Will Kohl’s be known for something other than its retail partners?

Discussion
Source: Kohl’s
Sep 14, 2021

A New York Times interview with Michelle Gass, condensed for clarity, posits that the Kohl’s CEO has sought to create a unique identity for the chain since replacing Kevin Mansell in 2018. Just how much progress she has made in that endeavor has been questioned by activist investors and industry watchers alike.

One of the most prominent features of Ms. Gass’ tenure has been the deepening of relationships with other retail brands, specifically Amazon.com, a deal made under her predecessor, and with Sephora.

She has consistently praised the working relationship with Amazon over the years with claims that accepting returns for the digital giant has brought new customers into Kohl’s stores.

Even recent reports that Amazon is considering opening its own department stores have not prompted Ms. Gass to cast doubt on what she sees as a complementary relationship between the two companies.

“We do returns really well and we provide a seamless experience to their customers. And what we get in return is new customers, traffic,” she said on Kohl’s second quarter earnings call last month.  Ms. Gass added that Kohl’s conversion rate with Amazon return customers has been improving.

She called the deal to place “Sephora at Kohl’s” shops inside her company’s stores part of a “game-changing partnership” that will lead consumers to think of Kohl’s as “a leading beauty destination.”

Kohl’s began debuting the first group of Sephora shops last month and expects to open 200 this year, another 400 in 2022 before reaching its goal of 850 total by the end of 2023. The 2,500-square-foot shops located at the front of stores feature 100 brands curated to appeal to Kohl’s female customers. Ms. Gass said the new shops “are absolutely beautiful and truly showcase the power of the Kohl’s transformation.”

Just how much transforming has taken place under Ms. Gass’ leadership has been a topic of some debate. A group of activist investors earlier in the year called for a board shakeup claiming the retailer had failed to keep pace with changes in the marketplace.

Ms. Gass, who made it through that tumult, continues to maintain that Kohl’s is very different from department stores and has a distinct identity in the minds of consumers.

“We are very far apart from what a traditional department store is,” she told the Times. “We are small, we’re super convenient and that allows us to do things like buy online, pick up in-store and curbside. But more importantly, we see ourselves as a specialty concept, that Kohl’s is the curator and the editor to bring you all the products and brands you need to lead a more active and casual lifestyle.”

DISCUSSION QUESTIONS: What do you see as Kohl’s brand identity and to what extent is it wrapped up in those of its partner brands? Does it hold a distinct place in the marketplace and where do you see opportunities for it to set itself apart?

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Braintrust
"As long as Kohl's continues to put its customers first and assorting the right product and brand mix, it will continue to set itself apart from other department stores."
"This is like looking in the mirror and seeing a tiger instead of a golden retriever."
"Kohl’s has the demise of J.C. Penney to thank for Sephora. The addition of Lands’ End and Eddie Bauer are solid pluses."

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28 Comments on "Will Kohl’s be known for something other than its retail partners?"


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Bethany Allee
Guest

Right now, Kohl’s is innovating retail and convenience. They’re not the same as the other department stores, because they seem to be fighting harder and more strategically. Powerhouse Amazon is still looking for ways to innovate the last mile/fulfillment and Kohl’s is the partner that’s stepping up. Sephora needed a physical presence to ensure their physical presence continues to thrive – Kohl’s stepped up. Kudos to Kohl’s for having the courage to step it up and stand out.

David Naumann
BrainTrust

Great points Bethany! Kohl’s creative marketing and partnerships have helped it survive in a category where its apparel-based department stores have struggled. Kohl’s finds strategic ways to attract more shoppers which results in incremental sales. Kudos to Kohl’s.

Neil Saunders
BrainTrust

The problem is that Kohl’s does not have a strong identity of its own. Ask yourself: what does Kohl’s stand for, what is unique there that you can’t get elsewhere, why must you go there over other retailers? There are very few answers to those questions.

While I applaud the efforts to add in Amazon (which has certainly driven footfall but has been less effective at driving sales) and Sephora, neither gives Kohl’s a personality. It’s like someone trying to be cool by association. This was brought home to me on a recent visit to a Kohl’s in Danvers, MA where a Sephora had been added. Sephora looked fantastic – but it just highlighted how dismal the rest of the store was.

I think Kohl’s has a chance but it really needs to work on its own proposition if it is to have long term viability.

David Slavick
Guest

You are so right! It’s called borrowed interest. Stand for something. Give value to your shoppers that is unique and differentiated vs. the competition. These partnerships are a desperate attempt to add freshness and yes convenience for their shoppers, but what does the BRAND stand for? Amazon drop-off? Getting HBA goods from another brand during a department store shopping experience? Next time you shop a Kohl’s, which department truly delights you? Which department is so well supported by signage, display, product array that you just say to yourself “this is awesome”? NONE!

Rick Watson
BrainTrust

I think between Target, Walmart, and Kohl’s, these large department stores with a nationwide or near nationwide presence are the new malls.

