Kohl’s Corp. is changing with its customer base, and now it’s thinking very differently about its raison d’être.
During a keynote at Consensus’ Ninth Annual Great Brands Conference Wednesday in Manhattan, CEO Michelle Gass addressed the evolution underway at Kohl’s and what lies ahead as the retailer seeks to attract new younger customers without alienating its loyal base.
“We don’t care where they are shopping,” Gass said of how Kohl’s thinks of itself as an omnichannel platform where consumers can shop in store, online or via a mobile app.
In considering its plans for the future, Kohl’s found it was a good time to “rethink the entire canvas of the company,” Gass said, which includes redefining its core purpose and evolving beyond a needs-based transactional model to one focused on becoming an “aspirational business.”
That change also meant shifting its marketing mindset to communicate how Kohl’s can help consumers lead fulfilling lives.
And over time the company began thinking of itself as a platform where customers can discover and experience new, emerging brands, Gass said.
On Oct. 10 the retail chain will launch its new “Curated By Kohl’s” program, which is set up as shop-in-shops marked by dedicated fixtures inside 50 locations in Chicago and Philadelphia and also available through kohls.com. The initiative showcases “super cool, young brands”—such as 3-D paper pop-up greeting card firm Love Pop and the sustainable outdoor apparel brand United by Blue—that will rotate through the curation program, with the possibility of selling on other parts of the store floor based on customer response, Gass said.
“We won’t stop at 50,” she said, adding that the test will provide valuable learnings before a fleet-wide rollout.
“We are rethinking and reimagining our stores,” Gass explained, adding that brick-and-mortar must become “experiential.”
“We want to make sure that when you get to the store that you have the experience and we have the product,” she said.
The new curation program, as well as the fall introduction of brands including Pop Sugar and Nine West, skews younger as Kohl’s looks to expand its customer base. The Mary-Kate and Ashley Olsen-led apparel label Elizabeth & James is slated to be introduced for the upcoming holiday season and an “Outfit Bar” helps shoppers navigate style trends. A renewed focus on active and wellness has enabled Kohl’s to bring in younger consumers, but not at the expense of existing shoppers.
“We have to be experimenting,” Gass emphasized, noting that five years out, Gen Z and millennials will command the most influential purchasing power.
Data, Gass said, has been the “secret sauce” of Kohl’s evolution. Roughly 30 million shoppers use a Kohl’s private-branded credit card, which yields a wealth of information about customer habits and preference and drives about 60 percent of all transactions.
New Kohl’s stores, reflecting an industry-wide shift to smaller footprints, typically average 50,00 square feet versus the previous 90,000. The retailer also has begun to lease excess space to synergistic businesses like the Aldi’s discount grocery chain and Planet Fitness, a nod to Kohl’s emphasis on wellness.
And though the retail chain is still in the early days of a partnership with Amazon that allows people to return Amazon purchases in Kohl’s stores, Gass cited the online giant’s huge reach and additional foot traffics as upsides of the non-traditional collaboration. About 80 percent of all households live within 15 miles of one of Kohl’s 1,200 stores, she added.
Generating about $20 billion in annual revenue, Kohl’s cites its core demographic group as a value-conscious consumer between ages 35 to 55 who is the head of household with annual income topping $90,000. One in two Americans shop at Kohl’s at least twice a year, Gass said, noting the company has 65 million customers.
Speed and agility are the name of the game for retailers hoping to remain relevant, Gass added, noting the need to continually experiment. And while Kohl’s has made some moves on multiple fronts, Gass isn’t happy about the pace of change.
“We’ve tried a lot of things. In my mind, we’re still not moving fast enough,” she said.