|Sears Hauled Over By Kohl's|
|Topic||Production and Costs|
|Key Words||Market share, sales, stock price, price, cost, rents.|
Kohl's department store is taking market share away from rivals such as Sears and J.C. Penney which sell moderately-priced apparel, shoes, and home products. Sales have grown at Kohl's, while they been flat at the other stores. Kohl's is expanding its stores to more regions. As a result, the price of Kohl's stock has been rising this year, while the price of the other stores' stock has fallen significantly.
The opinion of market analysts is that Kohl's has a lower cost structure, which allows it to charge cheaper prices for brand-name goods. In terms of location, Kohl's prefers to avoid malls where rents can be high, parking difficult, and distractions many. Instead, they tend to locate in strip centers with high-profile retailers. The stores are only one floor and approximately 86,500 square feet. They are laid out like a racetrack with goods around the edge and in the center. Cash registers are only found at the front of the store, to save on staff, although customer service is impaired as result.
Kohl's also tends to place its stores where the population is dense and incomes are at least $35,000 a year. It keeps customers coming back through 80 percent of its goods being brand-name items.
(Updated November 1, 1999)
|Source||Lorrie Grant, "Thriving Kohl's turns up pressure on competitors," USA Today, October 14, 1999.|
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