If you are a brand or retailer, would you rather hitch your wagon to a declining mall, or at least be in a store that still has foot traffic and a reason for consumers to come back to it? I’m not sure Kohl’s can beat Target or Walmart in this game, but can they create a better experience for these partnerships than a mall can? Absolutely.

Liza Amlani
BrainTrust

Kohl’s brand identity is not only tied to its partner brands but also its customer loyalty. The customer experience is top-of-mind and they are transforming their stores to be a shopping destination. Partnerships with Sephora and Amazon can only drive more traffic to Kohl’s and the store experience plus relevant product mix will keep these customers in the store.

As long as Kohl’s continues to put its customers first and assorting the right product and brand mix, it will continue to set itself apart from other department stores.

George Anderson
Staff

I found myself having to turn off Kohl’s communications a few years back as I seem to get a new promotional communication seconds after deleting the one that came before it. Do you think Kohl’s is doing enough to set itself off from a brand advertising and sales promotion standpoint?

DeAnn Campbell
BrainTrust

This is a smart move by Kohl’s. Rather than continuing to compete in a crowded discounter market, Kohl’s is building their own version of retail as a service, offering up store locations, customer service and retail operations to support brands coveted by consumers. This aligns with how the future of retail is trending – retailers who operate the brick-and-mortar stores, and brands who provide the products and brand experiences.

Melissa Minkow
BrainTrust

The more partnerships Kohl’s takes on, the less of an individual identity it will have. If that strategy has proven more successful for Kohl’s than investing in reinvigorating its own brand, that’s very much a viable way for the retailer to continue. However I wouldn’t recommend most brands go this route when they face waning sales and consumer support.

Chuck Ehredt
BrainTrust

Businesses with the reach and breadth of Kohl’s are becoming platforms, so adding brands that attract customers is a natural extension of such a marketplace. Ms. Gass may be under pressure for not meeting investor expectations, but at least she sees how the market is evolving and various potential roles for Kohl’s to play in the new landscape.

Georganne Bender
BrainTrust

Ms. Gass’s statement that Kohl’s is “very far apart from what a traditional department store is” rings true. Bloomingdale’s is a department store, with all the charms one equates with that type of store; Kohl’s is a big vanilla box with lots of departments.

I see Kohl’s brand identity as a discount store with Kohl’s Cash as its biggest draw. Other than that there is really nothing distinctive about it, leaving a lot of opportunity to build its brand.

Christine Russo
BrainTrust

Gass’s playbook is identical to Cornell’s at Target and doesn’t get the hype. My guess is that Kohl’s has some legacy branding issues – cool, color saturated dancing ads like Target or Old Navy could help?

Jenn McMillen
BrainTrust

Kohl’s is like the kid who wants to be taller, so hangs out with tall people. Kohl’s partner strategy seems to just amplify the bigger brands who have an identity, since Kohl’s is the everyman of shopping. Even their private label brands lack personality.

Dave Wendland
BrainTrust

Kohl’s has become a foundation from which to build relationships with customers and their identity is strengthened by partnerships that align with their targeted shopper base. As long as Kohl’s continues to bring consistent value to its shoppers — through brand initiatives such as Sephora, Lands’ End, etc. — I believe their place in the marketplace is quite solid.

David Spear
BrainTrust

Kohl’s will continue to survive with unique associations with Amazon and Sephora, but they’ll slowly erode their brand value over time. And think of the risk to the brand if Amazon and/or Sephora leave? What then? Who then? The level of risk this implies is significant and something that should worry any board director. That said, I do like the partnership with Sephora because it’s one of the most innovative brands in all of retail, and they have superior talent at the senior levels of their organization. Don’t be surprised if Sephora starts to “consult” with Kohl’s on a number of in-store initiatives to re-make the rest of the store on a par equal to the Sephora space. It will be interesting to watch it unfold!

KatieThomasKCI
Guest
9 days 21 hours ago

Prior to some of these larger partnerships, Kohl’s still did a nice job with designer partnerships within Kohl’s. I’d argue they could mimic Target in some ways by having a few core strategic design partnerships, while also enhancing some smaller brand relationships (e.g. DTC) for key departments in the store.

Where Kohl’s has potential opportunity is the store itself. It’s elevated from the big box stores, and I think they could play into that a bit more – make it more comfortable and more of a destination.

Dick Seesel
BrainTrust

As an ex-employee, I know I’m biased but I think Kohl’s has stronger brand equity than some other panelists give it credit for. When I started at Kohl’s in 1982, it was known for “jeans and sneakers,” and today it is known for “active and fitness.” To a strong degree, Kohl’s has stayed in its lane for a long time and has benefited from the rise of the active lifestyle vs. career apparel. At the same time, most of its department store competitors focused on wear-to-work apparel have fallen by the wayside.

Kohl’s brand is also built around a strong value proposition, and a location strategy driven by convenience. (The low operating costs of those off-mall sites enable the value.) These are two more reasons why Kohl’s has lasted as the slightly upmarket cousin to Target, while mall-based retailers struggle to survive.

