How Kohl's Plans to Lure You in for the Holidays
Sep 7th 2012 4:57PM
Updated Sep 8th 2012 2:31AM
Low prices: That's what's going to get registers ringing this holiday season at Kohl's (KSS), which is clawing its way out of a business slump.
So said Kevin Mansell, CEO of the 1,134-unit department store chain, at Goldman Sachs' retail conference on Thursday.
His comments come a day after the CFO of competitor Target (TGT) delivered the opposite message at the investor conference, vowing not to partake in the price wars during the Christmas shopping season.
By contrast, Kohl's will play up its lower-priced fare during the winter holidays, when it expects to see "the biggest acceleration in sales," he said.
The idea is to avoid a repeat of last year's holiday sales declines. It was a dearth of low-priced merchandise, as well as a weak gift assortment and poor presentation, that got the chain in trouble holiday 2011, Mansell said.
A Tough Year: Comeback In Store?
Kohl's holiday sales weakness continued into 2012. It has posted negative comp-store sales for much of the year, reflecting fashion missteps, too little inventory on the sales floor, and lackluster marketing.
But it turned a corner with back-to-school season, which was "very solid" for the chain, as it was for much of the retail sector -- a testament to a "resilient consumer," Mansell said. Sales rose 3.4% in August and 1.7% in July.
But Kohl's is not out of the woods just yet: Foot traffic in August "was still negative, but it was still the best performance we had all year," and sales-per-square foot lag historic levels, he said.
What's more, the retailer is still scratching its head as to how it can market itself distinctively from other retailers -- a necessary step if it's to drive sales higher. "That's remains a challenge," Mansell said.
Kohl's closest competitor is J.C. Penney's (JCP), which certainly made itself distinctive in the marketplace with its controversial -- and so far, unsuccessful -- move to eliminate sales and coupons.
When asked whether Penney's radical move has influenced Kohl's promotional strategy, Mansell said he didn't see his company following suit: Sales and coupons are a lifeblood of its business and spice things up for shoppers, he said.
"What we sell is very highly discretionary," Mansell said. The customer "doesn't need these things on a daily basis." In turn, sales keep them "motivated and engaged ... and create the demand," he said. "I can't imagine a scenario where that would change."
But although stores from mid-market Macy's (M) to low-priced Target and T.J. Maxx (TJX) have gained among customers alienated by Penney's "no sales" strategy, "Kohl's hasn't been the biggest beneficiary of that," Craig Johnson, president of the retail consultancy Customer Growth Partners, told DailyFinance. "There is a broader issue with the brand," he said.
Kohl's strategy to jump start the business includes strengthening its beauty and accessories assortments, and it's testing a new merchandising concept for them, said Mansell, though he declined to disclose details.
It will also beef up its line of exclusive collections from national brands and designers to draw in consumers used to having infinite shopping possibilities on the web. Among the upcoming offerings: Design Nation, an clothing line from Narciso Rodriquez.
"How do we get reconnected [to the customer] so we quit disappointing her?" Mansell said. By "getting her more engaged and giving her a unique experience."