Academic journal article Journal of the International Academy for Case Studies

Kohl's Department Store: Fastest Growing Retailer in 2007

Academic journal article Journal of the International Academy for Case Studies

Kohl's Department Store: Fastest Growing Retailer in 2007

Article excerpt

CASE DESCRIPTION

The primary subject matter of this case concerns an overview of the U.S. retail industry and specifically addressing an in-depth view of the Kohl's Department Store strategy. This case is primarily based on secondary source information and is ideal as a leadoff case for business undergraduate students (level 4) to demonstrate their ability to interpret basic strategic planning concepts. The case was written to provide an opportunity for students to 1) apply Porter's Five Force Framework to analyze the impact of the competitive forces on industry attractiveness, 2) prepare a thorough SWOT analysis to assist in developing potential strategic options, and 3) practice evaluating an organization's strategy. The decision focus of the case centers on what strategy can sustain a competitive advantage given the high level of consolidation within the retail industry. The case is designed to be taught in 2 class hours and is expected to require 6 hours of outside preparation by students.

CASE SYNOPSIS

The retail industry is in a state of flux, marked by a high-level of consolidation and new partnerships. The long-term trend of consolidation and intense competition for the mass market has been especially difficult for the traditional department stores as the popularity of the shopping mall declines while big-box discounters and specialty stores become more attractive alternatives. Amidst the recent restructuring arises the need to transform the competitive landscape; executing a well defined corporate strategy will be a key factor in determining which retailers will stay on top.

Making headlines with its aggressive five-year growth strategy, Kohl's Department Store continues to capture the attention of the public and investors alike. After years of retail consolidation, how does Kohl's manage aggressive department store expansion? Will the Classic American Family be able to "expect great things" from Kohl's ten years from now or will the department store overextend itself and relapse into stagnant sales growth?

RETAIL LANDSCAPE

The retail industry is currently being bombarded with merger and acquisition activity, ultimately restructuring the retail landscape once again. During the 1970s, downtown retail stores began losing consumers to the upcoming regional shopping mall structures typically located in the suburbs. Shopping malls appeal to consumers' social needs by becoming focal points in the community offering more than outlets for obtaining desirable goods by providing entertainment through movie theaters, restaurants, parks and fountains as integral components of the social outing. For some, shopping is a means of entertainment in itself to reduce boredom, keep up with the latest trends, and swap ideas with friends. The shopping experience is enhanced by the retailer who can appeal to the consumers' desires, not just their basic needs. Although enclosed malls have been successful at holding their ground for the past few decades, the frequency of mall excursions is on a downswing.

The mid-1980s brought about a surge of manufacturer's factory outlet stores and outlet centers serving price and value conscious consumers. Along came the 1990s when retail channels really blossomed into new opportunities. Located off the beaten path, outlet centers and big-box discounters were on the upswing. Revitalized downtowns, strip malls, and catalog sales continued as on-line shopping made its debut. Today's consumer has more shopping channels to choose from than the time to shop. Competition among retailers is gaining momentum, especially for multi-line retailers or department stores, as evidenced by an approximate 50% decline in revenue over a decade (Adjoined Consulting LLC, 2006). See Exhibit 1 for revenue share by retail format.

Shopping Seasons

Retailers are particularly keen to two shopping seasons: back-to-school and Black Friday weekend. …

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