Kohl’s has built a loyal shopping base of middle-aged moms. Now, it’s pivoting to chase a group of customers it has struggled with: Millennials.
“We have not done our job,” Kohl’s CEO Michelle Gass said last year of the department store’s history with Millennial shoppers.
For Gass, who stepped into the top job at Kohl’s a year ago, winning younger customers remains a key priority as she tries to make the 57-year-old retailer more relevant for a new generation of shoppers.
On-the-go Millennials don’t want to spend time roaming around big-box retail stores searching for the right size and style, analysts and Kohl’s executives say. They mix different brands and dress to fleeting fashion trends, which are often driven by social-media influencers. Younger shoppers also demand exciting store experiences, and quick and easy solutions for their wardrobe challenges.
“People are time-starved,” Kohl’s chief merchandising officer Doug Howe said in an interview. Shoppers in focus groups told Kohl’s that they struggled to find what they wanted when shopping its nearly 90,000 square-foot stores and had trouble matching clothes together spread out across the stores. Plus, “Millennial customers don’t buy one brand head to toe,” he said.
Last year, Kohl’s (KSS) created a “Millennial Initiative” team to develop ideas for experiences in stores and online that might attract younger customers.
The task force’s biggest bet yet: A Pinterest-like “outfit bar” at stores that lets women shop by “look” for work and social occasions — in one place.
Kohl’s is starting slow, rolling out the outfit bars near the entrance of 50 stores in Philadelphia and Chicago this spring. But executives’ expectations for the initiative are high. “We haven’t made, historically, this bold of a move,” Howe said.
‘Life is short. Get the outfit.’
CNN Business got an exclusive visit to the first outfit bar in Havertown, Pennsylvania, a suburb outside Philadelphia, the day it opened in late April.
In the 600-square-foot section, Kohl’s pulls together a curated mix of its national brands like Levi, Nike (NKE) and Champion, as well as a few of its in-house clothing lines.
The outfit bar gets prime real estate: The section is one of the first things customers see when they enter the store.
A foldable floor sign at the front of the section introduces customers to the new concept: “The outfit bar. Find your new favorite look.” Toward the ceiling in the back of the section, lit-up white letters read, “Life is short. Get the outfit,” set against a neon green grass sign. It all seems tailor-made for Instagram.
In the middle of the open section, three mannequins display varied styles: a sporty outfit, a sleek jumpsuit and blouse-and-skirt basics. PopSugar pants and tops and Champion jackets hang on side racks, while Levi’s jeans are laid out on a table.
There’s a green jacket, denim jeans and a graphic T-shirt proclaiming “off-duty fun,” while a multi-colored track jacket, denim skirt and Adidas sneakers comprise an “activewear anywhere” outfit. The outfit bar also features elevated wooden fixtures, which allow Kohl’s to slide in LC Lauren Conrad heels and Adidas sneakers to show shoppers how an outfit might pair with shoes.
Elizabeth Labor, 29, who was shopping at Kohl’s for a job interview, told CNN Business she gave the outfit bar high marks.
Labor said the “abundance of choices” at Kohl’s often made it difficult for her to decide how to match clothes. But she found the outfit bar helpful. “It was cool to get some ideas of what you could piece together,” she said.
That’s the goal for Kohl’s: to give Millennials a distinct area in the store where they can quickly find styles and discover clothes they didn’t know the retailer carries. The concept is a way for Kohl’s to show off its hottest wares to existing Millennial customers and build cachet among new ones.
Kohl’s will partner with stylists and social media personalities—the first will be Today Show contributor Lilliana Vazquez— to curate the outfit bar selection and update it every 30 days with new looks to give shoppers a reason to keep returning to stores. A companion landing page on Kohl’s site also allows customers to shop by outfit, instead of browsing by brand or clothing type. And Kohl’s will promote the outfit bar on social media to help boost customers’ awareness.
