Kohl's Rolling Out New Store Format With Key Partner

Kohl’s  (KSS) - Get Free Report has taken some major steps to improve its business for over a year, after the failed buyout with Franchise Group  (FRG) - Get Free Report.

Kohl’s has been plagued by disappointing sales over the last few years, which brought the retailer to the table with Franchise Group as a buyer for the company. Kohl’s pulled out of the deal citing a volatile market.

Since the failed buyout, Kohl’s has been working to reinvent itself as a fashion forward organization. Kohl’s launched a section of its store to create this new awareness of fashion and good faith acts called Discover @ Kohl’s. This section of the store is dedicated to partnerships with brands that promote inclusivity in different groups of people who are often left behind, such as serving differently abled customers and youth needing gender neutral clothing. 

Discover @ Kohl’s is just one section of the retailer’s floorplan that is working to bring customers together, with a promotion of greater good and charitable giving. The platform isn’t enough to turn the retailer around completely. It’s a step in the right direction, but more is still needed.

Kohl’s Makes Expansion Happen on a Smaller Scale

Not every retail space is being treated the same when it comes to Kohl's expansion of adding Sephora shops inside its stores. In its most recent statement, Kohl’s has said that by the end of this year, it will have Sephora shops in over 900 of its locations. Sephora is a beauty and personal care brand owned by multinational conglomerate, Moët Hennessy Louis Vuitton  (LVMHF) .

Kohl's stores originally set aside 2,500 square feet for Sephora shops, but in its Kohl’s latest release, the size of some of the Sephora shops have decreased from their original footprint, according to CNBC. A handful of Sephora shops are now only 750 square feet, but offer a similar experience as the larger shops.

“These five shops gave us the opportunity to understand how the small-format experience and assortment resonated with shoppers. The stores have strong customer satisfaction and customers indicated they are likely to return. Overall, the small-format stores have driven solid beauty sales and exceeded expectations, giving us confidence in the wider rollout later this year,” according to Kohl’s statement.

Kohl’s merchandising is different for the larger Sephora shops than for its smaller shops, and so far, customers have offered positive feedback on the merchandising in these tiny shops. Products are being grouped together by category rather than by brand, and while there is less to choose from, Kohl’s is displaying the more recognizable and popular brands including the Sephora Collection.

Kohl’s Adding More Sephora

The retailer still plans to ultimately bringing a shop-in-shop experience with Sephora to all of its retail locations by the end of 2025. Depending on the size of the store, will depend on if it gets the smaller shop format or the larger 2,500 square foot shopping experience for its customers.

“These stores drove solid beauty sales and exceeded expectations, giving us confidence in the wider rollout to 45 additional stores by the end of 2023,” according to a Kohl's email sent to Retail Dive.

Kohl’s 2023 beauty sales were up 150% over last year in the first quarter, which proves the Sephora partnership is already bringing in more business for the retailer.

Kohl’s plans to have more than 850 Sephora shop-in-shops with  2,500 square-foot floorplans in its stores, and it is planning approximately 45 of the smaller footprints in its smaller stores. These larger scale and smaller scale stores are all expected to be open by the end of 2023.