It is no hidden fact that the well-known department store chain, Kohl’s has been struggling to keep up with evolving markets and a consumer base who simply does not have enough disposable income to warrant regular shopping sprees anymore.
In the hopes of curbing this decline in sales, the company has been making various attempts at restructuring and change. After recording losses for 11 consecutive fiscal quarters, it had been decided that several underperforming stores will be closed down so as to minimize losses as best they can. Additionally, the corporate workforce will be downsized by 10%.
The company also recently welcomed a new CEO, Ashley Buchanan, who immediately got to work to return the retailer to profitability. However, it seems that one of these new policies has not been well received by customers.
Kohl’s policy change sparks controversy
One of the main amenities offered by the retailer that brought in customers is Kohl’s Cash and coupons, a rewards systems that allowed customers to enjoy discounts and deals on merchandize. However, the previous CEO’s decision to make a cost-cutting amendment to the way this system is executed does not appear to be sitting well with customers.
As a result of this amendment, customers are now noticing a large number of restrictions and exclusions on products that can have the Kohl’s Cash discounts applied to them. In an earnings call, it was said that last year recorded the highest number of exclusions to ever be implemented by the company, according to Buchanan.
Presumably, these exclusions have been driving customers away and as such Buchanan has promised to put an end to them.
“Over the years, our list of excluded brands on our coupon has grown too large with the percent of sales that are excluded from coupons reaching an all-time high in 2024,” he stated. “This has created confusion and frustration with our loyalist customers.”
Additionally, Buchanan also claimed, “We are in the process of reversing some of these exclusions to simplify the experience and allow our customers to shop with our promotional coupons more consistently.”
“More clarity in our price and value messages” will be seen according to the new CEO, and this will be “amplified to resonate” with customers.
“Our goal is to offer quality products at great prices across our entire portfolio, so our customers can more clearly see the value they’re getting with their purchase,” Buchanan added.
Recent company history
Despite his best intentions, former CEO of Kohl’s, Tom Kingsbury’s attempts to increase company sales was not as fruitful as he had hoped. The introduction of Sephora and Babies “R” Us stores was aimed at bringing in new foot traffic, particularly from a younger cohort of consumers. This move, however, did not yield the intended results and instead, it cost the company some of its long-time customers, according to Jean-Pierre Dubé, an expert and a research associate with the National Bureau of Economic Research.
“Kingsbury disconnected from their core customer and failed to connect with the younger generation that he was presumably going after,” Dubé noted.
Apparently, Kohl’s longstanding shoppers felt “betrayed” by this move and understandably so. By introducing external commercial brands, pricing is likely to go up.
According to the expert opinion of Michelle Greenwald, a professor at the New York University Stern School of Business, the company will have to make “attractive offers” to customers if the retailer wishes to retain them.
“Once customers leave, they find other alternatives that they’re happy with,” Greenwald cautioned. “It’s not like they’re necessarily going to come back.”
“A lot of it, they’re going to just lose forever,” she added.
It remains to be seen whether or not Buchanan will be able to turn things around for the company, however, his initial plans do appear to be in line with Greenwald’s advice.