Holiday 2023 is a big test for whether Kohl’s new management is getting it together.
No drastic changes in the holiday presentation are afoot, but plenty of the more-expected type — like a focus on gifts and cozy fashions — have been orchestrated, and should positively impact fourth-quarter selling after seasons of losing market share.
What will holiday shoppers notice at Kohl’s? A stronger emphasis on gifts, an expanded assortment of home decor with most items priced under $30, Sephora, pet supplies, impulse items by checkout areas, fashions focused on “cozy” styles, dress-up styles, flannel, faux leather, the color red, sparkle, Western boots, simplified and clearer pricing and value offers, and greater convenience.
“We know what we stand for,” Nick Jones, the chief merchandising and digital officer of Kohl’s Corp., told WWD. It’s also important that Kohl’s maintains what customers are familiar with, Jones added, and not risk losing them by making sudden sharp directional changes.
Holiday 2023 is a big test for the top management at Kohl’s, which hasn’t been working together for all that long. It’s the first Kohl’s Christmas for Thomas Kingsbury since he became CEO in February after serving as interim CEO starting December. It’s also the first Kohl’s Christmas for Jones, who joined the Menomonee Falls, Wisc.-based retailer in February, and for Dave Alves, who became Kohl’s president and chief operating officer in April.
Gifts and home decor from St. Nicholas Square are spotlighted in the front of store, adjacent to Sephora, where there’s more room now that certain checkouts have been relocated or taken out for greater merchandising impact near the entry. Gifting is also merchandised in “hot spots” around the store.
Sephora will be a bigger factor this year: Sephora shops are in 900 Kohl’s stores now, compared to 600 a year ago. “The gifting proposition in Sephora is much stronger in terms of scale and volume,” said Jones. In addition to makeup, skin care, fragrance and hair care, Sephora at Kohl’s will have hundreds of beauty gift sets this year.
Jones also said that “impulse” areas near the checkout areas, which provide last-minute selections like candy, snacks and toys, are stronger this year.
Recognizing that holiday shopping can be very stressful and harried, Jones emphasized the importance of convenience and said that key gift categories like stocking stuffers and sweaters, as well as holiday decorations, are merchandised in a more coordinated and readily accessible manner. Kohl’s also offers self-pickup for online orders, and with the exception of just one or two categories, such as sunglasses, keeps the vast majority of its merchandise unlocked, unlike many other stores, which have locked up products in response to the recent waves of organized theft.
“We’re pushing more regular newness into the store and we are able to chase product,” as selling trends emerge, Jones said. “We are very comfortable with our overall inventory position.”
On the fashion front, in women’s, executives cited brands like Simply Vera Vera Wang, Nine West, Draper James RSVP and LC Lauren Conrad for offering on-trend styles and festive partywear as key for holiday 2023.
On the cozy side, sweaters, fleece tops and bottoms, jogger sets from Nike, Eddie Bauer, Columbia, as well as private brands like Sonoma Goods for Life, LC Lauren Conrad and SO, and the exclusive collaboration with Crayola, were also cited as important labels for holiday.
In men’s, executives cited the private Apt. 9 and Sonoma Goods for Life, as well as Haggar and Tommy Hilfiger as key for polished casual looks and suiting options.
On the active side, Nike, Eddie Bauer and Columbia as well as the FLX private brand were singled out as also key labels for holiday.
According to Christie Raymond, “We know apparel is the number-one gift for men and women. There is very little in our store you wouldn’t want to give as a gift or to yourself.”
Asked about how she sees holiday shopping playing out, Raymond said, “We’ve been seeing earlier shopping since there was supply chain disruption. We’ve seen some spreading out of the holiday shopping. But those key dates are still really important, Black Friday, Cyber Monday. We do expect those to be really big days. Some customers are willing to wait to the very end. There will be last-minute shopping as usual. The season has been extending on both ends.”
Kohl’s has the advantage of being a true family store, with products for all ages and genders, having a reputation for strong values and enticing promotions, and being easier to shop given its off-mall locations, racetrack layouts and formats smaller than traditional department stores. Sephora at Kohl’s has been a hit. However, Kohl’s gets criticized for lacking enough differentiation with its assortment of national brands one can buy at many other retailers, a lack of fashion flair.
Kohl’s primarily targets blue collar and working class families, who have been hit hard by inflation and depleting savings from pandemic-related government assistance. In 2022, Kohl’s posted a net loss of $19 million compared to net income of $938 million and adjusted net income of $1.1 billion in the prior year. Net sales decreased 7.1 percent to $17.2 billion from $18.5 billion with comparable sales down 6.6 percent.
For the second quarter of 2023, Kohl’s reported net income at $58 million, compared to $143 million in the year-ago period. Operating income was $163 million compared to $266 million in the prior year. Net sales decreased 4.8 percent to $3.7 billion, and comparable sales were down 5 percent.
Raymond, in a statement about the holiday presentation, said, “We know customers are looking for the right gift at the perfect value this holiday, and Kohl’s will offer a season full of incredible deals, a broad assortment of gifts for everyone on their list, and an inspiring experience across our stores and on Kohls.com.”