The store closure pandemic strikes again as well-known retail chain, Kohl’s, is set to make some big changes — and it is perhaps not for the better but rather a last ditch attempt at keeping the business running. Retailers across the country having been taking knock after knock over the last few months, compelling companies to scale down their physical presence. From Walmart to Macy’s, and even Starbucks Coffee, consumers are just not willing — or rather not able — to spend as much and as often as they used to.
It appears to be a double whammy of downsizing for the department store chain, Kohl’s, as the company has made the decision to not only shut down certain locations, but also layoff a significant portion of its employees.
Kohl’s scales down to bring profits back up
The Wisconsin based retailer has been struggling lately, more so than its industry peers it seems. As a result, the company had recently announced its decision to close down multiple stores across the country in order to not run at a loss amidst these tricky financial and economic times.
The company had shared with Fox Business that this downsizing of operations is meant to “support Kohl’s ongoing actions to increase efficiencies and improve profitability for the long-term health and benefit of the business.”
By April 27, Kohl’s will have twenty-seven less branches as underperforming stores will be permanently closed down. These 27 stores span across fifteen states. Additionally, May will bring with it the closure of the San Bernadino e-commerce fulfilment center situated in California.
A full list of the stores that will be closing down can be found here.
Store closures aren’t the only tough decision this company is making
It seems that merely closing down underperforming stores across the States is not enough to return this retailer to profitability. In addition to scaling back on its physical presence, the retailer will also be scaling back on employees. Presumably, floor workers at the stores that are being shut down will also lose their jobs once the relevant locations shut their doors.
However, in addition to this, the company has made the decision to reduce its corporate workforce by a significant 10%. The company’s reasoning for these layoffs at a corporate level is to “increase efficiencies and improve profitability.”
Kohl’s has also shared that the employees who are impacted by these layoffs have already been notified of the impending termination of their employment. The company is offering a competitive severance package to the affected employees as well.
Brick and mortar retail in the digital era
The world has been steadily becoming more digitized over the last few years. The COVID-19 pandemic lockdown further highlighted the convenience of shopping online and having your goods delivered directly to your home. And when you consider fuel or transportation costs, along with the time needed to travel through traffic, e-commerce does seem like the obvious choice. This is all without even considering the rising costs of living and inflation impacting consumers. From a company perspective, paying rent on a storefront that is not raking in profits also does not make for good business sense. In-store retail appears to be something of a lose-lose situation for everyone involved in the current digitized world.
Perhaps the coming years will see Kohl’s shifting to a predominantly digital business model to combat the underperformance reported at physical stores. Conversely, if this downwards spiral continues and the company is is on the precipice of its final days, you may want to cash in all of your Kohl’s Cash, which is a rewards system that allows customers to earn a percentage of cash back on every purchase they make.