As department stores shutter physical locations to offset sluggish sales, Kohl’s is doing the opposite. The retailer plans to open five to 10 smaller stores next year, in addition to a new outlet chain. While that might seem like a misplaced bet on brick-and-mortar, the move cements the omnichannel commitment that landed Kohl’s fourth place in L2’s Digital IQ Index: Department Stores.
In the past two years, successful department stores have traded unproductive retail space for technology-focused transaction hubs. That trend is exemplified by Macy’s, which closed or consolidated 22 stores in 2014 while ramping up e-commerce and omnichannel fulfillment investments. L2’s Intelligence Report: Omnichannel Retail finds that last year, omnichannel leaders closed almost twice as many stores as laggards. However, the remaining stores were almost twice as productive.
Yet Kohl’s aims to win by rolling out both new stores and omnichannel initiatives.
“There’s a massive percentage of our growing e-commerce business that gets picked up in a store,” Chief Executive Kevin Mansell told Fortune.
Kohl’s already outperforms its department store peers in omnichannel capabilities, incorporating tech into its customer service efforts and integrating beacon functionality and personalized messages into its mobile app. In-store pick-up is another example of the brand’s forward-thinking: this fulfillment option remains relatively underused in the U.S., despite wide implementation in the E.U. The new stores can help the brand further this commitment to omnichannel while exploring new markets.