Raj B. Shroff
BrainTrust

I don’t see Kohl’s as having a brand identity. It is a pretty vanilla, one-size-fits-all type of place. In this thread Chuck calls it a platform, that seems about right. The addition of Sephora and Amazon are likely just functional connections shoppers have with Kohl’s. If Amazon returns were easily available elsewhere, people would migrate there. There is no loyalty to Kohl’s in that sense.

I do think it has a distinct place in the market. Regular people can go there and find a good selection of brand name clothing, footwear and accessories at an affordable price. You can’t say the same thing of Walmart or Meijer. Target stands on its own but I still can’t get as wide of a selection there as Kohl’s has. I think Kohl’s has a good pulse of regular people and they should continue to own that space, keep a pulse of those trends and align with those brands.

Rich Kizer
BrainTrust

I think Kohl’s should sit down and talk with customers (market experts) and decide where Kohl’s must go, if that is necessary. And perhaps talk to the customers about to what Kohl’s is to them and what they want from Kohl’s.

Maybe this department store is over. Someone is going to have to define what a department store is today.

Matthew Brogie
BrainTrust
9 days 21 hours ago

I love Kohl’s approach! Kohl’s is a department store after all, and within their departments they carry many brands (their own as well as other leading fashion brands). This is not unusual in the department store world, however the fact that these stores carry a range of brands can easily be lost. I believe that consumers are much more likely to shop in a store that they associate with strong brands. Without these affiliations, Kohl’s is simply Kohl’s. With them Kohl’s is the department store where I can find a variety of great brands!

Jeff Sward
BrainTrust
There are a whole range of pluses and minuses here. Kohl’s has the demise of J.C. Penney to thank for Sephora. The addition of Lands’ End and Eddie Bauer are solid pluses. Amazon could end up being a huge plus. But in terms of creating their own true persona, they have a ways to go. Last fall I tried a little experiment. I looked very closely at the flannel shirts from three different proprietary labels in the men’s department. I had to get really molecular to tell the difference. There were some differences between collar shape and patterning, but not so much that I would say that all three assortments had a distinct reason for being. Put them all together and it was a sea of flannel shirts. Rip the labels out and a lot of people would have trouble telling which is which. Three different proprietary labels should be talking to three different aesthetics and attitudes. And it’s not that any of the three were bad. They weren’t. But side by side they suffered… Read more »
Liz Crawford
BrainTrust

Partnerships are great, but Kohl’s needs to continue to embed its brand identity in the hearts of shoppers — particularly if they are joining up with big names that threaten to overshadow them.

Harley Feldman
BrainTrust

Kohl’s is trying to brand itself as your neighborhood specialty store that sells apparel and beauty products that the consumer would expect to be the right products for them but located down the street. Its brand partners help establish the image of having national brands for easy access in a nearby store.

Kohl’s holds a somewhat unique place in the marketplace with their product selection and the inclusion of national brands. For Sephora and other beauty brands this is particularly important as their female consumers will like to try the beauty products on in the store.

Richard J. George, Ph.D.
BrainTrust

I give Kohl’s kudos for its innovative alliances. The question is what do other similar retailers stand for? This category of retail has had identity problems for years. Changing the paradigm has allowed Kohl’s to become the lead dog. And we know the lead dog has the view!

Lee Peterson
BrainTrust

Why are some people so high on Kohl’s? They’re just another middle man, and unless you’ve got the scale (to price low) of a Walmart or the private label skills of a Target, or the “Blue Shirt” staff of a Best Buy — to quote Tony Soprano, “fuhgedaboudit.” Neil’s right: what IS their brand identity anyway? Cool? Nah, Target owns that. Price? Nah. Assortment? Boring. Wisconsin? Maybe (cool state). Speed and Convenience? Not so much. Good PR? Oh, that’s it! But even Macy’s is better at that. They’ve got a lot of brand work to do and I’m not sure, with the hockey-stick upward motion of online players, that they have the time.

Craig Sundstrom
Guest

Reading thru the comments, for the most part I found myself in agreement: Kohl’s is a big box of brands (that can be seen as either a bad thing or a good thing: Selfridges sees itself in those terms, but obviously operates in a different universe than Kohl’s). So adding Sephora makes perfect sense. The Amazon partnership is harder to evaluate: it seems less of a “partnership” and more of a … well, doormat relationship (literally, as the undeniable effect is to bring in foot traffic).

Rachelle King
BrainTrust

This is like looking in the mirror and seeing a tiger instead of a golden retriever. We have to give Kohls credit for their ambition. It is, in fact, the ability to see a future others cannot that often brings about change.

However, this is a long game and the elasticity of Kohls brand identity may not quite stretch so far as to be a destination for beauty, or a shopping destination for consumers looking to make returns.

Yes, they should leverage their ability to be nimble but they cannot forget they are first an apparel retailer. This fact has to fit into their vision and transformation and currently, it seems to be lost.