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

Kohl's is betting heavily on e-commerce growth. The department store retailer opened a second e-commerce fulfillment center in San Bernardino, CA in 2010 and is planning a third center this fall, part of a planned $1 billion in capital spending for the coming year.

Kohl's executives believe continued online sales growth will justify the expense. "Investment in our e-commerce business continues to result in higher sales," said CEO Kevin Mansell during a recent conference call. "E-commerce sales increased almost 60% for the [fourth] quarter and for the year increased more than 50% to $720 million." Later in the call, Mansell said "I would expect us to achieve $1 billion in e-commerce sales in 2011."

Mansell cited a number of factors contributing to Kohl's e-commerce success: "We have broadened our assortment pretty significantly. We've improved the amount of goods that are available online that we either don't have room for in our stores, extended sizes for instance, or categories and price points that we don't sell in our stores.

"From a marketing perspective, we've been very aggressive in the digital world and in social media to market aggressively our online business," Mansell added. "And then maybe most importantly, we made a very significant capital investment in both technology to drive the customer interface, and in fulfillment we expanded our capacity, essentially doubling that this year. All those things worked together to give us the sales increase."

Digital Signage Chainwide by Holiday 2012

The company is not ignoring its brick-and-mortar channel: it opened 30 new stores in 2010 for a total store count of 1,089, and plans to open 40 more stores this year. In addition, Kohl's deployed digital signage to 50 stores during Q4, bringing the total number of stores with digital signs to 100. "We would expect to have rolled the signs to about 500 stores by the end of the year, with the full chain rollout expected to be completed by holiday 2012," said CFO Wesley McDonald.

Cross-channel activity is facilitated with Kohl's in-store kiosks, which were deployed chainwide in 2010. The kiosks have been successful enough to justify additional devices in approximately 100 stores. Kohl's measures the kiosks' success in part by the number of shoppers taking advantage of their everyday free shipping. "It's one of the reasons why we know that the kiosks are dramatically outperforming the plan we set, which had aggressive hurdles from an ROI perspective," said Mansell.

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