Kohl’s has announced a plan to literally shrink 200 more of its 1,160 stores into smaller spaces in an effort to target shoppers more effectively and to reduce costs. Like other popular department stores, Kohl’s has struggled to see growth over the last year, but instead of shutting down under-performing stores, they’ve doubled down on physical locations after seeing strong financial indicators that physical locations impact digital sales. This plan will bring the total number of smaller Kohl’s stores to 500, with the intention to focus more heavily on localized interests, giving shoppers more of what they want in their areas while also facilitating digital sales for the things not available in their local stores.
Last year, Kohl’s closed 19 stores to test the impact closures would have on sales and discovered that not only were nearby locations unable to recoup the expected 38% of sales lost, digital sales in those areas also fell by 10%. The correlation between having a local store and strong digital sales was clear, so Kohl’s has decided to better integrate the digital sphere with the physical one, investing heavily in its app and website and working to shrink their in-store inventory by 3% a year for the next three years.
Kohl’s hopes these changes will lower costs and provide local shoppers with an inventory that’s tailored to their shopping habits and patterns. Kohl’s CEO Kevin Mansell says, “What we need to carry in a store is what’s relevant to that store’s customer.” With competitors like JCPenney and Macy’s shuttering hundreds of stores over the next year, Kohl’s approach is a more optimistic look at the changing climate of retail stores, prioritizing convenience to the customer and lowering costs for itself. One of the most interesting initiatives launching in Kohl’s stores is the addition of mobile cash register devices that allow sales associates to check customers out anywhere in the store. By investing in its physical locations and its digital space simultaneously, Kohl’s is breaking from the department store pack.
While downsizing their stores will most likely impact some jobs, it’s not nearly the drastic loss of thousands of positions as with other companies cost-saving initiatives. About 85% of Kohl’s sales are made in-store, so heavy layoffs don’t seem to be in Kohl’s future. Even though shopper traffic is down 6% as of last year, Kohl’s is optimistic that maintaining their physical presence in a more efficient way to encourage growth. “People still spend a lot of their time and money in stores,” says Mansell, “We want to keep our stores fresh and flexible and we want to use technology to enable a smaller footprint.”