Kohl's CEO on Future of Stores, Amazon and More

In an interview yesterday with Sucharita Mulpuru at Shoptalk in Las Vegas, Kohl's Chairman, CEO and President Kevin Mansell discussed the future of the struggling retailer, including the role of brick-and-mortar, how the department store will leverage technology, how it views Amazon.com, and the potential impact of the proposed border adjustment tax.

Reimagining Stores

With 1,200 stores across the country, success for Kohl's is going to come from being an amazing omnichannel retailer, Mansell said. The department store chain's foot traffic and sales have been down for a number of quarters. With that being the case, it's imperative that the company makes it existing stores more productive. That means several things, including fulfilling online orders in-store, using stores as returns center for online customers, designating space for customers that choose to buy online and pick up their orders in-store, and more. But the key to all of this is to make these processes easier and faster for customers, something Kohl's has struggled with, Mansell admitted.

“We haven't used speed and been as agile as we need to,” said Mansell.

While negative operating profit stores are targets for closure (18 were closed in 2016), Kohl's will be investing in physical retail. It doesn't have much of a choice, conceded Mansell, but that doesn't mean stores can't be a competitive advantage for the retailer.

“We have lots of stores — that's the hand we have to play,” Mansell said. “Kohl's has 70 million customers, and the vast majority of them shop in-store. Our most valuable customers are omnichannel customers. Eighty-five percent of Americans live within 15 miles of a Kohl's store.”

Technology to Improve the In-Store Experience

Committed to its brick-and-mortar stores, Kohl's is investing in technology that will create better experiences for those shopping in them. Mansell noted that technology is the biggest budget spend at Kohl's, with the retailer having spent $2 billion on technology in the last three years.

A prime example of this is Kohl's mobile app, which has seen strong adoption — close to 18 million downloads. Features within the app include a digital wallet, which allows users to better manage their loyalty points and Kohl's Cash, ensuring that they're getting the best price for every purchase. Furthermore, the digital wallet makes the experience at the point of sale much easier. App users can also take advantage of Kohl's Pay, further speeding up in-store transactions.

In addition to customer-facing tools such as its mobile app, Mansell said that Kohl's will be investing in technology solutions for its store associates that make them more productive at their jobs.

Competing With Amazon

Like every retailer, particular those with roots in brick-and-mortar, Kohl's is dealing with the challenge of losing customers to Amazon.com. But competition isn't new to the department store chain.

“Apparel is an extremely competitive category,” noted Mansell. “It's been that way for a long time; it's just moving faster now. Amazon is a share threat and a share gainer. Off-price is a share gainer. For both points, our strategy is to be best in omnichannel. We know we can win there. That's a path for success for us.”

In addition to its omnichannel capabilities, Mansell cited Kohl's loyalty program and private-label brands as key assets for the company as it looks to compete and win against Amazon and other competitors.

Wary of Border Adjustment Tax

When asked by Mulpuru about the potential for a Border Adjustment Tax, which would significantly increase the cost to retailers for importing goods, Mansell voiced his concern.

“At the end of the day, to tell American consumers to pay 20 percent more for apparel, footwear, home goods, I don't see that being a good thing and it doesn't make any sense to me,” said Mansell. “Higher prices will minimize demand. The thing I know for sure is that prices are going to go up a lot.”