In recent years consumers have been forced to make serious changes to their spending as rampant inflation took hold and didn’t let go.
That in turn has hit retailers hard, with more than 7,300 stores permanently closing their doors in 2024.
Department stores have also been hit hard over the past half-decade. During the pandemic consumers shifted to online shopping since visiting stores was considered hazardous to their health. But many department stores struggled in that area.
Department stores have long relied on the model of drawing loyal customers to their doors and having them physically browse their way to a loaded shopping cart. And many don’t have the online infrastructure to offer the same experience as big-box stores and giants like Amazon.
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Consumers generally don’t want to wait seven days for their orders to arrive at their door — not when Amazon (AMZN) can ship them out within 48 hours. And so many customers are loath to shop at department stores, both online and in person, despite their wide selection.
Kohl’s, however, has long had a loyal fan base. Its changing inventory and attractive rewards program have been a draw for customers through the years.
But even Kohl’s isn’t immune to competition and shrinking demand. And it will need to be strategic as it navigates uncertain times.
Kohl’s makes a big change in some locations.
Nathan Howard/Bloomberg via Getty Images
Kohl’s issues rough sales outlook for 2025
Kohl’s beat analysts’ expectations on earnings and revenue during its most recent fiscal quarter. But the company expects revenue to decline for 2025 and projects that comparable sales will slide 4% to 6%.
In January Kohl’s said it had cut almost 10% of its corporate workforce. The company also plans to close 27 underperforming store locations by April.
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Of course, Kohl’s wasn’t the only retailer to issue a less-than-stellar 2025 outlook. A number of major retailers have sounded alarms on revenue declines and cost increases as companies grapple with the uncertainties of the current administration’s tariff policies.
But Kohl’s doesn’t have a lot of wiggle room given the stiff competition it faces. And the company will need to be mindful of its strategy at a time when consumers are being increasingly choosy about where they shop.
Kohl’s makes a big change that might or might not work to its benefit
Kohl’s began accepting Amazon returns in its stores in October 2017 as a way to get more customers in the door. In 2019, it expanded that service to nearly every store location.
Now, the company has said that it will stop accepting Amazon returns at select locations.
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Kohl’s associates in Leominster, Mass.; Washington, Missouri, and Eau Claire, Wis., confirmed that their stores were no longer accepting Amazon returns. A company spokesperson confirmed the change but was quick to note that it’s only a temporary test.
“To continue to learn from our customers, we are conducting a test in a handful of our stores where we will be temporarily discontinuing the third-party returns service,” the Kohl’s spokesperson said. “Kohl’s has a test-and-learn culture that helps us to evolve our store experience and stay informed about customers’ expectations and preferences.”
The idea behind the partnership with Amazon was to give Kohl’s a much-needed boost in sales. But while Amazon sales have soared in recent years, Kohl’s sales have slumped.
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In 2021, Kohl’s said it had gained two million new customers through its Amazon partnership. But it hasn’t made mention of notable customer gains since. The fact that Kohl’s is stopping Amazon returns at key locations is a pretty clear indication that the relationship has not been doing much for the department store’s bottom line.
Meanwhile, Kohl’s store employees seem happy with the change. Accepting Amazon returns has no doubt been a burden on store associates.
It’s too soon to know whether Kohl’s will end its Amazon return program broadly. But if it does, the company will need to come up with another creative way to get people in the door at a time when consumers are being choosier than ever in their spending.
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