic change underway across all of retail and that Kohl’s shows all the signs of emerging as a winner."

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7 Comments on "Kohl’s CEO says company is ‘stronger coming out of the pandemic’"


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Dave Wendland
BrainTrust

Perhaps I’m biased with Kohl’s headquartered in our backyard, but I wholeheartedly agree with Michelle Gass. Kohl’s has been inventive, responsive, and nimble during the pandemic and coming out on the other side. Reimagining merchandising, stepping up e-commerce/mobile, and “right-sizing” promotions have all contributed to a very healthy retail operation. I also applaud the introduction of several key partnerships that should lift shopper value: Eddie Bauer, Sephora, Lands’ End and, of course, Amazon. Kohl’s understands its customer quite well and continues to delight her at every turn with convenience, ease of shopping, and appealing merchandise.

The challenges are many: 1.) competitive pressure around the edges from the likes of Target, Walmart, and Macy’s, 2.) technology investments that are massive but necessary and 3.) ever-evolving shopper behavior (online purchasing, brand disloyalty, and the appeal of global marketplaces).

Rich Kizer
BrainTrust

Anyone who knows me knows that Kohl’s has always been one of my favorite chains. I always watch it, and certainly enjoy how they have created rabid followers with their promotions and Kohl’s cash through the years. (I also enjoyed watching Larry Montgomery, my fraternity brother from my college days). However I was a bit put off during the pandemic regarding their product selections and half empty fixtures at times during that period. I am excited and believe they will generate higher turn rates for Kohl’s inventory and the mission to run more full-price sales. I get that from a business perspective, but not from the customer perspective. And any analyst who believes in GMROI is with many of my banker friends.

Neil Saunders
BrainTrust

Amid a spending boom, such as the one we are currently in, it is easy to talk about being in a position of strength. The acid test comes when spending growth falls back to more normalized levels. As the tide ebbs, I expect we will see many of the “old” issues come to the fore for retailers like Kohl’s as legacy problems remain. That said, Kohl’s has worked harder than other department stores and has better prospects.

DeAnn Campbell
BrainTrust

I have mixed feelings about Kohl’s. On the one hand they consistently innovate well ahead of the curve, yet on the other hand their product offering and category mix are far behind their competitors. Kohl’s was one of the first retailers to bring endless aisle digital kiosks into stores and an early adopter of partnerships with their Aldi alliance. They have a strong private label beauty product line that will be even better with their recent partnership with Sephora. However their in-store experience needs a lot of work. Their store design is uninspiring and it’s unclear who their target customer should be. With their success in the beauty department it would make sense to build out complementary departments such as shoes and accessories, but the current offering in these areas is nowhere near the quality of their beauty products.

Matthew Brogie
BrainTrust
2 months 30 days ago

I love the innovation that we’ve seen from Kohl’s over time, and Gass’ perspective on B&M stores as the center of physical *and* digital activity. Being able to solve for a statement like that is exactly what it takes to differentiate the relationship with the modern consumer. I have long believed that retail is far from dead (ever since some of the pundits started making claims of retail’s demise 20+ years ago); I do however firmly believe that there is significant systemic change underway across all of retail and that Kohl’s shows all the signs of emerging as a winner.

Lee Peterson
BrainTrust

You have to give it to Gass; she’s a great agent for the brand, but I’m with Neil on this one — wait until the pent up buying splurge is over, then let’s see. I also can’t help but think, so, what are Kohl’s points of differentiation? Price? Selection? Other people’s brands? Stores? E-commerce speed? Do any of those ring out as unique to you? Is Kohl’s just a better J.C. Penney? Good job on the NRF presentation, but lots of work still to be done.

storewanderer
Guest
2 months 30 days ago

Reality check between what is being said here and what is happening in Kohl’s Stores are two very different things. Sure, in the past couple months the stores have gotten busier, but this is due to pent up demand. Even J.C. Penney is busy the past couple months.

Kohl’s has cut inventory levels, cut staffing, and in general their stores are really lacking. I have not purchased anything from Kohl’s this year despite going in there multiple times. The cuts to mix, reductions in promotions, reductions in store hours, elimination of certain brands, completely anemic home category, and long checkout line (yes line since they only have one cashier) have really hurt.

This is not like Target where the management is making strong statements and it is backed up by what is going on in the stores.

wpDiscuz
Braintrust
" Reimagining merchandising, stepping up e-commerce/mobile, and 'right-sizing' promotions have all contributed to a very healthy retail operation."
"They have a strong private label beauty product line that will be even better with their recent partnership with Sephora. But their in-store experience needs a lot of work."
"...there is significant systemic change underway across all of retail and that Kohl’s shows all the signs of emerging as a winner."

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