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Kohl’s plans to keep shoppers shopping—across the store


NEW YORK —With store expansion plans and a solid financial sheet firmly under its belt, Kohl’s isn’t sitting on its laurels. As company management revealed at the Piper Jaffray Consumer Conference earlier this month, Kohl’s wants to increase the amount its shoppers buy in stores and encourage customers to shop in more than just one department.

“A majority of our shoppers really only buy in one of our six lines of business throughout the store—approximately 60% of our customers do that,” said Wes McDonald, Kohl’s cfo, at the conference. “We have a big opportunity if we can get them to buy a handbag or a piece of jewelry to go with that sportswear outfit.”

According to Kohl’s research, the company still has a very small market share of customers who buy what the retailer calls “Kohl’s-like merchandise.” On average, customers use about 10% of their spending, or $300 dollars per year, at Kohl’s. Average transactions ring in at about $50, and customers frequent Kohl’s about five or six times per year, McDonald said.

“We have a lot of opportunities to gain share of wallet here if we can be successful in this cross-shopping initiative,” McDonald said.

Kohl’s plans to drive customer traffic across the entire store by expanding awareness of merchandise available “only at Kohl’s,” with national and private-label brands such as Chaps, Candie’s, Simply Vera by Vera Wang, Sonoma, Apt. 9 and Daisy Fuentes, many of which are available across multiple departments.

For example, Chaps, which started in the men’s department in 2005, has expanded to include boys’, women’s, handbags, jewelry and intimate apparel, based on its success. Chaps Home just launched in stores in May, and in September, Chaps women’s fragrance will land in stores (men’s fragrance launched in April). Kohl’s exclusive brands bring in about 8% of the company’s total business.

Kohl’s primary vehicle for encouraging cross-shopping throughout the entire store will be through in-store, direct mailing and event marketing campaigns. A new tagline, “Explore the Store,” will be launching this quarter, McDonald said.

“About 33% of our sales are in women’s [apparel], but only a small percentage of those go over and buy a handbag,” McDonald said. “Direct mail is a way we are targeting these potential cross shoppers. Last year, we had great success with our jewelry mailers, as well as home. This year we expanded it to men’s with a wardrobe sale, and a shoes and handbag sale that we ran earlier this spring.”

Kohl’s also has had success with its shopping events, which have been branded as “Super Saturdays,” “Power Hours” or special two-day shopping events.

“But we continually have to re-evaluate these events, because imitation is the sincerest form of flattery out there [with competitors] and we need to try and find new ways to reach the customer,” McDonald said.

An improved shopping environment in stores also will aid in the company’s effort to encourage shopping across the store. Last year, Kohl’s launched a new “Innovation” prototype in Florida, which included enhanced dressing rooms, way-finding signage and updated graphics and store fixturing. This year, the company will plan on adding even more visual elements in its stores, especially in the swimwear, athletic shoe, Chaps jewelry and Chaps Home department. Men’s wear will also be a focal point, with Apt. 9 and Chaps receiving special enhancement.

Remodeling stores also is an important initiative moving forward, McDonald said. Kohl’s has already remodeled 29 stores during the first quarter this year. Currently, 90 of Kohl’s 834 stores have been upgraded to reflect the new prototype. The company plans on remodeling 55 stores next year. As a rule, a store gets remodeled every eight to nine years.

“Consistency is what we’re going for as we roll out more stores, and we’re incorporating many of the elements of our new store prototype as we are remodeling and reopening stores,” McDonald said.

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