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May 26, 2022

Kohl’s eyes $500m sales opportunity through smaller format stores

US department store retailer Kohl’s Corporation is underlining its commitment to bricks and mortar, with plans to open about 100 new, smaller format stores over the next four years in a move it says represents a sales opportunity of more than US$500m.

By Beth Wright

Kohl’s says it is deeply committed to its retail footprint and is evolving its real estate approach to match the changing industry landscape and customer needs. Specifically, this includes modernising its store fleet by rolling out new in-store services and the introduction of Sephora at Kohl’s to 850 locations by 2023, reflecting a “new and more modern Kohl’s.”

The department store retailer will open about 100 new, smaller format stores over the next four years in markets currently untapped by existing Kohl’s stores, following a successful pilot of over 20 smaller stores. By introducing these smaller format stores, most at about 35,000 sq ft in comparison to the average 80,000 sq ft, Kohl’s says it gains the flexibility to enter new neighbourhoods while also providing a hyper-localised experience to cater to the community’s needs.

This June, Kohl’s will open a brand-new store in Bonney Lake, Washington State, and in the autumn, four additional new small-format stores will open in San Angelo, Texas, Morgantown, West Virginia, Tacoma, Washington State, and Lenox, Massachusetts. These new stores will also be among the first to test Sephora at Kohl’s in smaller store formats.

As a data-centric company, Kohl’s is using information technology to create what it calls a highly-localised experience in these smaller stores such as catering the new Tacoma store’s merchandise toward the active lifestyle customer in that market by offering a more focused assortment of outdoor gear. In total, these new stores represent a more than $500m in sales opportunity as they ramp to full productivity.

Meanwhile, Kolh’s plans to modernise stores with plans to offer services such as in-store pickup, drive-up, self-pick-up, and Amazon returns, and through the introduction of Sephora at Kohl’s.

“Kohl’s began with roots as a brick-and-mortar company, and these 60 years of experience have set the company up to become a leading omnichannel retailer,” says Mark Griepentrog, Kohl’s chief property officer. “Our strong and productive off-mall store base can continuously evolve with our customer’s expectations and demand, and we see substantial opportunities to leverage our real estate in producing long-term growth.” 

The department store retailer will also roll out what it calls dedicated zones for discovery which it says will inspire curations of cross-category product and brands including diverse- and female-owned companies to meet the needs of customers seeking newness and inspiration.

Kohl’s recently saw first-quarter net sales and comparable sales decrease 5.2%, while total revenue fell to $3.72bn from $3.89bn a year earlier. Net income was flat at $14m.

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