Kohl’s cutting retail floor space in move toward digital
Department store chain Kohl’s said it is overhauling almost half of its stores to reduce floor space for products and bolster its digital offerings as the sector reels in competition with Amazon and nimble fast-fashion retailers.
Kohl’s, based in Menomonee Falls, Wis., said nearly half its locations would be “operationally smaller” by the end of the year. The company said it would reduce the number of products available in store as part of an on- going plan to shrink.
Unlike competitors Macy’s and JCPenney, Kohl’s has avoided major rounds of closures despite struggles for department stores. Shifting products into backroom space can boost profits because it’s cheaper to maintain.
Kohl’s spokesperson Julia Fennelly said the company is not cutting any jobs or removing any square footage as part of the plan.
The company described the plans for its network of more than 1,100 stores in 49 states as another move to bolster its digital capabilities. Like other retailers, Kohl’s is investing in an “omnichannel” strategy designed to encourage customers to buy online and pick products up in the store or get them delivered directly.
The plan appeared to have gone over well with investors. Kohl’s stock rose 83 cents to $38.16, up 2.2%, on Tuesday.
The company said it had already remade about 300 stores with new interior layouts aimed at boosting profitability.
“By optimizing and right-sizing stores based on customer and in- ventory needs, Kohl’s stores are able to operate more efficiently and provide a more engaging customer experience,” the company said in a statement.
The retailer said it would open four new small-format locations in October, adding to a current base of eight. The 35,000-squarefoot stores are located in North Smithfield, R.I.; Blue Ash, Ohio; East Windsor, N.J.; and Montebello, Calif. The company will open a fifth online sales fulfillment center, located in Plainfield, Ind.