Kohl’s Raises Stakes
May 3, 2006,
Milwaukee — Kohl’s will continue to dress up its home textiles department, rolling out brand exclusives, expanding its “best” offerings, and upgrading merchandise presentations, chairman and ceo Larry Montgomery told Home Textiles Today following the annual shareholder meeting last week.
He added, “Chris has only been with us 18 months.” This praise was directed at Chris Capuano, executive vp/gmm for home and footwear, who joined Kohl’s in fall 2004 from Federated Department Stores.
Capuano said she is energized by the tightly focused culture at $13.4 billion, 741-store Kohl’s, where merchandising initiatives in home are able to tie in more directly with marketing campaigns.
Montgomery said 400 stores now feature a fully coordinated queen bed vignette, which will roll out chain-wide by fall. The company is now testing a three-bed, good/better/best layout.
Kohl’s introduced its exclusive juniors brand Candies in March with two collections in bed and beach, supported by national print ads featuring actress Hilary Duff, who also appears in a Candies-at-Kohl’s TV ad promoting apparel and fashion accessories. The retailer launched its contemporary private label apt. 9 this month with three collections in bedding, bath, window, dec pillows and rugs. Both brands are anchored in Kohl’s apparel division. The apt. 9 debut boasts the company’s first-ever TV advertising for any of its private labels.
Montgomery said all this activity is aimed at taking advantage of the “opportunity being abdicated by traditional department stores today, as they walk away from moderate price business.” And moderate prices are just part of the formula. Reiterating the company mantra of offering “brands, value and convenience,” he said the formula “at higher price points is performing very well.”
Kohl’s president Kevin Mansell noted that Chaps, a Polo Ralph Lauren brand crafted for mid-tier distribution and “currently” exclusive to Kohl’s, was launched at the retailer in men’s sportswear and suit separates and is now Kohl’s “biggest brand introduction” ever in women’s apparel. Chaps is also slated for introduction into the home categories, Montgomery confirmed.
Mansell said “classic” fashion themes are paramount, “updated” looks the biggest dollar growth opportunity, and “contemporary” the newest segment. Kohl’s assorts these three lifestyles across a good/better/best mix to form a nine-box planning grid.
Contemporary is the smallest component, but Kohl’s is attacking it with great energy. In the TV ad for the apt. 9 label, a version of the Madonna pop hit “Express Yourself” is used along with the “Only at Kohl’s” tagline as a model appears in a dozen sleek outfits. In theory, the glow of the fashion will extend into home.
The three bedding styles for apt. 9 are Bedrock, Espresso and Random, which are carried across window panels and complemented with related themes in towels, bath rugs, shower curtains and hard bath accessories.
The apt. 9 sheet sets, in 300-thread-count 100% cotton, are priced at $74.99 queen ($33.74, sale). All-cotton comforter sets are $219.99 queen ($131.99, sale). Poly embroidered sheer window panels are $29.99 ($17.99, sale).
Kohl’s is going after its last remaining un-stored region of the country; of the 85 new units planned for 2006, 10 are in the Northwest, said coo Arlene Meier. The company’s ninth distribution center, set to open in June, is sited in northern California.
The core Kohl’s is an 88,000-sq.-ft. “suburban” box with 74,000 sq. ft. of selling space, which rings up average first year sales of $14 million to $16 million. The company opened a 133,000-sq.-ft. “urban” store in May 2005 in Chicago; first-year sales are projected at $20 million to $25 million. It converted two New York City Kmart locations last year and soon will open an urban unit in a former Jersey City, N.J. Macy’s.
For lower population-density markets, Kohl’s is pleased with its “small” 68,000-sq.-ft. prototype, first tested in 2002. These units, which ring up average first year sales of $10 million to $12 million, will comprise one-quarter of all new stores in 2006.
Direct-to-consumer sales — Internet only; Kohl’s does no catalog business — is seen by the company as a “big growth vehicle.” Montgomery observed that the home furnishings assortment is “the best part.”
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