To say Kohl’s (KSS) has had a tumultuous year in the last 12 months could be considered a massive understatement.
Kohl’s had survived decades without really making major strides in advancing its fashion and retail image. It had definitely started to wear on the company as the department store's competition had in some cases shut down, like Sears, or updated their retail concept, like Target.
So, during 2022 Kohl’s had been entertaining prospective buyout options, and it wasn’t until Kohl’s was about to close the deal with Franchise Group (FRG), at the end of the second quarter that it abruptly pulled out of the deal. Kohl’s cited a volatile market as its reason for ending the deal talks.
Kohl’s then made a surprising move and quickly began to revamp its inventory and fashion departments. Within a couple of weeks after ending the deal with Franchise Group, Kohl’s developed a new section of its store known as Discover @ Kohl’s. Whether the retailer had been working on this all alone or just came up with this new concept is uncertain, but it came out quickly featuring fashions By Women For Women, a Family Fall lineup, and supporting a charity with its new concept by featuring products that give back.
Kohl’s continued making strides into the fourth quarter of 2022 with new partnerships offering throwback fashions available exclusively at Kohl’s with the Silver Tab line from Levi’s (LEVI) 90’s collection. Interestingly enough not long after the deal to bring Silver Tab to Kohl's, the then CEO Michelle Gass of Kohl's announced her departure to go be the president and eventual CEO of Levi Strauss. Kohl’s also committed to giving back millions to its community and to charities, all while then announcing layoffs at its corporate office.
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Kohl’s Makes Surprising Expansion Move
Kohl’s is making a surprising move after the year it has had, as it is continuing to expand its Sephora footprint in its stores. Sephora is a beauty and personal care retailer owned by multinational conglomerate, Moët Hennessy Louis Vuitton (LVMHF) . Kohl’s began its partnership with Sephora 2021 and continued opening shop-in-shop locations in its department stores.
The retailer announced on March 22 that it was moving ahead with plans to open another 250 stores including shop-in-shops with Sephora. These full-sized departments at Kohl’s will take on about 2,500 square feet of the existing Kohl’s retail footprint. The addition of these stores will bring the number of Sephora shop-in-shop locations to 850 stores.
“We are making great strides in building a formidable beauty business with the addition of Sephora at Kohl’s,” said Karen Daoust, Kohl’s senior vice president and Sephora general manager at Kohl’s. “The completion of our 850 stores in 2023 is just the beginning as we look to expand Sephora at Kohl’s to all stores, enhance the customer experience and deliver prestige beauty to our customers across the country.”
Leveled Up Against Competitor Target
The partnership between Sephora and Kohl’s rivals the Target (TGT) shop-in-shop experience with Ulta Beauty (ULTA), which has been in Target stores also since 2021. While both shop-in-shop experiences happened in the same year for both retailers, the expected outcome from each partnership is the same.
The beauty and personal care companies quickly expand their reach when built into existing retailers, and the retailers are able to offer more personal care and beauty products to their existing customers. Kohl’s and Sephora have both already seen an increase in sales.
Sephora is projecting to reach $2 billion in sales by 2025 according to a Kohl’s press release, and Kohl’s said that in those Sephora sales, roughly 50% of the tickets contained other Kohl’s products in the purchase. So, whether the shoppers came in were initially Sephora or Kohl’s customers is unknown, but really what matters is that the customer walked out of the store with both company’s products, which proves the partnership is being successful in its venture.
Sephora had previously worked within JCPenney retail locations and ended its partnership to work with Kohl’s. Sephora also has stand-alone stores, but its business strategy is to expand and be considered the top authority on beauty and skin care products. Even in the Kohl’s shop-in-shop locations the staff is given extra training to be able to be personalized beauty consultations and assist customers with making the right products for the customers' needs.
