Kohl’s Approach Is The Way Forward For Department Stores

Department stores such as Macy’s, J.C. Penney’s and Saks Fifth Avenue, for example, have faced troubled times over the past few years. Covid-19 did not help. Most department stores are seeking solutions that leverage America’s changing shopping habits such as delivery and pick-up. Amazon is reported to be entering the department store arena. But, how much Amazon will be effective in creating a new shopping approach is still unknown. Coronavirus notwithstanding, the concept of the department store has become less relevant and less differentiated.

Relevant differentiation is critical for any brand. If a brand is just differentiated, but not relevant, it is a novelty but not a frequent favorite. If a brand is relevant, it has meaning but it is just like other brands with nothing special to say. This lack of relevant differentiation is plaguing department stores. 

Department stores have focused on technology, delivery, data, promotions and inventory. The goal is to be omnichannel. But, there appears to be a lack of focus on the brand: what does my brand mean to customers?  Saks Fifth Avenue focuses on its inventory – the latest couture from clothing designers, for example. But, Neiman Marcus has that approach, too. And, inventory is a feature of the brand: it is not a benefit. Exactly what are the functional, emotional and social benefits of inventory? What customers’ needs? Nordstrom had a famous signature brand essence but bankruptcy and other financial issues has eaten away at Nordstrom’s fabled service orientation positioning.

One department store is focusing on its brand. One department store is focusing on making its brand relevantly differentiated to make it a customer favorite. Kohl’s is that store.

Kohl’s, once a popular Wisconsin grocery chain established in the 1920’s, opened a department store in the early 1960’s. The original Kohl’s department store positioned itself as an affordable, but not discount, emporium with a wide variety of goods.

Since its opening, Kohl’s experienced decades of management and ownership changes. And, although, over time, the enterprise faced the same sorts of issues that most brick-and-mortar stores experienced, it has managed to successfully emerge as a popular shopping venue.

Rather than just concentrate on getting goods to customers, Kohl’s has concentrated on generating and implementing a focused, relevant differential advantage. In other words, Kohl’s has spent time and effort in the development and activation of a brand promise. And, Kohl’s is making sure that everything it does is focused on delivering that brand promise to its customers regardless of how these customers prefer to shop.

In a brand-affirming interview with The New York Times, the CEO of Kohl’s, Michelle Gass, spoke about the brand’s positioning. She stated, “Kohl’s had a successful model for a long time, sort of this hybrid department store brand, but with mass convenience. But, over time, that got blurred. So, the challenge and opportunity is, ‘OK, what is the space we can occupy that will be differentiated?’”  Ms. Gass stated that Kohl’s did focus on its ability to be an “omnichannel retailer”. Customers look for this. She added, “But from a product and brand standpoint, how are we going to be more relevant? How are we going to have a brand stand for something?” 

Defining a brand promise is an important strategic step for establishing or revitalizing a brand’s relevant differentiation. Brands are promises of relevant and differentiated, trustworthy experiences. The total brand experience (functional, emotional and social benefits) is what defines the relevant distinctiveness of the brand. It is a mistake to believe that a brand promise is a mere marketing construct. A brand promise is what attracts – and generates loyalty of – customers, potential customers and employees and other stakeholders.

Creating a brand promise is essential for brand longevity. Without a concise, clear, well-articulated, credible brand promise, a brand can find itself a commodity… a generic version standing only for the basic characteristics of the category. Unfortunately, this is what has happened to department stores.

For Kohl’s, claiming a relevant differentiated position is allowing Kohl’s to become incredibly meaningful to its customer base and like-minded others. And, if the brand consistently delivers its brand promise in a quality manner, trust will build.

According to Ms. Gass, Kohl’s “… is not a traditional department store.” So, what is Kohl’s? Kohl’s is “… small… super convenient” especially when it comes to how customers wish to interact with the brand. “But more importantly, we (Kohl’s) see ourselves as a specialty concept, that Kohl’s is the curator and the editor to bring you all of the products and brands you need to lead a more active and casual lifestyle. Our strategy is the active and casual lifestyle, and selling the kinds of products that were amplified during the pandemic. People want to look good. They want to be comfortable. Their work wardrobe is going to look very different coming out of this eventually than what it was going in.”

Brand success requires many things. But, one of the most critical is defining what you want your brand to stand for in the mind of the customer. Without a brand promise, a brand runs the risk of becoming generic. And, a category with brands that are generics is a category without a market. This is because a market is a homogeneous group of people sharing common yet specific values, common yet specific needs within a common yet specific occasion. Without needs to satisfy, there is no market.

Department stores need to move on from a relentless, progressing omnichannel focus to figuring out what they want to be now and for the future. Department stores need to follow Kohl’s lead if they want to generate enduring profitable growth.