The concept “should help Kohl’s create a compelling area in store that is more attuned to the needs of Millennial shoppers,” said Neil Saunders, managing director at GlobalData Retail.
Kohl’s average shopper is 45, according to customer surveys from Cowen. That’s a year older than Macy’s (M) and JCPenney’s (JCP) average shopper, two years older than Target’s (TGT) and four years older than the average shopper at discount chains TJMaxx (TJX) and Marshalls. Amazon (AMZN) Prime shoppers are also younger than Kohl’s, according to Cowen.
Kohl’s draws heavily from customers over 65 too, according to data from Morgan Stanley.
Greg Revelle, Kohl’s chief marketing officer, said sweeping demographic shifts led Kohl’s to go after Millennials, who have overtaken Baby Boomers as the largest generation in the United States. Also, he noted, about a million Millennial women every year become first-time moms.
“We want to win as all these women make that transition,” Revelle said.
Strength with moms
The approach marks a shift for Kohl’s, which has historically directed its efforts on strengthening its relationship with middle-aged moms.
“A number of our initiatives have really been around satisfying that core customer,” Revelle said.
Kohl’s has connected with moms through a mix of stylish clothing brands and a knack for quickly reacting to the latest fashion trends. The company’s women’s clothing business accounts for close to a third of overall sales, and Kohl’s relies heavily on its own brands.
But now Kohl’s wants to improve with Millennials.
“Kohl’s is simply not on the fashion radar of many younger shoppers,” said Saunders. “There are many Millennial consumers who just don’t set foot in its stores.”
About 29% of Millennial women said they shopped at Kohl’s over the past year, compared to 50% at Target, 33% at TJMaxx and 31% at Macy’s, according to GlobalData Retail data.
“We have a particular opportunity to gain share among Millennials, especially Millennial moms,” Gass, the Kohl’s CEO, said in March. “We expect to make a lot of progress.”
The Pinterest effect
Kohl’s has taken several steps in recent years to target young moms.
It started investing in digital and TV advertisements to reach customers under 35 for the first time. It’s focused in particular on Pinterest, which Revelle said is “sort of the new style platform.” Pinterest lets users bookmark or “pin” images ranging from clothing to home design.
It has also brought in new brands including Under Armour (UA)and PopSugar to appeal to Millennials.
Kohl’s will closely study the outfit bars’ performance for the next three months before making a decision about putting them in more stores. Executives will assess whether the outfit bar clothes perform better than they do elsewhere in the store. And, of course, they’ll measure whether the concept brings in Millennial customers.
Howe, Kohl’s merchandising chief, said a similar concept could one day make it over to Kohl’s men’s department, too.
Though it’s online trends like Pinterest and social-media influencers who helped inform the creation of the outfit bar, Kohl’s believes its more than 1,150 brick-and-mortar stores give it an advantage to draw Millennials.
“We’re seeing a lot of these Millennials starting to shop more in stores, particularly when they’re shopping for their families,” said Revelle. “It’s much easier to look through everything, find what you like and check out. Plus, of course, you don’t have to wait for delivery.”
Fighting off Target and TJMaxx
As Kohl’s battles for Millennial dollars, so are a large mix of big box retailers, brands and department stores.
Target is “a popular destination for female Millennials and its new in-house fashion brands have been well received,” said Saunders. It has improved the store experience by creating mini-sections in stores for it top brands.
Walmart (WMT)has also stepped up its fashion game by partnering with celebrities like Ellen DeGeneres and Sofia Vergara for exclusive clothing lines and buying up hip online brands such as ModCloth and Eloquii.
In the department store realm, Macy’s recently unveiled Story, a new section in more than 30 stores that will change brands and concepts every few months to get customers to keep coming back to see what’s new. Under a new CEO, JCPenney has poached executives from Target in recent months. Analysts believe it may be trying to follow Target’s successful private-label strategy.
For Kohl’s to gain ground on those chains among highly coveted Millennials, it “does need to reinvent the store experience,” said Saunders.