- Kohl’s same-store sales surged 6.3% in the holiday period.
- The growth suggests Kohl’s is scooping up market share from the rash of stores closing across the country, most of which are tied to shopping malls.
- Nine out of 10 Kohl’s stores are in suburban strip malls and other areas away from enclosed shopping malls, the company says.
Kohl’s is defying the retail apocalypse.
The retailer’s same-store sales surged 6.3% in the critical holiday period, which is far stronger than the gains made by rivals like Macy’s that recently reported a 1.3% uptick in same-store sales.
The results suggest Kohl’s is scooping up market share from the rash of stores closing across the country, most of which are tied to shopping malls.
Macy’s, JCPenney, and Sears are among dozens of mall-based retailers that have closed thousands of stores over the past couple of years amid massive declines in foot traffic to shopping malls. At least another 3,000 stores are expected to close this year.
Kohl’s will continue to benefit from the closures, an analysis by Gordon Haskett Research found, as it has the highest number of locations within a five-mile radius of the 103 Sears and Kmart stores closing in April.
Kohl’s has managed to avoid the store-closure trend because it’s somewhat immune to the drop-off in mall traffic – nine out of 10 Kohl’s stores are in suburban strip malls and other areas away from enclosed shopping malls, the company says. It has about 1,100 stores across the US.
“We believe Kohl’s is a beneficiary of its off-mall physical store footprint, which is more convenient for customers to visit,” Oliver Chen, an analyst at Cowen and Co., wrote in a note to clients in January.
Instead of closing stores, Kohl’s has been shrinking them – clearing out space in its existing stores to other retailers, as well as opening smaller stores that are about 35,000 square feet, or about one-sixth the size of a typical Macy’s store.
Along those lines, Kohl’s announced Thursday that it planned to bring the discount chain Aldi into as many as 10 of its stores in a pilot test.
Kohl’s has also been bringing in more national brands like Under Armour and the company recently partnered with Amazon to sell the e-commerce company’s devices in stores and offer free returns for Amazon products at several locations.
“This kind of thinking… shows that Kohl’s understands the need to give customers reasons to visit stores and is not afraid to experiment to achieve this,” Neil Saunders, managing director of GlobalData Retail, wrote in a note to clients on Thursday.
Additionally, Kohl’s has rolled out online initiatives that benefit its stores, such as its “smart basket” program that gives customers discounts for picking up items in stores instead of shipping them to their homes.
“A frictionless customer experience between online and stores is critical and the initiatives for [Kohl’s] to compete more effectively appear to be taking hold,” Moody’s vice president Christina Boni said.
Amazon could be eyeing Kohl’s as an acquisition target
Some retail industry experts have predicted Amazon could acquire Kohl’s this year as Amazon looks to increase its presence in the physical retail world to better compete with rivals like Walmart that have thousands of US stores.
Amazon is likely to find Kohl’s single-story locations away from malls more attractive than the multistory buildings occupied by department stores like Macy’s and JCPenney, Steve Dennis, a former executive at Neiman Marcus and Sears who founded the retail advisory firm SageBerry Consulting, told Business Insider.
“I keep saying Amazon should buy Kohl’s,” Jan Kniffen, a former retail executive who’s now a retail consultant, told CNBC’s “Squawk Box” in November.
“It’s a very simple reason,” Kniffen said: It would give Amazon “a nice little halo.”
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