What Are Kohl’s Other Growth Strategies?

The troubles the retail sector has been facing are well known. To boost sales numbers amid stiffening competition from online retailers, traditional retailers such as Kohl’s (KSS) are moving forward with many growth initiatives.

Under its Greatness Agenda strategy, Kohl’s is revamping its merchandise offerings, emphasizing the omnichannel experience, and optimizing its marketing spending across channels. The company is also paying attention to its store base, with special attention being given to its smaller-format locations.

Kohl’s merchandise portfolio consists of national, private, and exclusive brands such as Nike (NKE), Levi’s, and Skechers (SKX). On its 4Q17 earnings conference call, Kohl’s management stated that due to the strong performances of the Nike, Adidas, and Under Armour brands, the company saw its active footwear and apparel comps rise 25% in 4Q17.

More importantly, national brands’ portfolio sales were up 11%, and their penetration increased to 62% of total sales in 4Q17. This strong showing was driven by strength witnessed in the Levi’s, Haggar, Carter’s, Columbia, Van Heusen, and Skechers brands.

Kohl’s is also revamping its portfolio of private and proprietary brands, which are exclusively sold in its stores. In 2017, the company discontinued certain brands that were proving to be drags on its overall performance. This has lifted its margin performance and aided margin inventory, according to the company’s management. For 4Q17, the sales of its proprietary brands were flat on a year-over-year basis.

Kohl’s has also been investing in developing its omnichannel capability, especially digitally. The company said that investments directed toward the development of point-of-commerce and mobile apps were adding to its store productivity. Its online sales grew 26% in 4Q17, while online penetration made up 25% of its total sales. The improvements the company made in technology along with its product initiatives and personalization efforts resulted in increases in its customer acquisition growth. In 4Q17, its new customer acquisition growth was up in the mid-teens.

Moreover, to retain customers, the company is merging its loyalty programs, namely Kohl’s Cash, Kohl’s Charge, and Yes2You Rewards, into Kohl’s Rewards. The program will be launched in 100 stores as a pilot program in May 2018.

Facilities such as buy online and pick up in-store are improving the company’s digital sales. According to Kohl’s, in 4Q17, its stores fulfilled 36% of its digital demand units.