Kohl’s Shifts Retail Focus from Bricks-and-Mortar to Digital

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Kohl’s joined Walmart and a handful of other up-and-coming masters of retailing in spreading bricks-and-mortar stores nationwide during a suburban building boom over the last quarter-century. Now, however, Kohl’s real estate ambitions are waning as the mid-priced, discount-savvy soft-goods retailer deals with the effects of online retailing and slower growth overall in its physical stores.

At the same time, the Menomonee Falls, Wis.-based chain, with more than 1,100 stores coast-to-coast, is investing more heavily in its own e-tailing operation, as it faces stiffer competition from Target and the newly revamped JCPenney.

“Online is really the wave of the future, of course, where retail is moving and has been moving — especially for retailers [like Kohl’s] that don’t have a grocery component,” Erika Maschmeyer, retailing analyst for Robert W. Baird & Co., told brandchannel. “They just don’t need as many or the same size of stores now with the internet.”[more]

Last week, Kohl’s CEO Kevin Mansell told analysts that Kohl’s plans to “introduce a new prototype store layout to reflect the neeed for space-allocation changes within the store and the expansion and introduction of new brands to our customer.”

Kohl’s co-branded lines of designer wear under the Jennifer Lopez and Marc Anthony brand names are doing well, while the brand hit the recent New York Fashion Week to showcase its line of exclusive denim from Rock & Republic. Still, Kohl’s executives are still trying to figure out why, as Maschmeyer put it, “an incremental $30 million [marketing] spend in [the fourth quarter of last year] was largely ineffective during a promotional holiday season.”

Maschmeyer said one reason Kohl’s is examining new physical-store formats “is because they’re realizing the face of the stores can look different now that they’ve got a more advanced e-commerce site.” Mansell said that Kohl’s online sales were up about 40 percent last year and projected another 40-percent increase this year.

Kohl’s achieved breathtaking success on the national retail scene with a firm understanding and execution of a physical-store format, and promotional pricing, that really appealed to middle-American apparel shoppers. Now it’s become just the latest bricks-and-mortar success story that is having to adjust to — and attempt to capitalize on — the unrelenting impact of the internet.

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