Kohl's 2002 Annual Report Download - page 9

Kohl’s stores are located in growing suburban areas, close to where
our customers live and work. We prefer free-standing locations or
power strip malls that provide visibility, ample parking and easy
access. We enter major new markets with a critical mass of stores
that enables us to establish a presence and leverage marketing,
regional management and distribution expenses. Once established,
we add fill-in stores to further build market share. Typically, we target
trade areas of 150,000 people or more and build an 89,000 square
foot store to serve our customers.
Preparing for new market entries
Kohl’s process for opening new stores and new markets has been
developed and refined over the last 10 years through the opening
of more than 400 stores. Preparations for new market entries begin
a number of years before the first store opens.
As an example, our March 2003 entry into Southern California began
with the identification of locations in 2000. This long lead-time
enabled us to thoroughly research and understand the market from
every aspect, including site locations, store designs and logistics.
The hiring of key regional and district managers for our Southern
California entry began nearly two years ago, enabling them to gain
firsthand experience by working in existing stores and participating in
other major new market entries. The store management teams were
identified and hired in 2002, ensuring that new Associates would
receive on-the-job training in existing stores and that the Kohl’s
culture and operating principles remain consistent throughout the
organization.
Our merchandise and market solutions teams researched the market
over the past two years to develop a merchandise mix that is
tailored to the Southern California climate and lifestyle.
Construction of a new distribution center in San Bernardino to
support this region began in 2001, with Associates hired in 2002.
The new distribution center began receiving merchandise for the
new stores three months before the stores opened.
Our advertising started two months before the opening, initially
introducing the Kohl’s concept to our future customers, and then
intensifying as the grand opening approached. A combination of
television, radio, outdoor, newspaper inserts, magazines and localized
community programs, in both English and Spanish, customized our
already successful marketing strategies to this new West Coast market.
Small-store test
In response to feedback from customers, in 2002 we initiated a
small-store test to serve trade areas of 100,000 or less in population.
The test consists of one store each in Wisconsin, Iowa, Michigan and
North Carolina. The stores have a layout that is similar to our larger
prototype stores and includes all departments, but with an edited
merchandise assortment. We will be evaluating all aspects of these
test locations over the next few years. In the meantime, we will
continue to focus on increasing the number of our traditional
prototype stores that have been so enthusiastically received in every
market that we enter.
ENTERING NEW MARKETS
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A new distribution center
in San Bernardino,
California, supports
Kohl’s expansion into
the Southwest.