Kohl's Advancing Toward $1B E-Commerce Goal

Kohl's set itself a simple, elegant goal for fiscal 2011: $1 billion in e-commerce sales. The department store retailer is on track to reach that goal, with $171 million in e-commerce sales during Q2, a 36% increase over the same period last year. Kohl's has also brought a third e-commerce fulfillment center, located in Maryland, online to support the peak 2011 holiday season.

"With the amount of [sales] increase we have and from many objective numbers I've seen, our online business is growing much faster than the overall industry online business," said Kohl's CEO Kevin Mansell during a recent conference call.

While the $1 billion one-year sales goal is a great motivating tool, Kohl's takes a long-term view of e-commerce. "In the short term, [e-commerce] is a little bit of a drag on operating margins because we've made so many significant investments," said Mansell. "That will continue until early next year though it will improve from this year's level. In the longer term¼I think that our online business will be a tailwind to our operating margin."

Expanded online merchandise offerings are part of Kohl's long-term plans for e-commerce growth. While Kohl's private label and exclusive brands currently have lower penetration in its online merchandise assortment, "we do have strategies in place as we move into next year to pretty aggressively change that trajectory," said Mansell. "So we're going to be offering much larger assortments than we do in the store in our private and exclusive brands, and I think that's something that will benefit us going forward."

For related content see: Kohl's Q1 Online Sales Climb 47% to $187M

Kohl's Projects Online Sales will Total $1 Billion in 2011