With Kohl’s Corp. seeing some pickup lately in an otherwise slow back-to-school season, there’s optimism for the holiday 2020 season.
The company will set off its holiday push in early October and present pumped up presentations of home, toys, active and casual.
Kohl’s also expects to get a lift from its Kohl’s Rewards program launched last week, and upcoming brand introductions including Lands’ End and Adidas x Zoe Saldana.
“It will be like no other holiday as this year has been like no other, but I can’t help but be excited about the holiday season for Kohl’s,” said Michelle Gass, the retailer’s chief executive officer, during a conversation with the National Retail Federation’s president and ceo Matthew Shay.
Gass, outlining the Menomonee Falls, Wisc.-based chain’s approach to the holiday season, observed that “conditions will be very different…customers will want to shop a little early.” She said Kohl’s has “some new campaigns and ways to connect [with customers] in early October.”
“If you really want a particular gift that you are seeking for someone, and want that security of being able to get it, we are going to be prepared for that,” Gass said.
She said Kohl’s will be emphasizing home, toys, casual and activewear, more so this year, reflecting shifts in what consumers are buying. While the Kohl’s business overall was down last quarter, the home side of it was positive across all categories — kitchen, bedroom and living room. “Home has momentum,” Gass said.
Casual and active attire will be even more important to the business than before, while toys, historically not a big category for Kohl’s, will be played up more. “We are positioned in toys for holiday,” Gass said. Long-term, the focus at Kohl’s is on health, wellness, active, ath-leisure and casual.
The ceo said holiday sales will be fueled by newness, citing the upcoming Lands’ End debut in 150 stores and on kohls.com, and retailer’s private Adidas x Zoe Saldana collection of active apparel, footwear and accessories for women, launching on kohls.com and in nearly 500 Kohl’s stores starting Sept. 30.
Those additions will support the retailer’s drive to dominate the active and casual markets, which at Kohl’s is led by such brands as Levi’s, Nike, Under Armour, Columbia and Adidas. Gass said active represents 20 percent of Kohl’s total business and can represent 30 percent or more. “We’re not putting a cap on it,” she said.
Kohl’s is also expecting a lift from its rewards program, launched last week. Instead of utilizing points on the old system, customers can earn 5 percent Kohl’s Cash whenever or however they shop the store, and also receive “personalized” deals and perks and a birthday gift. Kohl’s Rewards balances are converted and issued in $5 increments of Kohl’s Cash coupons on the first day of the following month. They’re valid for 30 days.
In her conversation with Shay, Gass also discussed the sharp cutback at the corporate office disclosed Wednesday; being “bullish” about brick-and-mortar stores, and the importance of communication, transparency and decisiveness during difficult times.
“This has been a really tough week,” Gass acknowledged. “We did reduce our workforce 15 percent at corporate.”
She also said the company, like others, has been navigating the pandemic “with no playbook, creating extraordinary pressures and great opportunities.”
To get through it, Kohl’s closed its 1,200 stores temporarily on March 20, furloughed workers, dramatically reduced expenses, extended its revolver, issued $600 million in bonds, and maintained its investment grade, and began reopening stores in May.
She said management “came together” as a team, and began making decisions faster, “getting all the right stakeholders around the table at every level.…The key for us has been communication and transparency.” Once the pandemic hit, she communicated weekly to employees, initially live and later via taped videos. Good or bad news, be it store closings or the reopenings, Gass filled in the workers.
She said Kohl’s will strive to pick up market share from competitors closing stores. “From a very micro standpoint as stores are closing, we are targeting them. Unfortunately, in our industry there has been some serious fallout but our stores are healthy. Last year, 99 percent of our stores were cash-flow positive, 90 percent generated a million dollars or more, and 95 percent of our stores are off-mall, easy to shop and spacious.…I am a big big believer in stores,” she said. “Happily, I believe stores and digital can coexist. I don’t think they are at odds.”
While stores were down last quarter, the digital business rose 60 percent. “I don’t know that we will maintain that level forever,” Gass said. “I find it particularly exciting that now we are seeing some customers shopping both channels. They are six times more productive than digital-only shoppers, and four times more productive than those shopping stores only. We are going to do more and more things to cross-pollinate.”
When Kohl’s stores were closed for shopping inside them, 50 percent of Kohl’s digital orders were fulfilled by stores.
“If there is anything we can take away from COVID-19, it’s how to be flexible, fast and decisive,” Gass said.