You are the company you keep — well, at least Kohl’s executives seem to think so.
In 2017, amid sluggish industrywide trends in brick-and-mortar, the Milwaukee, Wis.-based big-box retailer decided to start leveraging the real estate in some of its stores to cut waste and engage more shoppers, leasing or outright selling off space to key parties. “We see the rightsizing strategy as a large opportunity for Kohl’s with tremendous runway,” said Michelle Gass, CEO and director of the department store, during the company’s Q4 2019 earnings call in March, noting that she sees ongoing opportunity with grocers, such as Aldi, smaller specialty shops, such as total line and fitness companies.
Overall, in the last two years, the company has seen its average store inventory decrease by 10% while its 2018 profits gained 32% to $927 million.
Here, five ways the retail chain is innovating.
Combo Stores
In 2018, Kohl’s announced a partnership with growing grocery store chain Aldi — rolling out pilots across a handful of stores. The first of these opened in Waukesha, Wis., in February 2019. According to a Field Agent study, about 68% of consumers polled indicated they would likely shop at both stores in the same trip and about 90% said they would likely shop at both the supermarket and department store.
Amazon Returns
Kohl’s started hosting Amazon returns kiosks at many of its locations in fall 2017. The stores that had the partnership operating in early 2018 saw revenue growth top 10%, double the revenue growth at the rest of the retailers locations, according to a study by Earnest. The percentage of new customers also went up 9% versus 1% for the rest of the United States. “We continue to be encouraged and learn a great deal through our returns pilot,” Gass said in the latest earnings call. The returns kiosks are now in 100 stores.
Amazon Products Sections
Amazon has also launched a shop-in-shop program in 30 Kohl’s stores, but will transition the program to a wholesale relationship, offering Amazon products in 200 stores. As part of its efforts to lure customers with Amazon devices, the department store even hosted an Amazon devices Black Friday sale.
Planet Fitness
Kohl’s is shrinking its retail space even more by leasing out space in 10 stores to Planet Fitness. The thinking is that customers will work out and then head next door to buy new workout apparel or anything else they need. “We see the Planet Fitness partnership as a real win-win,” Gass said in March.
Weight Watchers
As part of a series of wellness initiatives, the big-box store is opening a Weight Watchers studio in one of its Chicago-area stores. “As a destination for active and wellness for the entire family, we continue to seek out new ideas that support our customers’ health goals,” Gass said in a statement this year. The 1,800-square-foot space for WW will host events for members. Kohl’s will also start selling WW kitchen products online in June.
Correction: An earlier version of this article incorrectly stated that 200 Kohl’s would be getting Amazon shop-in-shops. It has been updated to note that instead Amazon products will be offered at Kohl’s stores.
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