Kohl's Bringing Back Name Brands To Drive Sales

For years, it seems, private labels have been nothing but a success story, whether it’s in the grocery aisles, warehouse outlet or drugstore. But one particularly telling comment in yesterday’s flurry of retailers’ first-quarter results — our Sarah Mahoney has the complete roundup here — was a promise by Kohl’s to drive sales by bringing back name brands that will attract customers back to its “retail racetrack” nationwide.

“"Our biggest issue has been sales,” CFO Wes McDonald said, Suzanne Kapner and Anna Prior report in the Wall Street Journal,  “We have lost some traction with our core customers as the place to get great brands they recognize,” McDonald continued, and  “bringing the brands back,” Kapner and Prior write, “is what the traffic driving is all about.”

A transcript of the analysts call with McDonald and CEO Kevin Mansell is published on Seeking Alpha. 

The company said first-quarter earnings dropped 15%, Fox Business’ Matthew Rocco reports. Revenue slipped 3.1% to $4.07 billion and it missed Wall Street estimates.

Mansell unwrapped “a new path forward” at the company’s annual meeting in Menomonee Falls, Wisc. “While the five-point plan, dubbed the ‘Greatness Agenda,’ was short on details, it does start to illuminate Kohl’s strategy to overcome sluggish sales and earnings of the past two years,” Stacy Vogel Davis writes in the Milwaukee Business Journal

They are: amazing product, incredible savings, easy experience, personalized connections and winning teams.

“In the past, the company has always focused on the practical selling points of ‘brands, value and convenience,’ Mansell said,” Vogel Davis reports. “Now, the company’s purpose is ‘inspiring and empowering families to lead fulfilling lives,’ and its goal is ‘to become the most engaging retailer in America."

A key word yesterday was “engagement,” with Mansell asserting “we feel like engagement is a place we can win,” pointing to “inspirational” new ads that were created by Minneapolis agency Peterson Milla Hooks, Rick Romell reports in the Milwaukee Journal Sentinel.

“Where the retailer's ads traditionally have emphasized promotions and discounts, Kohl's lately has stirred in a branding focus that plays more to emotions than to the pocketbook,” Romell writes. “The latest spots celebrate family-oriented ‘yes’ moments, from a kid overcoming his fear of the high-dive to a dad holding a newborn for the first time.”

And there’s nary “a 40%-off promotion to be seen,” he observes. 

Meanwhile, Kohl's hopes to have a new chief merchandising officer in place in time for the company's next investor meeting in late October, Kapner and Prior report in the Wall Street Journal. “Mr. Mansell said the ideal candidate needs to be able to ‘inspire and lead,’” they write, pointing out “the person selected could one day succeed Mr. Mansell as CEO.”

On Tuesday, Kapner and Joann S. Lublin reported that “Kohl's is hamstrung by the absence of a roster of internal candidates who could take over from Mr. Mansell,” according to a source,  “with one exception: former Starbucks Corp. executive Michelle Gass, who joined Kohl's in June in the newly created position of chief customer officer.

“Ms. Gass, 46, has been charged with improving Kohl's loyalty program and beefing up its marketing, including commercials that ran before Thanksgiving featuring Jennifer Lopez.”

Mansell, 61, joined Kohl’s in 1982 as a divisional merchandise manager from the Venture Store division of May Department Stores and was named CEO in 2008 and chairman in 2009. Gass, 46, spent 16 years at Starbucks in a variety of marketing, global strategy and category management positions, most recently as president of Starbucks Europe, Middle East and Africa, according to her official bio. Before that, she worked in marketing and product development with Procter & Gamble Company.

“Kohl’s success is attributed to three features: Kohl’s locates its stores away from malls, its product line is composed of brand names, and it applies a unique design for its layout, which is the racetrack. The racetrack is cited as a distinguishing factor in the rapid growth of Kohl’s, Haluk Yapicioglu wrote in a doctoral dissertation that “models and solves an important and common service sector facility layout problem, the retail store layout problem.”

Kohl’s, which has not strayed from standalone outlets and racetrack aisles, believes it is modeling and solving the brand name problem. We’ll check back in October.

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