Rising digital dependency has amplified online shopping trends, urging retailers such as Kohl’s Corporation KSS to continue strengthening their e-commerce capabilities. Progressing along such lines, the company opened its sixth e-commerce fulfillment centre in Etna, OH. This is likely to help the company in meeting the online demand for its products more efficiently and thereby accelerate digital sales. Let’s look closer into this latest development.
Strengthening Online Capabilities Looks Prudent
Kohl’s began the construction of the 1.2 million square-foot facility in Ohio in 2019. The construction work was temporarily halted in 2020 due to the pandemic, though it was resumed in 2021. This new facility is the company’s largest and the most efficient e-commerce fulfillment centre. The facility will be engaged in processing, filling and shipping orders from Kohls.com. This next-generation facility makes use of automation and advanced technologies for processing orders faster. The state-of-the-art technology makes this facility three times more productive than the other e-commerce fulfillment centers.
Moreover, the facility will enhance proximity to customers, geographically. This, in turn, is likely to boost customer pickups from stores. Moreover, the new facility will help manage fulfillment costs at a lower level, which resonates well with the company’s aim to increase operating margins and enhance end-to-end supply chain efficiencies.
Apart from these, the facility will create more than 400 new jobs in the Columbus area over the next few months. The company also plans to add thousands of seasonal positions in the second half of the year to support the rise in digital demand during peak seasons. Additionally, Kohl’s will offer employees competitive wages, weekly paychecks and a free on-site wellness center for associates and their families. Employees can also avail an immediate 15% discount when they shop at Kohl’s.
Management highlighted that the company’s digital sales have grown more than 100% in the past five years. The continued momentum in digital demand makes its necessary for the company to strengthen fulfillment capabilities so that consumers’ needs are met efficiently. In fact, we note that the company has continued to invest substantially in the development of a powerful omni-channel platform for meeting consumers’ needs with ease and enhance their shopping experience.
In addition to e-commerce fulfillment centers, Kohl’s also leverages the strength of its strong store network to fulfill online orders. The company has more than 1,100 stores nationwide. During fiscal 2020, the company’s stores fulfilled nearly 45% of digital orders, through omni-channel services such as Drive Up, In Store Pick Up and Ship to Store. Moreover, the company is ramping up digital marketing and enhancing website features. Kohl’s also strengthened its ties with retail giant Amazon.com, Inc. AMZN to drive traffic. Incidentally, the company is benefiting from the rollout of Amazon returns program nationwide.
Such well-chalked endeavors coupled with efforts to boost assortments via prudent partnerships and innovations as well as disciplined capital management practices keeps Kohl’s well placed for growth in the forthcoming periods. Shares of this Zacks Rank #3 (Hold) company have surged 44.2% in the past three months compared with the industry’s rise of 40%.
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