Business

Jobs, Benefits, Business Model, Founding Story

Kohl’s operates as a retailer of apparel and accessories in the US, seeking to provide a broad catalogue of high-quality products to customers at reasonable prices.

Kohl’s was traces its roots back to 1946, when Maxwell Kohl (“Kohl”), a grocery store operator, built his first supermarket in southeastern Wisconsin. He went on to expand this one supermarket outlet into the largest supermarket chain in the Milwaukee area, with his network of stores operating under the name Kohl’s Food Stores. Kohl used this initial success to branch out into department stores, through which he began selling a more diverse product range.

In 1972 the British-American Tobacco Company’s US retail division acquired a controlling stake in Kohl’s, which by then had developed an asset portfolio of 50 grocery stores, six department stores, three drug stores and three liquor stores. In 1983 the Company sold its grocery store assets to A&P, which went on to operate the stores under the Kohl’s name in various guises. Meanwhile, Kohl’s itself was acquired in 1986 by a group of investors, following which it expanded its interests significantly, adding a further 27 stores to its portfolio over the next two years.

Kohl’s has since continued to expand its operations across the US. It now operates more than 1,100 retail outlets across the US, as well as making sales through an e-commerce platform. The Company is among the largest retail groups in the US, ranking 145th on the Fortune 500 list and placing 808th on the Forbes Global 2000 list. Kohl’s trades a portion of its shares on the New York Stock Exchange and has a current market capitalisation of $8.80 billion.

Business model of Kohl’s

Customer Segments

Kohl’s offers a broad range of apparel products and accessories, including for males and females of all ages. The Company serves a diverse range of customer demographics, however, recent reports state that is particularly popular among women, who enjoy the Company’s convenience and its frequent discounts on branded items. It is also popular with consumers aged between 35 and 54, an age range that, according to a recent survey, accounts for more than 40% of the Company’s customers.

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Kohl’s serves an extensive domestic customer base in its native US, operating online and physical retail outlets across 49 of the country’s 50 states, with its largest presence being in California, Texas, and Illinois. The Company does not currently have any significant international operations.

Value Propositions

Kohl’s provides value to its customers in the following ways:

  • Its reputation and track record, with the Company established as a reliable and efficient provider of branded and unbranded apparel, with a track record for providing high-quality products at reasonable prices;
  • Its extensive product portfolio, with the Company offering a broad catalogue of products, including a full range of apparel products and accessories designed for men, women, and children of all ages;
  • Its accessibility and reach, with the Company operating 1,164 physical retail outlets across 49 US states, serving a broad range of local communities, as well as operating an online sales channel that serves customers across the country quickly and efficiently; and
  • Its brand strength, with the Company having developed a popular and well-known brand name that effectively serves its core customer demographic of women aged between 35 and 54.

Channels

Kohl’s operates a corporate website at www.corporate.kohls.com, through which it provides information on its corporate activities, investors relations, and leadership. It also operates a separate consumer-facing website at www.kohls.com, through which it provides more specific detail on its products and services. This website also serves as an online sales channel, allowing customers to browse the Company’s products, make purchases, and organise deliveries independently. The Company additionally offers a mobile app, available on Android and iOS devices, that provides similar functionality.

Kohl’s principally makes its sales through its extensive network of physical retail outlets spread across 49 US states. This network comprises 1,164 outlets, through which the Company employs teams of sales personnel who directly serve the Company’s customers in person. The Company supports this sales infrastructure with its own distribution and logistics network, comprising nine retail distribution centres through which all of the Company’s merchandise is received.

Customer Relationships

Kohl’s offers a full range of products to its customers on a self-service basis through its online retail channel, which allows customers to browse products, make purchases, manage account details, and arrange product deliveries without interacting directly with the Company’s sales and support personnel.

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Kohl’s provides personalised service to its customers through its in-store sales staff, who are available to provide assistance with products and customer enquiries, and handle complaints and product returns in person. The Company also operates a dedicated customer support organisation, the members of which customers are able to contact over the phone or online in order to receive tailored support.

Kohl’s also provides a range of online support resources to its customers through its website, including shipping and tracking information, guides, and FAQs, which can be accessed independently. The Company additionally operates a number of social media accounts – including with Facebook, Twitter, Pinterest, Instagram, Google+, and YouTube – through which it can interact directly with customers.

Key Activities

Kohl’s is an operator of department stores and online retailer of apparel and accessories. The Company operates more than 1,160 department stores across 49 of the US’s 50 states. The Company’s product portfolio includes private label, exclusive and national brand apparel, footwear, accessories, beauty and home products.

Its website also includes merchandise, which is available in its stores, as well as merchandise, which is available exclusively online. Kohl’s private brands include Apt. 9, Croft and Barrow, Jumping Beans, SO and Sonoma Goods for Life. Its exclusive brands include Food Network, Jennifer Lopez, Marc Anthony, Rock and Republic and Simply Vera Vera Wang.

Key Partners

Kohl’s works in close collaboration with a wide network of partner companies and organisations. These partners can be categorised broadly as follows:

  • Supplier and Vendor Partners, including suppliers of products and merchandise that are resold by the Company online and across its retail outlets, as well as supplier of services, technologies, and equipment that are utilised more broadly across the enterprise;
  • Brand Partners, comprising various high-profile brands with which the Company maintains exclusive and non-exclusive retail partnerships;
  • Channel and Distribution Partners, comprising companies that assist in the distribution and delivery of the Company’s products, both to its stores and to its online customers;
  • Hospital Partners, comprising various hospitals and healthcare facilities with which the Company collaborates in developing and providing effective and reliable care across communities in the US; and
  • Strategic and Alliance Partners, comprising market-leading companies across multiple sectors with which the Company collaborates on various branding, marketing, and other projects.
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Kohl’s has agreed a number of partnerships in recent years. This includes a partnership with AwesomenessTV, a unit of Dreamworks, to market its products to teens, a retail tie-up with UnderArmour, and a fashion partnership with former Coach Inc executive creative director Reed Krakoff.

Key Resources

Kohl’s key resources are its intellectual properties and brands, its catalogue of products and supply chain, its online platform, its IT and communications infrastructure, its physical sales and distribution infrastructure, its partnerships, and its personnel.

Kohl’s owns and or leases a number of physical properties that are key to its ongoing activities. This notably includes the Company’s network of 1,164 stores with 83.8 million selling square feet across 49 states, as well as its nine distribution centres that manage all of the Company’s merchandise.

Kohl’s also owns a number of intellectual properties and brands. Searches of records published by the US Patent and Trademark Office identified no patent applications filed in the Company’s name.

Cost Structure

Kohl’s incurs costs in relation to the development of its intellectual properties, the procurement of products and merchandise, the procurement of professional services, the development of its online platform, the maintenance of its IT and communications infrastructure, the operation of its physical retail and distribution infrastructure, the management of its partnerships, the implementation of marketing and advertising campaigns, and the retention of its partnerships.

In 2015 the Company’s largest expense was its cost of merchandise sold, which totalled $12.27 billion for the year. The Company also recorded selling, general and administrative expenses – including include compensation and benefit costs and occupancy expenses – in the amount of $4.45 billion.

Revenue Streams

Kohl’s generates revenue through the sale of apparel and accessories, both online and through its chain of physical sales outlets. The Company derives its revenue principally in the form of general sales fees.

In 2015 Kohl’s recorded net sales for the year in the amount of $19.20 billion, up marginally on the $19.03 billion recorded by the Company in 2014.

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