Penney and Kohl’s Compete

Discussion
Apr 03, 2006
George Anderson

By George Anderson


J.C. Penney Co. is aggressively looking to expand its free-standing stores in an effort to take back business lost to Kohl’s in past years, reports The Business Journal of Milwaukee.


According to the piece, Penney sees its off-mall strategy as a means to bring its stores closer to consumers.


The same strategy has been credited as one of the prime reasons that Kohl’s rose to retailing prominence over the past 15 years.


Sid Doolittle, a partner at McMillan/Doolittle, says the increased competition cannot be seen as “good news for Kohl’s.”


According to Mr. Doolittle, Kohl’s brought new thinking to the department store business with its off-mall stores, central checkouts and other innovations but that it has failed to find new ways to differentiate itself in recent years.


Kohl’s has not entirely stood still. It has added Estee Lauder cosmetics sections to its stores and rolled out the Candie’s clothing and home fashion and accessories line. The company web site has young celebrities Samaire Armonstrong, Ciara, Hillary Duff and Michelle Trachtenberg modeling clothes on its Candie’s junior’s page.


Mr. Doolittle, however, feels Kohl’s needs to do more to answer the competitive response from Penney’s and others, such as Target and Sears, looking to attract the same consumers.


According to The Business Journal of Milwaukee, Mr. Doolittle believes “Kohl’s needs to sharpen its fashion component and make sure its customer service is top-notch.” It also needs to partner with fashion designers ala Target with Isaac Mizrahi and develop a strong private label program to rival Penney lines such as a.n.a.


Moderator’s Comment: What do you see Penney and Kohl’s having to do to better compete with each one another?
George Anderson – Moderator

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8 Comments on "Penney and Kohl’s Compete"


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Carol Spieckerman
Guest
14 years 10 months ago

Both Kohl’s and Penney’s have made strides in differentiation – Kohl’s cosmetics alliance with Estee Lauder was brilliant, yet Penney’s has a stronghold in domestics and apparel. Kohl’s needs to ramp up the private label and pursue an apparel designer alliance strategy that will increase their cool factor pronto. Their “national” brands are unimpressive…J.C. Penney’s private labels are much trendier.

It will be interesting to see if/how Mervyn’s turns up the heat in the big middle with Ms. Castagna at the helm. Interesting that the turn-around times they are stating are similar to those first stated by Questrom when everyone had written Penney’s off.

Mike Romano
Guest
Mike Romano
14 years 10 months ago

My observation is that Kohl’s has attracted a younger profile customer interested in fashionable brand name merchandise. Penney has tried hard and has spent untold millions on unmeasurable TV and print dollars trying to appeal to the masses and change their brand image. However, I like the way Kohl’s has done it one customer at a time. Less mass marketing and more targeted marketing via multiple channels – voice, direct mail and email. I believe that creates a more loyal customer. Now, one of them needs to figure out how to use the biggest opportunity loyalty tool of the next 10 years – the mobile phone.

Kai Clarke
Guest
14 years 10 months ago

Penney needs to continue to aggressively pursue other ways to market. Their objective to grow their stand-alone stores, as well as their marketing mix is a good one. Retailing is changing, as is the competitive marketplace, and Penney knows that it must continue to adapt to the new opportunities or it will perish. Their stand-alone growth strategy is good, and it would also be beneficial to consider tuning their store mix, as they continue to evolve. Moving towards more discounted brand names, in addition to their core competencies, will only make Penny a more appealing retailer.

Michael Tesler
Guest
Michael Tesler
14 years 10 months ago

Though the industry may perceive them as competitors, their target customers may not. Both work hard to position themselves as more convenient and less expensive alternatives to moderate Department stores (or should we now say department store…since this segment is now soooo dominated by Macy’s), when in fact they are some sort of specialty store/discount store hybrid and compete with everything from Old Navy to H&M and Wal-Mart in the confused consumer’s mind. The goal for each of these two is not to better compete with each other but (as always) it is to have the right goods at the right price.

Mark Lilien
Guest
14 years 10 months ago

J.C. Penney would be unprofitable without the margins generated by its private label clothing. Kohl’s strength is the opposite: great buys on famous label clothing. These 2 companies are best off if they stay away from each other. Direct competition will only hurt both. Penney’s will do fine if they build new locations on a very conservative basis. Rapid expansion will raise their costs but their return on capital will decline.

Race Cowgill
Guest
Race Cowgill
14 years 10 months ago
There appear to be a great number of opportunities for both Kohl’s and Penney, whether you see them as direct competitors or not, but both of them seem to be trying to differentiate with product mix and store atmosphere — these, along with differentiation by price, are some of the weakest differentiation strategies we have seen. As we have said many times in these discussions, the retail world has a very difficult time seeing, understanding, and serving core customer needs (for many reasons, as we have also discussed), which leaves large clusters of significant customer needs met weakly or in some cases not at all. In this way, Kohl’s and Penney are really occupying the same basic space as Target, Macy’s, Dillard’s, Old Navy, Wal-Mart, Mervyn’s, and numerous others. Because of that, and because of the reasons behind their meeting core needs weakly, these retailers MUST focus on very small and narrow differentiators, such as one leaving out Estee Lauder and one including it. This in turn means that tiny changes become huge issues for… Read more »
Camille P. Schuster, PhD.
Guest
14 years 10 months ago

Most of the comments have been about what product offerings are the same or different and what the strategy of each company is. The really important issue is whether the customers of Kohl’s and J.C. Penney’s are the same… or does management of either store want them to be the same? Investing in real estate can be a tricky business, especially with the increase in Internet purchasing. Who are the customers? What do they want? How do they shop? How do they want to shop? What’s important for them? If each store is answering those questions well for its customers, there is room for each to be successful.

Elizabeth Bennett
Guest
Elizabeth Bennett
14 years 10 months ago

Penney’s needs to align themselves with celebrities. The trend of consumers thinking “if Gwen or Halle uses it, then I’m good enough to have it too” is not diminishing. The key is identifying who is hot and who is not. Wasting time with any has-beens will be counter-productive.

The marketing and merchandising will just be a no-brainer if the celebrity is totally credible and “hot, hot, hot.” The right celebrity alignment will raise Penney’s image to new heights although it probably won’t be easy getting Shakira to peddle their products.

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