"From a marketing perspective, our strategy will reach customers we haven't reached before," Larry Montgomery, Kohl's chairman and CEO, said during a presentation at the Goldman Sachs 13th Annual Global Retail Conference here.
The retailer has already started its pitch to lure customers from higher priced department stores with the announcement last month that it has teamed up with high-end fashion designer Vera Wang to create a new fashion and lifestyle brand. Montgomery says the company plans to expand on those branding efforts with exclusive offerings and multi-media marketing initiatives to build brand awareness.
So far, the retailer's initiatives have paid off. With brands like Chaps and Ralph Lauren in its collection, Kohl's has been able to attract customers that normally shop in upscale department stores and led to a 4%-increase in ticket sales.
In fact, says Montgomery, sales throughout the country have continued to grow, particularly in the Southwest, which has become the chain's second-largest region in the past four years. While most retailers struggle with rising fuel prices and interest rates that have cramped consumer buying, Kohl's is seeing more store traffic and higher profits than many of its competitors.
"Having a broad lifestyle appeal is going to be a big benefit to us as things shake out," he notes. "We're positioned well. We've got momentum."
Yet the company still takes a conservative approach to retailing, which Montgomery says will allow it to "pace the business and do it at a higher profit. We've always performed from an operating margin at the top of the industry," he notes.
"We've always been a very productive low-cost producer, much in line with a discounter mentality, but we have the ability, through the convenience aspect, to broaden our appeal and really hit home with the value equation in fashion merchandise and soft home and deliver in the neighborhood of what traditional deptartment stores haven't been able to do."
For Kohl's, that has meant sales increases of 15% this spring and net income of $400 million. The retailer's new designer lines and marketing initiatives, Montgomery says, should take the chain well beyond those numbers in the future.
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