Big prizes, small stores: this is the new Kohl

More smart coupons. More Kohls Cash. And small stores have more of what you want and less of what you don’t want.

Will all this be enough to fix Kohl’s problem?

The struggling department store chain has unveiled some changes, ranging from its promotional strategy to its store design, the way it defines itself as moving forward.

“We’re evolving our position from a department store to a more focused lifestyle concept centered on an active and casual lifestyle,” CEO Michelle Gass said in a presentation to investors this week. “It’s unique and we can own this place.”

Kohls spent the past year trying to address the challenges, including declining sales, misleading publicity, a disturbing image among young buyers, and impatient active investors for results. Now the company’s executives say they can see the way forward.

The first is to “modernize its brands and offers” to become the “retailer of choice for an active and casual lifestyle”. As part of that effort, the retailer plans to open more than a hundred new small-format Kohl’s stores, including a selection of more curated products to “adapt to the unique needs of how people live their lives today and in the future.”

Other changes include self-service returns and self-checkouts, an enhanced website experience, and the expanding of the popular new Sephora segments to more than a hundred stores.

For contract-seekers, however, the biggest changes could involve Kohl’s ever-present promotions. In some ways, they’re going to get better – in other ways, maybe a little less.

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“We already have the industry-leading Kohls card, and we’re ready to take it to the next level,” said Greg Revel, chief marketing officer. Following a pilot program in selected markets, all Kohl’s store credit card users will receive 7.5% cash back on future purchases in the form of Kohl’s Cash earlier this spring, up from the previous 5%. “Basically, customers will earn 50% more in rewards when they use their card,” Revel said. “This is a huge new benefit for the nearly 19 million Kohls card members who are also award members.” Kohls plans to launch a co-branded credit card next year, which will allow customers to earn Kohl’s rewards wherever they use the card.

Non-cardholders, meanwhile, may benefit from more useful smart promotions for what they are likely to buy. “We use a lot of couponing,” admits Jill Tim, chief financial officer, and that will not change. But Kohl’s “will start using couponing in a more targeted way, versus scaling it up for everyone.” More personalized offers would mean “you and I can’t get the same coupon,” Tim explained, “and I think that’s where we’re going to be better than in the past.”

But simplified promotion will not always work for the customer. “I would add that we see we have less stackable offers,” said Tim. “We know our new customers get confused when they have to do a lot of math on multiple offers.” And in this inflationary environment, Kohl’s frequent discounts will allow it to raise prices without actually raising prices. “Instead of adjusting to what people see for tickets, we can say, instead of a 40% discount, it could be a 30% discount,” Tim said. It “gives us a lot of flexibility to get value through less publicity in terms of what we’re selling.”

Only time will tell if this change will please buyers. But the verdict of some concerned investors has already come.

Jonathan Duskin, CEO of Massellam Capital Management, told Yahoo Finance Live: “Nothing really changed for us. “Things are getting worse. And I think that’s a problem Kohl has had for many years. “

Massellam, one of Kohl’s largest stockholders, is advocating for retailer change, in everything from its publicity to its executive leadership makeup.

“Kohl uses a striking array of promotional strategies that make it difficult for many customers to know the true value of an item,” Masselam wrote in a letter to fellow stockholders last year. The letter urged Kohls to “stream countless streams of propaganda.” Also, “Kohls has been talking about fixing his loyalty program for years and has made little progress … although some recently announced changes have been made to simplify the program, more needs to be done.”

Following this week’s presentation, Duskin is not impressed. “We think this board needs to be completely restructured,” he said. “There needs to be a new majority in the room that is putting together a credible plan with real retail experts.”

So if you’re a Kohl’s credit card holder, or a fan of Sephora, or active and casual clothing, Kohl’s planned changes may be what you’re looking for. But if active investors have their way, be prepared – because these changes can only begin.

Photo source: Kohls

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