Will smaller stores and omnichannel pay off for Kohl’s?
While many rivals are closing stores, Kohl’s is adding to its numbers. The rationale is straightforward, the chain’s CEO Kevin Mansell told attendees at this week’s Shoptalk conference in Las Vegas. Kohl’s future success is dependent on its ominchannel efforts and, not only does the retailer lose physical store sales when it shutters a unit, but its online business drops off, as well.
Mr. Mansell, who reported that 85 percent of Americans live within 15 miles of a Kohl’s, said the company’s online sales were flat in markets where it closed stores last year. As a company, online was up 12 percent.
“Success for us is becoming an amazing omnichannel customer,” said Mr. Mansell, who said tech investments are weighted to supporting stores.
Admitting that his company is “not as agile as we need to be,” Mr. Mansell pointed to new, smaller stores and Kohl’s mobile app as ways the retailer is making customers’ experiences “a lot more engaging.”
Kohl’s CEO, in a nod to the sales shift from physical locations to online, said “stores will continue to get smaller over time.” About 20 percent of the chain’s store count currently consists of smaller stores. Kohl’s, which operates stores up to 100,000 square feet, is opening new units nearer to 70,000 square feet.
“Mobile,” Mr. Mansell said, “is the driver of behavior when customers come into our stores.” Roughly 18 million people have adopted the Kohl’s app to date, he said.
While Kohl’s success is largely tied to its aggressive promotional strategy, Mr. Mansell acknowledged that it could be confusing for some customers. As a result, Kohl’s has invested in making its mobile app “simpler” to use. One example is its Wallet feature, which combines coupons, Kohl’s Cash and Yes2YouRewards in one place. This relieves customers from the need to question whether they’ve gotten the best price possible when shopping at Kohl’s.
Organizational changes at headquarters have made Kohl’s more responsive to the needs of its customers, said Mr. Mansell. The retailer has emphasized “recruiting and retaining a lot of talented people” while eliminating silos and focusing on collaboration internally and with vendors.
DISCUSSION QUESTIONS: Do you see smaller stores and a greater focus on omnichannel as a strategy that will prove successful for Kohl’s? How important will Kohl’s mobile app be to its future success or failure?