Kohl’s Sees a Multibillion-Dollar Opportunity as JCPenney, Steinmart & More Close Stores in Bankruptcy
Kohl’s shares are falling today after the retailer said it’s experiencing a slow start to back-to-school and expects an uncertain holiday season — but the company has a game plan to capture more market share as its rivals go bankrupt.
As JCPenney, Steinmart and other bankrupt rivals grapple with bankruptcy and close stores, Kohl’s sees “billions of dollars” of market share opportunity.
More from Footwear News
Kohl's Beats Earnings Estimates -- But Sales Still Hurt as Stores Operate at Reduced Hours
Retail Earnings This Week: Big-Box Chains to Make Big Gains, Off-Price Could Fall Victim to COVID-19
“We think about [this] both from a short-term standpoint and a long-term standpoint. There are literally thousands of stores that, unfortunately, have faced some pretty dire consequences and are facing closures,” said CEO Michelle Gass in a conference call after the company beat both earnings and revenue estimates for its second quarter. “And we have a playbook that we’ve used in past at a very localized level to go after those customers, new customer acquisition, and go after that market share.”
Gass said that the retailer’s data shows what the overlap in customers is “down to the zip code level.” She added that since many of the impacted stores are in close proximity to Kohl’s locations, the retailer is already using geo-targeting and personalized marketing to court these shoppers.
From a long-term perspective, the retailer continues to look for ways to differentiate itself.
One big way it plans to do that? The rollout of new brands, including Toms Shoes and Land’s End. (Tom’s launches at Kohl’s in September as the label looks to bounce back after it was taken over by its creditors last year.)
“Even in this environment, we’re introducing new brands,” Gass said. Earlier in the call, she noted that premium athletic footwear, which carries higher price points than much of Kohl’s assortment, is also showing strength. In addition, apparel from Nike, Adidas and Under Armour is resonating as the athleisure boom continues.
Kohl’s will be studying permanent shifts in consumer behavior as the coronavirus impact continues to shake out.
Besides emphasizing casual assortments and adding new brands in that segment, Kohl’s is putting safety top of mind as it evaluates the future of retail. “While safety has been paramount, and we expect that will be continuing for some time, we’re also taking advantage of just making the overall experience in the store easier and better to shop. So wider aisles, reduced fixtures, greater depth,” Gass explained.
Kohl’s is also preparing its new loyalty program, which has been in a pilot phase for the last couple of years. “We have 30 million members. So we want to make sure that [what] we put out there is accretive to what we do today,” said Gass. The retailer’s focus on this area come after Nordstrom, Famous Footwear, DSW and many other retailers have focused on stepped-up loyalty programs in recent years.
As it refines its strategy, Kohl’s will continue to face pandemic-related challenges that are plaguing every retailer. Shares were down about 16 percent in mid-day trading.
Sign up for FN's Newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.
