MILWAUKEE – Kohl's Corp. is testing small cafes in two of its department stores, another step by the big retailer as it seeks to drive traffic and re-energize revenue growth.
Now serving up cinnamon lattes, caramel macchiatos and other fancy versions of the once-humble cuppa joe that have entrenched themselves with consumers are two southeast Wisconsin Kohl's stores.
The idea: Give the firm's famously value-conscious shoppers a reason to linger — and perhaps use their Kohl's Cash on yet another 20-, 30- or 40-percent-off selection.
"You want the customer to dwell more," said Jon Grosso, executive vice president and director of stores for the 1,166-location chain. "You want them to spend time in the building."
The cafe venture — besides Caribou Coffee, the outlets offer smoothies, other beverages and snacks — is an experiment but one the retailer will be watching closely. "We want to test and learn and see what we can do in 2016," Grosso said. " … And then, wherever we expand it, if and when we do, we want to apply those [lessons]."
Now embarked on what it calls the "Greatness Agenda," which envisions increasing the firm's sluggish sales by about $2 billion by 2017, Kohl's has launched a number of initiatives — with the drive shaped in part by chief merchandising and customer officer Michelle Gass, who came to Kohl's from Starbucks. Among other things, Kohl's has revamped the beauty sections in hundreds of locations, joined the array of firms that let customers buy products online but pick them up at stores, and last June opened its first off-price store.
But the company still moves at a measured pace, and is hardly in the vanguard with its Kohl's Cafes. Rival Target Corp., for example, has Starbucks outlets in more than 1,300 of its stores. One twist with Kohl's, though: The cafes have almost no seating. The idea, apparently, is that customers will sip as they shop.
That drew questions from two retail consultants who otherwise think Kohl's is on the right track.
"It could be a good idea," said Anne Brouwer, senior partner at McMillan Doolittle. " … You'd rather have people stay in the store, spend more time, spend more money, relax, have an enjoyable visit, than to leave and go to Starbucks and potentially not come back."
"What I don't understand," Brouwer added, "is how relaxing is it to be shopping … and potentially trying to hang on to a handbag and a toddler and a cup of coffee?"
Similarly, Joe Pine, co-founder of consulting firm Strategic Horizons, said the one piece of advice he would offer Kohl's is to provide more seating. Otherwise, count him as an enthusiast. People want more than products now; they want experiences, he said.
But analyst Paula Rosenblum of Retail Systems Research is a skeptic — and one who sees retail as fundamentally about moving goods.