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06/23/2021

Kohl’s Used the Pandemic to Lean into its New Strategy

The COVID-19 pandemic will likely be remembered as a tough time in history, but for a lot of businesses the era will also be cemented as a defining moment of change.
Kohl's store

That’s the case for Kohl’s, which has leaned into a new strategy and shored up its product assortment to meet consumers on the other side of the pandemic.

And as consumers seek to update their wardrobe after spending so much time at home since early 2020, Kohl’s is aiming to become the destination for the new lifestyle.

Active and Casual Lifestyle

 

Kohl’s new strategy is centered around what the retailer has identified as a desire for an “active and casual lifestyle,” according to CEO Michelle Gass, who recently spoke about the company’s direction at the National Retail Federation’s live virtual event, NRF Retail Converge. That lifestyle was influenced by the pandemic, with more folks working from home and generally spending more time at home.

In fact, there are three consumer behavior trends Kohl’s is tracking that are helping define its strategy moving forward, including wanting to dress more comfortably and casually, the importance of ease and convenience, and a focus on overall value. Over the last year and a half, the company has leaned into these emerging consumer demands---and worked hard to redefine itself as a retailer.

That meant taking a hard look at the brands--both private and national--that were in Kohl’s assortment. The retailer recently launched its own specialty athleisure brand, FLX, made out of quality performance fabrics.

“We used the opportunity during COVID-19 to be a lot more aggressive in the brand edits and in reducing inventory,” Gass said. “[It’s a] strategy we were pursuing pre-pandemic, and then we just got after it [during the pandemic]. During a crisis, the opportunity to take risks and make bolder moves is what successful companies do. They don't retreat, they lean in. So we did that.”

Kohl’s eliminated more than 25 private brands it had under its belt, including big brands and 10 that were in the women’s categories alone. That brought down Kohl’s inventory as much as 20% since 2019, according to Gass. However, the tradeoff leaves the retailer with higher inventory turnover, less clearance and a more streamlined in-store experience that aligns with the new strategy. The assessment of Kohl’s brands started before the pandemic, but was executed quickly once pandemic-related opportunities arose.

Additionally, Kohl’s, which has more than 1,150 stores in the U.S., focused on its omnichannel presence, ensuring that customers could shop online and pick up in the store or curbside. That mix of in-store and online also fits within the active and casual lifestyle vision, according to Gass.

Brand Recognition

 

Another huge piece of Kohl’s strategy to become the retailer of the active and casual lifestyle is including iconic national brands that will bring people into the store. Kohl’s has been ramping up partnerships with big brand names, and the retailer has partnered with Nike, Adidas, Under Armour, Eddie Bauer and more. 

Recently, the company scored huge when it landed a deal to open Sephora shops within its stores, as well. The deal happened after Sephora cut ties with J.C. Penney, which housed the makeup brand within its stores but faced numerous challenges during the pandemic and ultimately filed for bankruptcy in May 2020. The deal mimics that of Target, which also announced a major deal with beauty brand Ulta Beauty in late 2020, revealing that the appeal of a recognizable beauty assortment can bring customers through the doors.

“The big game changer is the launch of Sephora,” Gass said. “We’ll hit 200 stores this fall, and do another 400 next year on our way to at least 850 stores. … It’s a new day at Kohl's, with a fresher, more modern and relevant experience.”

As Sephora moves in, Kohl’s is repositioning its activewear to the front of the store so consumers will see the top brands they know and love right when they walk in. That’s designed to also capture shoppers who may be stopping in to hit Sephora.

“We’re being deliberate to ensure as we bring  in the new customer they are wowed by Sephora but also the entire experience,” Gass said. “And we are expecting a halo effect from everything coming together.”