How Kohl’s Is Handling Holiday 2022
Electric bikes. Outdoor tents. Barware. Pet beds.
For Christmas, Kohl’s is promoting these and a lot of other products shoppers wouldn’t typically expect from the Menomonee Falls, Wisconsin-based retailer. Year-round, Kohl’s fashions itself as a leading destination for activewear, casualwear and outerwear. Yet for holiday 2022, several noncore categories like toys, pet products, electronics and items that fall squarely into the rubric of gift-ables are being rolled out.
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“There is a ton of newness and innovation,” Ron Murray, Kohl’s interim chief merchandising officer, told WWD in an interview Tuesday. “We are leaning into where we see a lot of customer demand accelerating. In outdoor, we are seeing significant demand from Eddie Bauer, Columbia, Lands’ End, and we are going to have outdoor offerings for the home. Think tents and stoves. We have carried some of that outdoor equipment online before, but that is definitely new for us in the stores.”
Asked if Kohl’s kicked off its holiday campaigning earlier than last year, Murray said, “We did indeed. It really showed up in our approach to toys, starting with a Lego expansion. We have twice the assortment,” compared to 2021.
He said the holiday campaigning began Oct. 1 this year (a couple of weeks earlier than in 2021) initiated by the launch of Kohl’s first toy book. It has 32 pages listing the “top” toys.
Kohl’s is under serious pressure to reverse drooping sales and profit trends and is looking to this holiday season to recapture market share, and for some recently implemented strategies to kick in and resonate with shoppers, most notably the addition of Sephora beauty shops to 600 stores.
“Sephora is going to be a game-changer. It’s in triple the doors versus a year ago,” said Murray. “We have really accelerated Sephora’s gifting components and we’ve done a great job integrating Sephora into the holiday messaging.”
Gift sets for fragrances, skin care and body care have doubled, Murray added. Charlotte Tilbury, Sol de Janeiro, Nars, Fenty Beauty, Olaplex, Too Faced, Yves Saint Laurent and Giorgio Armani are key brands in the 2,500-square-foot Sephora shops.
Pets is another big play for holiday. “Sixty-eight percent of our customers have pets. They love their pets just like their children,” said Murray. “We’ll have a pet offering like we never had before,” including pet beds, apparel and treats.
Reacting to Americans going out again and ready to party after being cooped in due to COVID-19, Kohl’s is touting expanded occasion dressing options ranging from sequined, metallic and velvet dresses, to wide-legged trousers, faux fur coats, and heeled footwear from brands like Nine West, Draper James RSVP and Madden Girl. Options for men include suits, ties, button-downs, sweaters, and chino pants from brands such as Tommy Hilfiger, Hagger, Dockers, and Apt. 9.
“We think families are in a celebratory mood,” said Murray.
Within Kohl’s “Presentville” shops, which are destinations for board games, barware, puzzles, personalized gifts, stocking stuffers, prank sets, and cocktail kits, among other gift items, “50 percent of the offerings are new,” said Murray. “We will have a lot more gifts for the family versus what we’ve had in the past.”
The retailer has also pumped up its selection of smart home products, carrying the new generation Echo Dot smart speaker, the Amazon Fire 7 kids edition smart tablet, and new audio options such as Victrola Journey record players, Sony speakers and JBL Bluetooth earbuds.
New outdoor products include Duraflame Stoves, Igloo Coolers, Columbia Tents, GoTrax Electric Bikes, and GCI portable folding chairs.
Additional in-aisle space is being utilized to highlight what store executives see as popular gift items.
As it has in the past, Kohl’s will spotlight “incredible values” in its private brands such as Sonoma Goods for Life, SO, Apt. 9, Jumping Beans, FLX and Tek Gear.
“We spend at lot of time with our private label, where there’s been a tremendous amount of product innovation,” said Murray.
But Kohl’s isn’t about to underplay its portfolio of national brands where there is less price flexibility. Key national brands include Nike, Levi’s, Under Armour, Adidas, Tommy Hilfiger, Calvin Klein, Eddie Bauer, Columbia, Vans, Cole Haan, Cuisinart and KitchenAid.
