While most retailers had a disappointing Christmas, Kohl's department store chain racked up a same-store sales gain of nearly 15% in December - capping a successful year. Kohl's faces the same risks as other retailers operating in an economic downturn, particularly because its offerings are mostly nonessential items. Still, the company remains on target to open 50 to 60 new stores this year, including expansion into new markets in Georgia and Arkansas that will help it fulfill its ambition to become a national chain.
Shoppers like Kohl's for its low prices and national brands, but part of the success formula is its unique store design. Modeled after a racetrack, the Kohl's store layout is smaller and simpler than those of most department stores. Its design is geared to smoothly lead shoppers past all the merchandise, in what the retailer hopes is a continuous circuit of temptation.
One lap at a typical store, for instance, leads you by Nike athletic shoes as low as $39.99, then on to housewares where dishes and cups mimic Crate & Barrel's cheap-chic sensibility - but at even more competitive prices. Swing around into the girl's department with its $29.99 Mudd brand jeans (regular price: $40), and you can't help but pass the Hallmark stationary boutique and the toy department with Barbies and Legos, before finally crossing into the checkout register lane.
With an average 86,000 square feet, a Kohl's store is about half the size of most department stores, helping busy shoppers get in and out quickly. Still, it provides ample room to roam and limits departments around the track to five or fewer display racks, in hopes that the cleaner display will encourage people to divert freely from housewares into, say, careerwear. A shopper walks roughly a quarter of a mile on the track and its main aisles in order to cover the whole store. At rivals such as J.C. Penney, Sears, or Dillard's, the distance could easily double, and a shopper typically must negotiate two or more levels. About 89% of Kohl's stores are on a single floor.
Conventional retail wisdom says store layouts ought to keep people shopping longer, but Kohl's tries to shorten each trip. "Our whole philosophy is: How can we have shoppers buy more and spend less time in our stores?" says R. Lawrence Montgomery, chief executive of the 320-store chain.
The layout has helped Kohl's squeeze out surprisingly high sales per square foot, a standard industry measurement, among its department-store peers. Kohl's stock price, meanwhile, has nearly doubled from its 52-week low of $34.78 to $65.91.
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