Kohl’s Corp. is thinking smaller to grow bigger.
The department store retailer is increasing its investment in brick-and-mortar through new store openings, remodels, enhanced omnichannel capabilities and the ongoing rollout of in-store Sephora shops. The plans include the opening of about 100 smaller-format stores during the next four years in new markets.
Kohl’s believes the new stores, in total, represent a sales opportunity of more than $500 million as they ramp-up to full productivity. The expansion follows a successful pilot of more than 20 smaller-format locations.
At approximately 80,000 sq. ft., the average Kohl’s store is too large for many small markets, according to the company. The smaller format, at about 35,000 sq. ft., will give Kohl’s the “flexibility to enter new neighborhoods while also providing a hyper-localized experience to cater to the community’s needs,” the company stated.
On Monday, Kohl’s reported that its first-quarter total revenue fell 4.4% to $3.71 billion from $3.89 billion. The company also provided an update on its exploration of a potential sale, following its successful effort to fend off activist investor Macellum Capital’s bid to take control of its board, saying it continues to “engage with multiple parties.”
“Kohl’s began with roots as a brick-and-mortar company, and these 60 years of experience have set the company up to become a leading omnichannel retailer,” said Mark Griepentrog, chief property officer, Kohl’s, which operates 1,165 stores. “Our strong and productive off-mall store base can continuously evolve with our customer’s expectations and demand, and we see substantial opportunities to leverage our real estate in producing long-term growth.”
This June, Kohl’s will open a store in Bonney Lake, Wash., and in the fall, four additional new small-format stores will open in San Angelo, Texas., Morgantown, W.Va., Tacoma, Wash., and Lenox, Mass. The new locations will also be among the first to test Sephora at Kohl’s in smaller-store formats.
Kohl’s said it is using information technology to create a highly-localized experience in these smaller stores, such as tailoring the merchandise in the Tacoma store toward the active lifestyle customer in that market by offering a more focused assortment of outdoor gear.
Existing Stores Kohl’s is also modernizing its existing stores with convenient services that include in-store pickup, drive-up, self-pickup and Amazon Returns.
Kohl’s is also continuing to test self-serve returns, currently in over 100 stores, with more planned throughout the next 18 months. The self-return experience provides customers with a simple in-store drop-off process. Additionally, self-checkout is being tested and will deliver a new kind of checkout experience for customers.
Also, by 2023, some 850 locations will offer a Sephora at Kohl’s shop.
The retailer is also introducing dedicated zones designed to inspire curations of cross-category product and brands including emerging diverse- and female-owned companies. Since the inception of Kohl’s emerging brand program in 2019, the company has introduced more than 70 new brands to its customers.