Kohl’s CEO Michelle Gass: People are underestimating the Return of Stores

By guest author Jennie Bell from Footwear News

For Kohl’s CEO Michelle Gass, 2021 is looking brighter and brighter

“While the past year has been very difficult time for so many, we are emerging stronger out of the pandemic, with the moves we’ve made, the new brands we attracted,” said the exec, speaking today during the NRF Retail Converge conference. “Overall, I just I have so much conviction about our strategy.”

Indeed, the retailer has had a stellar start to the year, recording UDF 3.89 billion in revenue for its fiscal first quarter ended May 1, besting analysts’ predictions for USD 3.48 billion in sales.

And Gass sees major upside ahead as the vaccine rollout continues and Americans are able to resume their normal lives. “Customers are going to be excited to come into stores, to browse, to discover how social experience shopping can be fun,” she said. “Stores are going to have a renaissance, so to speak. And I think people have been underestimating how that is going to unfold.”

She acknowledged, though, that consumers have become accustomed to the digital shopping experience and the convenience of services like curbside pickup and BOPIS (buy online pickup in-store). “We’re still going to offer those conveniences,” Gass said.

But at the same time, the CEO explained, Kohl’s has been investing heavily in improving its in-store shopping experience to give consumers a strong “why” to get in their cars and make the drive over. One of its most notable initiatives is the introduction of Sephora shop-in-shops, which Gass said will be in roughly 200 Kohl’s locations by this fall, with another 400 slated to debut next year. The company has said it aims to hit 850 by 2023.

The big-box chain has also benefited from its partnership with Amazon, which was introduced in 2019 and turned Kohl’s stores into drop-off locations for package returns. “That’s highly convenient,” said Gass. “Amazon is a seamless experience and we’ve got new customers and more traffic coming into our stores.”

Meanwhile, the retailer continues to shift away from the traditional department store assortment toward a focus on healthy living and the active lifestyle, illustrated by some of its notable brand additions: Kohl’s recently introduced Cole Haan into its roster of footwear labels — and is set to bring Lands’ End and Toms Shoes into its portfolio in the fall.

Gass said major change also has been underway with its private labels as well. “During the last year, [we did] a massive audit of our private brands and we eliminated more than 25 across the store. And some of these were brands that we’ve had a number of years, and notably 10 of them were in women’s,” she said. “[That’s] making space to double down on the national brands, both the ones we have, as well as the ones that are coming — so expanding our active footprint with things like Nike, Under Armour, Adidas, Champion, and the introduction of new whitespace categories for us, our new athleisure brand FLX.”   

And along with streamlining its assortment, Kohl’s also is rethinking the physical layout of stores. “[We’re] changing the merchandizing, opening up the aisles, we’re moving inventory and actually removing fixtures that held that inventory. Inventory has been down 20% even relative to 2019. Yet we’re seeing higher inventory turn, higher sell-through and less clearance,” said Gass. “That’s improving experience. It’s also very good for the top and bottom line, of course.”