Updates on Kohl’s Store Optimization Initiatives

Stores remain at the core of Kohl’s omnichannel strategy. The company will continue to invest in our store base by rightsizing stores, optimizing our existing store footprint and opening smaller format stores. Kohl’s is focused on amplifying the role and relevancy of our stores while also working to ensure that shopping in a Kohl’s store is an engaging and inspiring experience for our customers.

Rightsizing
First announced in 2017, rightsizing, in the simplest terms, means shrinking the footprint of select Kohl’s stores to be smaller. The remaining, underutilized square footage is then either leased or sold by Kohl’s to a different entity.​ By rightsizing stores based on customer and inventory needs, Kohl’s stores are able to operate more efficiently and provide a more engaging customer experience. The rightsizing strategy is an important initiative to leverage Kohl’s real estate assets and drive traffic to stores through key partnerships.

Kohl’s announced in 2018 an approximately five-store pilot effort with the fast growing supermarket chain Aldi to open locations adjacent to select Kohl’s stores. To date, we share a location with the grocer in Waukesha, Wis., which opened in February 2019. Kohl’s has also announced a new partnership with Planet Fitness, which will initially include up to 10 fitness locations adjacent to Kohl’s stores. Kohl’s will continue to seek out strong partners during this pilot phase for existing rightsized locations that are well-capitalized companies and will drive traffic to our stores.​

Standard to Small
We’re operating a portion of our stores different through a standard to small initiative. While the footprint remains the same, these stores have been optimized with new interior layouts – becoming operationally smaller through balancing inventory and adjusting fixtures in an effort to enhance store profitability and improve customer experience. Kohl’s currently has 500 standard to small stores. Kohl’s standard to small strategy has been a key driver of Kohl’s overall reduction in inventory. The standard to small strategy success has enabled the company to recognize an opportunity to separately rightsize many of these stores as a next step.

Small Format, 35,000 Square-Foot Stores
The smallest of Kohl’s store formats, the 35,000 square-foot stores have 60 percent less space and 60 percent less inventory than a standard Kohl’s store. Kohl’s currently operates thirteen 35,000 square-foot stores. These stores are flexible and efficient, with fixtures that can be adapted by department and for localized merchandise and assortments. Like the rest of Kohl’s store fleet, these stores further serve as pick up locations for customers who opt to buy online and pick up in store. Small format stores also provide a blueprint for Kohl’s to maximize its store presence in small and large markets and to continue to identify operational improvements that can be transferred to larger footprint stores.