Kohl’s Invisible Holiday Magic

Depending on how one feels about shopping, eggnog, Christmas carols and tiding of comfort and/or joy as a whole, the holiday season is either the most wonderful time of the year or it’s simply the longest 60 days on the calendar.

But whether one loves the holiday season or politely endures it for the sake of family and friends, there is not much in the way of argument that the season is short of flashiness. The holidays are meant to be attention-grabbing — hence all the blinking lights, shiny paper, jingling bells and the like. And for retailers, it is the ultimate annual go-big-or-go-home season.

Which is why Black Friday started 25 days ago and has managed to carry on continuously since — and it seems every merchant from the tallest to the smallest is giving it their all to capture consumers’ eyeballs. The sales are bigger, and the incentives are rolling in all with the singular goal of helping consumers decide that this is the place to unload some of those holiday dollars.

The front-end flash can be both useful because watching how retailers are trying to lure in their customers can tell a watcher a lot about who they are trying to catch by the stories they are telling. Walmart has Dad cooking dinner, Target has elves and Ninja Turtles, and Macy’s has nostalgia and a commercial about the Thanksgiving parade clearly intended to make the audience cry, believe in Santa and then shop at Macy’s (seriously).

Over at Kohl’s, the theme of this holiday season is “Give A Little More” — with their marketing focused on how Kohl’s isn’t just making the world a better place to shop, it’s making it a better place to live, by, you got it, giving a little more. And if it seems we are making fun of Kohl’s, we’re not, as there is literally nothing on earth more delightful than Santa and his wife sitting on a motorcycle together. Moreover, the “Give A Little More” theme has just about the right plucky tone for a company that is coming back from a tough Q3 performance with declining same-store sales.

And, as it turns out, it’s not a bad theme for Kohl’s entire effort this year — particularly when it comes to their back-end organization, which has seen three areas of emergent focus over the last 12 months: inventory management, localization, and enhanced product lines and offerings.

And all three of those areas have seen progress.

Inventory per stores is down 9 percent, a total sea change from the early days of holiday 2015, when Kohl’s was one of many retailers running massive inventory surpluses.

The big drop this year comes as Kohl’s is capping off the first third of a three-year plan to reduce inventory with an eye toward being more nimble and responsive to trends — and to get away from the deep-discounting model that has dominated in recent years.

Moving away from that model is important for Kohl’s since the second leg of its milking stool of recovery is an enhanced suite of products — particularly in its successful home business. That comes in a tie-in with other big-name players in retail, such as Under Armor, which is coming to Kohl’s racks this spring; Apple watches, which will be on sale this Christmas; and American Girls, with its Doll of the Year.

And all of that inventory control and rebooting comes in tandem with a new focus on localization so that stores are better tailored to the specific markets they serve — and the particular needs of individual customer bases that patronize them. Because, according to management comments, that is simply a system better calibrated for generating conversions.

“We continue to see slightly better sales results, 50 basis points to 100 basis points, in localized categories, on less inventory versus non-localized categories.”

The question mark in Kohl’s next phase is how eCommerce will tie into the sum total of the firm’s efforts, though the tea leaves point to enhancements and drive in that directions as well. Kohl’s completed the construction in its fifth fulfillment center this year, and has seen 13.5 million downloads of its mobile app. Kohl’s also rolled out Kohl’s Pay this year (albeit in a fashion limited to the card-carrying customer base) and reported (as of June) that it was not capable of making 90 percent of orders from online deliveries in two days or less.

Kohls is certainly giving a little more — both this holiday season and beyond.  It remains to be seen if they’ve given enough, of course, that Q4 results will tell us that in early January.

But Kohl’s is clearly dedicated to creating a little customer magic — and doing it mostly beneath their customers’ notice, as that is certainly an innovative take on a season usually dedicated to going over the top.