Kohl's to open smaller formats and FILA shops

Kohl's (NYSE:KSS) is expanding on its five-year transformation plan with the addition of smaller format stores and specialty shops that will exclusively feature the retailer's proprietary brands.

The Wisconsin-based chain will open 35,000 sq. ft. stores in "underserved markets" next year, according to Kevin Mansell, Kohl's president, chairman and CEO. Kohl's will open between five and 10 such stores and is creating a completely new format to focus on a single store brand, starting with FILA. Ten to 15 FILA shops will bow in 2016 in outlet malls.

The retailer will also expand its Off-Aisle off-price format after the initial success of its pilot location. Two more Off-Aisle units are planned for 2016.

"We are in a strong position to explore new formats as an additional avenue for growth and diversification. We have created a smaller, more nimble 35,000 sq. ft. Kohl's prototype and will open five to 10 of these Kohl's stores in underserved markets next year," Mansell told attendees at the WWD Apparel & Retail CEO Summit in New York City. "We have also leveraged the strength of our exclusive brands to create completely new retail outlet locations solely selling our proprietary brands, starting with FILA."

"Additionally, after seeing the potential from our first Off-Aisle by Kohl's pilot store opened last year, we will open two more Off-Aisle by Kohl's locations in 2016. All three of these new formats create new revenue streams and growth for Kohl's," he said.

It's part of the retailer's updated transformation strategy unveiled last year.

The company's "Greatness Agenda" is a multi-year strategy to grow various, specific aspects of its business. The earliest efforts focused on the Yes2You Rewards program, which now boasts 33 million members. Kohl's has also expanded the beauty department, introduced personalized marketing, launched a new mobile app, and added several new national brands to its portfolio.

The success of Kohl's Yes2You Rewards is yielding data that the retailer is putting toward its personalization efforts. Expect more targeted offers and a greater focus on popular categories and items identified by data-driven insights.

"The Greatness Agenda is our multi-year plan and it's working. Since announcing this strategy one year ago, we've changed the trajectory of our performance trend line from negative to positive," Mansell said. "The key business initiatives outlined in the Greatness Agenda one year ago have delivered, or in most cases over delivered, to our plan. With one year of key wins and further customer insights under our belts, we are on course to meet our three-year goals and become the most engaging retailer in America."

For more:
-See the Kohl's press release
-See this presentation by Kevin Mansell, Kohl's president and CEO

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