News Feature | April 12, 2016

Kohl's Abandons Caribou Café Expansion To Refocus Turnaround Efforts

Christine Kern

By Christine Kern, contributing writer

Kohl's SIgn

The experiment performed below company expectations.

Kohl’s Corp. launched a pilot of two trial coffee cafes in Wisconsin stores in September 2015 as an effort to entice shoppers to linger in-store.  The upscale Caribou Coffee cafes offered espresso drinks and other fare and were opened in response to sluggish turnaround efforts by the retailer in order to drive traffic and revitalize sales.

Now, Kohl’s has announced that the pilot was not as successful as they had hoped, and that the pilot cafes in Menomonee Falls and Delafield Wisconsin will be closed. The cafes offered smoothies and other beverages along with cookies and packaged snacks, and offered limited seating to encourage shoppers to browse the store while they enjoyed their refreshments.

“Although Kohl’s received positive customer feedback, the pilots did not provide the business benefits need to warrant further testing,” said Jen Johnson, vice president of corporate communication. “We will be removing the cafes in the coming weeks.”

However, Kohl’s continues to explore “new experiences in stores,” Johnson asserted.  “Kohl’s is committed to providing our customers with an easy, convenient shopping experience in a way that is personalized and engaging – no matter how each customer prefers to shop,” said Kevin Mansell, Kohl’s chairman, chief executive officer and president. “Our digital teams are continually testing new ideas and capabilities to create a world-class omnichannel experience that is seamless across devices. With each evolution, we aim to elevate our offerings for an easy, inspiring shopping experience.”

Kohl’s is in the midst of a difficult turnaround period, exploring a number of options to accomplish the goals of its “Greatness Agenda,” which includes shaking up its merchandise offerings and strengthening its loyalty program. Kohl’s has also invested a lot in omnichannel efforts like ship-from-store and in-store pickup of online orders, and the company has said that it will increase its IT investments to improve its mobile engagement further.

But the company is also experiencing some serious challenges, despite its strengths in today’s tight market. Kohl’s stock had fallen on Friday after Credit Suisse called the retailer a “canary in a coal mine” that illustrates challenges in the retail sector as a whole, according to The Street. The retailer has faced sluggish returns in its ecommerce sector, along with increased spending on employee’s wages – a challenge faced across the board in the retail sector today.

“Most retailers faced wage pressure in 2015 due to essentially industry-wide wage increases triggered by Walmart Stores’ decision to increase its minimum wage,” explained the firm. “We expect wage pressure to continue in2016 as the second round of wage increases become effective.”

Kohl’s also recently announced plans to shutter 18 underperforming stores, even as it pilots a new smaller format store and move into the outlet space, according to a company statement.

“We see exciting growth potential in the new stores and new formats that we are opening this year and are heavily investing in the health of our overall stores portfolio to continue to serve our current and future customers,” explained Kevin Mansell, Kohl’s chairman, president and chief executive officer. “A vital component of our omnichannel approach is to clearly understand the evolving retail environment and ensure that we are well-positioned to leverage our resources on productive projects.”