For more efficient fulfillment of online orders, Kohl’s is operating with 300 “omnipower centers” which are mini-fulfillment centers inside its stores.
The holiday season is always the most important part of the year to most retailers, though this year there seems to be a greater sense of urgency at the $19.43 billion Kohl’s, considering for months activist shareholders have been second-guessing the strategies and demanding changes in management and in the composition of the board. On top of that, Kohl’s and the rest of retailing is dealing with inflation, declining consumer confidence, the volatile stock market, mounting expectations that the nation will enter a recession next year, and the nation’s labor shortage. Kohl’s seasonal hiring is still going following the company’s two national hiring events, in September and October. Many retailers have lowered their forecasts for fourth-quarter and year-end revenue totals.
After reporting a 63 percent drop in second-quarter income and an 8.5 percent decline in sales, Michelle Gass, the chief executive officer of Kohl’s, told WWD, “We are right-sizing our inventory to reflect a more modest sales plan, but we still have plenty of fresh receipts coming in. There will be a lot of newness” for holiday.
“The tailwind is that we didn’t have enough inventory last holiday. That won’t be the case this year.…This is an extraordinary environment. Between inflation and dampened consumer spending and the pressures on them considering what they are paying for food and gas, we’ve got to make sure we show up in a relevant and compelling way,” Gass said in an interview.
Fourth-quarter inventories will be up 19 percent from 2019.
Gass said that Kohl’s is “assuming a more promotional environment than last year because of the inventory level, and because consumers are looking for deals.”
Some retailers and industry analysts are expecting all-time high levels of price promoting for the upcoming holiday season, due to consumers cutting back on discretionary spending, excess inventories and higher prices. Gass couldn’t say whether it will be a record holiday season for promotions, though charged-up discounting across retailing would be an advantage for Kohl’s, which historically has been among the industry’s most aggressive and innovative with staging promotions and savings through Kohl’s Cash and Kohl’s Rewards.
For the fourth quarter, Kohl’s has in its arsenal “new tools for how we price and promote,” Gass said. The company introduced a two-day “Deal Dash” Oct. 11 and 12, whereby shoppers could take an extra $10 off a $50 purchase on some already discounted items. Wednesday marks the start of a “Lowest Prices of the Season” event.
“We know our customers have many options to choose from during the holidays, but where Kohl’s stands apart is in our tremendous breadth of categories, mix of national and private label brands, and incredible value differentiators that make shopping at Kohl’s a go-to destination for the season,” said Murray.
Among other tactics that could benefit the holiday season:
Earlier this year, the retailer launched “Discover @ Kohl’s” for selling emerging, established, and diverse-owned brands that are new to Kohl’s including female-owned brands such as Pinch Provisions, Tone it Up, and Teleties, and emerging ones like Coalatree, Atticus and Smiley.
For the first time, shoppers can earn Kohl’s Cash every day from Cyber Monday (Nov. 28) through Christmas Eve. Earlier this year, those using their Kohl’s Card began getting a higher earn rate of 7.5 percent Kohl’s Rewards on every purchase. Kohl’s Rewards members who choose an alternate payment method receive 5 percent Kohl’s Rewards. Kohl’s Rewards balances are converted and issued in $5 increments of Kohl’s Cash coupons on the first day of the following month, valid for 30 days.
The retailer has been reflowing key active and casual brands such as Calvin Klein, Draper James RSVP and Under Armour, in proximity to its Sephora shops for better exposure. “Kohl’s has refreshed the entire store with how merchandise has been reflowed, notably bringing active to the front. In active, we have elevated brand shops going in,” said Murray.
Kohl’s has rolled out self-serve stations for picking up online orders, in addition to already providing the ability to drive up and pick up packages and make Amazon returns.
Four new stores will open on Nov. 4, in San Angelo, Texas; Morgantown, West Virginia; Tacoma, Washington, and Lenox, Massachusetts.
