In a session last week at the launch of the National Retail Federation (NRF) Retail convergence event, Michelle Gass, CEO of Kohl’s, explained how a careful audit of the department store’s brand portfolio, including an upcoming launch with beauty leader Sephora, as well as the rollout of omnichannel services such as online shopping , in-store pickup (BOPIS) and curbside pickup have helped the company survive a difficult time during the pandemic, while also positioning it for future success.
Gass was interviewed by Retail Editor Phil Wahba, Fortune, during an opening session on Wednesday of the week-long digital event. Here are some highlights from their conversation.
Trends on which Kohl’s can capitalize
When asked by Wahba what trends are being followed by Kohl’s and where the company thinks it can capitalize, Gass cited its portfolio of proprietary (e.g. SONOMA, Croft & Barrow) and national (e.g. Nike) brands. , Under Armor), as well as omnichannel services that cater to the ease and convenience of consumers, such as BOPIS and curbside pickup.
“I think the real power of Kohl’s is omnichannel,” said Gass. “We’ve been able to weather the storm in the last 15 months. There have certainly been long and dark days, but we are coming out the other side. I know there have been a number of competitors who haven’t. ‘weren’t so lucky, but now it’s a market share opportunity for us. The ease we have, our presence outside of shopping centers, BOPIS and at the curb, complemented by a very strong growth digital activity, now $ 6 billion, “will help Kohl’s seize this market share opportunity.
Rising consumer expectations
Gass noted that the bar has been raised when it comes to consumer expectations for ease of shopping experiences, including across multiple channels. This includes in retail stores, which shoppers are returning to more and more as the pandemic subsides.
“Digital during the pandemic has accelerated dramatically, but customers will still want fun in-store shopping experiences,” notes Gass. “We are only at the beginning of normalcy. For us, stores are essential. And we see them differently. They are an omnichannel hub for our customers. Multichannel customers are four to six times more valuable to us. If they decide to spend time at a Kohl’s store, we want to make sure they have a spectacular experience. We improve the overall shopping experience without sacrificing ease and convenience. “
For example, Gass cited Kohl’s partnership with Amazon.com, in which the department store accepts product returns for the online retailer, as a key part of its in-store services. She noted that Amazon enjoys a seamless and convenient experience for its customers, while Kohl’s gains foot traffic and new customers entering its stores.
Additionally, Kohl’s has made some notable changes to its stores over the past year. The department store has reduced its branded inventory by 20% from 2019 (before the pandemic), freeing up space between its four walls. The strategy freed up aisles in stores, allowing for greater browsing by shoppers. Additionally, narrowing product selection led to fewer clearance items, higher sale rates, and improved profit margins.
“We have eliminated more than 25 private labels throughout the store, and in particular 10 of them were in the field of women. [categories]. As we like to say, edit to amplify. Really focus on the brands that are truly iconic for Kohl’s (eg, Sonoma, Jumping Beans), then make room to double national brands, both the ones we have and the ones to come. “
Speaking of national brands that are coming …
Capitalize on the Sephora partnership
Last December, Kohl’s announced that it had has entered into a multi-year partnership with the leading retailer of beauty products Sephora. Starting next fall, “Sephora at Kohl’s” will be a fully immersive, upscale beauty destination, designed in 2,500 square feet of space and prominently displayed at the front of all 200 Kohl’s stores. The partnership will expand to at least 850 stores by 2023.
The partnership is part of Kohl’s strategic push to become a destination known for catering to the active and relaxed lifestyles of consumers. This includes Kohl’s deeper penetration into clothing, beauty and home categories.
“We want to be known as the place to go if you’re updating your wardrobe,” Gass told the Virtual Audience. “We’re making a big bet on beauty, but that’s part of Kohl’s larger promise in the active, relaxed lifestyle (beauty, clothing, home). Active men and women move to the front of the store, with the beauty Sephora sections.We think it will have a nice halo effect.
Gass expanded on the potential benefits Kohl’s can offer to its brand partners, including Sephora, Tommy Hilfiger, Eddie Bauer, and Cole Haan. Everything revolves around the overall vision of the department store to respond to the active and relaxed lifestyles of consumers, by amplifying the brands that are part of this strategy.
“We have a tremendous opportunity for brands to view Kohl’s as a key partner,” says Gass. “[Kohl’s has] meaningful platform and reach with its omnichannel services. A thoughtful, edited and inspiring portfolio of brands. Eighty percent of the American population lives within 15 miles of a Kohl. We can take advantage of BOPIS and the sidewalk for brand partners. Our brand portfolio and omnichannel capabilities set us apart. “