To remain competitive as it looks to boost flagging store sales in a tough retail environment, department store chain Kohl’s is continuing to invest in omnichannel operations, executives said in a second quarter call with analysts, as digitally-driven sales grew while overall revenue fell.
“In our focus around omnichannel initiatives, we continue to see strong results in digital demand, with online-generated demand achieving a mid-teens increase, as we expected,” said Kevin Mansell, chairman, president and CEO of Kohl’s. “We continue to invest in technology and training in our stores to allow us to ship from store and provide buy online, pick up in store capabilities, providing faster shipping times and more convenience for the time-strapped customer.”
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In the second quarter, the combination of ship from store and buy online, pick up in store sales represented 21% of total dollar online demand and 23% of total unit online demand, both up from the first quarter, Mansell said.
“We do believe we have a big opportunity there, both short and long-term, which we think will only continue to amplify the role and relevancy of our brick-and-mortar stores,” he said.
Mansell added that Kohl’s ability to ship from store more effectively and less expensively, along with the growing customer adoption of buy online, pickup in store, “gives us a sense that that’s also a key element for us to see the value in having a broad network of brick-and-mortar stores.”
The company closed 18 stores in June, following a disappointing Q4, but executives said there were no plans to close any more stores in 2017.
Asked if the company has seen any pickup from Macy’s announced plans to close 100 stores, Wesley S. McDonald, senior executive vice president and CFO, said it has been negligible as Kohl’s is more of a big-box operator than a mall-based company.
“Because they’re in malls, very similar to when Penney’s was pursuing their different strategy, we didn’t see a big pickup,” McDonald said. “We haven’t seen a big pickup from the Macy’s closures. I would think the mall-based retailers would see more of that.”
Like many other retailers, Kohl’s is looking to mobile as a future sales driver, especially among millennials. The Kohl’s app was downloaded by more than 13.5 million customers in Q2, with usage growing including as a mobile payment vehicle.
Overall, Kohl’s sales were down 2% in the quarter to $4.2 billion. Same-store sales declined 1.8% compared to the previous year.
Mike O’Brien is Senior Editor of Multichannel Merchant