Kohl’s Is Testing And Learning At Its New Concept Store In Tacoma, Washington

Kohl’s is testing a new 35,000-square-foot concept store in Tacoma, Washington, filled with innovations. The smaller store, which opens in November, has been a year in the making. It features more mannequins, clean and open sightlines and a new and improved self-pickup area. The checkout stations are off to the side and out of the way, so consumers can get a good look at the merch the minute they step into the store.

CEO Michelle Gass led a virtual tour of the store on Thursday, pointing out that mannequins have different skin tones and come in different sizes in a nod towards diversity and inclusion. Storytelling and mannequin vignettes can be seen throughout the store. Gass said customers want to be inspired and also want ease of shopping and convenience.

“We’re in [the midst] of a big reinvention,” said Gass of Kohl’s. “It’s all about serving the customer. The company can really be a leader in the active and casual lifestyle. There’s strategy, product and value, and there’s the experience. Thinking differently about the experience is a big part of this strategy.”

Kohl’s reported second quarter comparable sales decreased 7.7% and net sales decreased 8.5%, and second quarter diluted earnings per share of $1.11.

“Second quarter results were impacted by a weakening macro environment, high inflation and dampened consumer spending, which especially pressured our middle-income customers,” Gass said in August. “We have adjusted our plans, implementing actions to reduce inventory and lower expenses to account for a softer demand outlook.”

Gass said the company is “doing a lot across the store to reflect our new strategy of the active and casual lifestyle. We really challenged ourselves. It was part of that blueprint to step back and think ahead. What does the customer need today and what will he or she need tomorrow. There will be a lot that we learn from this strategy that will inform new stores going forward, as well as ideas we can take back to our very robust fleet.”

Gass said the new store is part of Kohl’s commitment to being an omnichannel retailer, and also a commitment to stores. “It’s core to our strategy, core to our DNA, and it’s important that we show up for our customers,” Gass said. “The bar has been raised on this world of digital and physical. It’s a smaller store, which is the blueprint as we look to expand stores.”

Gass sees 100 stores in Kohl’s future, and they are the size of the concept store. “Importantly, this store is still a concept,” she said. “It’s an experiment. It’s not yet what we’ve decided to scale for those 100 stores. We have working models that are based on the economics and experience. This was taking a white space and putting the customer first, using analytics data and saying, ‘Okay, we’re designing this store from scratch, what is possible.’”

The Tacoma store offers an edited version of Kohl’s brands and national brands. Kohl’s relied on the analytics and data and tailored the store to this customer. “Of course, it has Sephora and Sephora is working for Kohl’s. We’re just in the process of rolling it out. By next year, we’ll have 850 full-size Sephoras in our stores and we recently announced that we’re going to have a Sephora presence in every one of our stores, including the new stores.”

“The way we have flowed the store will also look different and that’s intentional,” Gass said. “What we’ve done is a different use of space, a different use of the walls. We’re really taking advantage of that space, but importantly it’s about inspiration and storytelling. What customers have told us, ‘I’m time starved, I want solutions,’ so we’re mixing brands, its not head to toe one brand. We’re using more mannequins in this store and it’s part of that inspiration.”

The discovery area features emerging brands with diverse founders and female leaders. “If they’re making the decision to come into the store, they might be on a mission, and we’re happy to serve them that way, but I think they also want what shopping’s all about. They want entertainment, discovery and inspiration. Discovery at Kohl’s is exactly that. We’ve rolled this out to 600 of our stores and online. We’re taking a different approach to how we’re merchandising. There are a lot of cool brands customers can get exposed to.

“Our next stop is something very new for Kohl’s,” Gass said. “We’re calling this the active and outdoor hallway, which is really a manifestation of localization for this market and this customer out here in Tacoma.

The outdoor lifestyle hallway features products from multiple brands, from Columbia and Eddie Bauer, to NikeNKE
, Under Armor and Adidas. “As the customer walks down this amazing hallway, they really get a lot of great product innovation, they get storytelling,” Gass said. “This Columbia display is for the family and things that are adjacent, like sleeping bags.

“I can’t underscore enough, this isn’t just Kohl’s thinking this customer will like this,” Gass added. “This is really based on data and not only the inputs around the data, it’s also we worked a lot on creating a scalable model.

“In this particular store you are getting the active amplification,” Gass said. “There’s stores in the If this was in the South, you’d see something very different in the hallway. You’d see a lot more summer-oriented products, swimwear, tanks. I just get really excited about it because between the display you get right when you walk in all the way through this hallway, it’s really about driving relevant inspiration and also easy shopability.”

The women’s department is at the front of the store, and all the way back against the wall is men’s. Gass said men’s wear is not an afterthought. “We serve millions of customers around the country, men and women. We have 65 million customers and it’s important that we are a destination for both of them.

Active and outdoor includes the casual lifestyle brands Gass talks about. “You see some of great denim brands, our new brands like Tommy Hilfiger,” she said. “One of the things that you really see is the depth. In this store, we significantly reduced the choice count. It has the same number of products as the typical small store, but we can really go deep. It shows the amount of confidence we have in the items we’re carrying.”

The service area has been redesigned to offer ease and convenience. Rolled out to all 1,166 stores across the country, it’s been a big success, according to Gass. “I think we’re one of the first in the industry to do this kind of self-pick. up.”

The self-service area is for a customer who wants to be in and out quickly. “It’s really easy, you just use your phone to scan and you will find your products in one of these bins,” Gass said. “Of course, we have AmazonAMZN
returns. We’ll have associates here helping if you need it. We are testing self-return and doing a lot of experimentation. This is a bold step forward for Kohl’s. Hopefully, what you’re getting a sense of, ‘I see Kohl’s, but it looks and feels different, but in a good way. It’s the next chapter for Kohl’s. We’re going to take the cue from the customer. We have teams working on this in real time. We’ll be changing things around as we talk to the customer.”

The home department looks different than one you’d see at a classic Kohl’s store, too. There are familiar brands such as Ninja, Cuisinart, Kitchen Aid. “One of the things that we’ve done, which is different, is we do have these vignettes to offer solutions and inspiration,” Gass said. “If you want, you can buy this candle and this pillow, but you can also buy things that come from our web exclusives. This is a good example of where physical and digital come together. It’s super easy.

“Customers are really used to QR codes,” Gass said. “You literally scan the QR code and you have the ability to order this entire [display], including the fireplace, the lamp and the chair. As the world of shopping has evolved and people have gotten more comfortable with digital shopping, we’re bringing those two things together. Not just in the back of house, like how we do with ship to store, but how they shop. Do they want to bring it home or do they want it shipped to their house.”

The checkout area is a first for Kohl’s, the fist time checkout isn’t located at the front of the store. “This whole area has been redesigned and it offers both the traditional associate checkout as well as self-checkout,” Gass said. “This is a test. It has the latest hardware and software. It’s very clean it’s very modern. It even has ways to take off the security tags, which for our industry has been a bit of a barrier.

“The team has solved all of this, and we’ll learn,” Gass said. “What will be the interest and conversion of customers using this. It’s a bit of a lab. The other thing the team built into this is flexibility. You’ll see a lot of product here. It’s impulse, discovery, we redesigned the way we’re offering impulse to our customer. Its really being an omnichannel leader in the active and casual lifestyle. There’s big ideas about our commitment to stores and our commitment to our strategy and really a commitment to innovation and learning and experimentation.”