HILLSBOROUGH, N.J. — Kohl’s, one of today’s hottest retailers, is creeping deeper into beauty.
This story first appeared in the October 25, 2002 issue of WWD. Subscribe Today.
Proof of the power merchant’s foray into beauty was evident Oct. 10 at the opening of a new 85,000-square-foot store in this bustling New Jersey suburb. The first 360 customers over the age of 16 were given free private label bath gel products. The items were gone within one hour.
The unit here was one of three new Kohl’s that opened in New Jersey in early October, bringing the state total to 24. Other sites were in Wayne and East Brunswick. Nationwide, there are 457 stores. Although this store was built from the ground up, Kohl’s has snared many new locations from the skeletons of shuttered mass merchants such as Caldor.
Kohl’s is one of the few retailers to buck current sales trends. Although September resulted in a drop in monthly same-store sales, that was the chain’s first decline in a year. And, financial analysts report sales are already rebounding at the retailer as consumers seek good value. “Other than Wal-Mart, they are the hottest retailer around,” said Ted Krauss, a retail expert based in New Jersey.
Shoppers, clutching coupons for 10 percent off their purchases, packed the store opening. Many had tried to visit Kohl’s a few days earlier, but construction problems delayed the planned soft opening. Customers trying to get in were given more coupons to make opening day a bigger bargain.
“This area really needed something like this,” said Lori Konkowski, a local shopper. “It will really be the end for the Kmart,” she said of an old and decaying Kmart just a few miles away.
For many consumers venturing into the shopping center, which will eventually house a Pathmark, a Lowe’s and an Applebee’s, this was their first experience at Kohl’s. Many described it as a cross between the now defunct Stern’s department store and a Target. “There are some better brands than Target and it looks like a department store, but the prices are better than department stores,” added Beth Klinck, another new shopper.
Consumers flocking to Kohl’s couldn’t help but encounter the beauty selection. Cute ceramic Halloween pumpkins filled with beauty items from Body Source were featured on an end-of-aisle display near the entrance and priced at $10. The entire department is heavily geared toward Kohl’s Body Source label, as well as products from Burlington Toiletries International. “Kohl’s has an exciting assortment for their customers. They are always on top of fashion trends,” said Avery Kaufman, director of product development at Burlington.
Kohl’s stocks impulse and cute beauty items rather than planned needs. Few shoppers at the opening said beauty was on their list. Yet many grabbed reasonably priced items that caught their attention. For example, one young consumer snapped up a pencil case shaped like a sneaker with cosmetics inside.
Kohl’s has had a limited selection of beauty items for years. It does not have rows and rows of pegged cosmetics. However, the Kohl’s here has a larger and more impressive selection of beauty than an older Kohl’s about 30 minutes away in Princeton, N.J. And, while Kohl’s stresses private label or independent players, the store here includes a mix of national brands, such as Coty, The Healing Garden, Neutrogena and designer fragrances. Kohl’s declined to comment.
During the opening, the store almost sold out of The Healing Garden, which was priced at 34 percent off the suggested retail. Neutrogena skin care products were also moving briskly, thanks to a 30 percent-off sale.
Fragrance gift sets were priced at $15.95 to $35. Like many mass merchants, Kohl’s has adopted a clamshell presentation for prestige scents. However, Kohl’s uses the plastic casing as a way to insert security devices, rather than as a vehicle to peg the fragrances. All items are presented on shelves available to consumers without assistance. There’s also a clever scratch-and-sniff sticker on Liz Claiborne products so consumers can get an idea of what the juice inside smells like.
Many vendors expect Kohl’s will continue to add more beauty items, and likely cross merchandise beauty products with apparel departments. Many suppliers are eager to help Kohl’s expand. Beauty, sources said, adds robust margins that are attractive to merchants operating on pricing structures such as Kohl’s.
In 2001, Kohl’s sales rose 21.7 percent to $7.49 billion. The chain has enticed well-known brands to its stores, such as Levi’s, Dockers, Reebok, Skechers, Mudd, Calphalon, OshKosh and Nike. Apparently, the combination of price, brand names and location is clicking for Kohl’s. “Stores like Stern’s went out of business because they were no longer catering to the needs of the consumer,” Krauss said. “Kohl’s secret is giving customers what they want.”