Kohl's Shoe Deal With Aldo Aims to Pick Up the Pace for Its Store-Brand Footwear
Kohl's (KSS) has created excitement among its core customers by regularly adding new private label and exclusive brands, but a new deal with fashion footwear producer Aldo Group International should kick its footwear business into overdrive.
The deal with the Canadian firm will provide a focal point for Kohl's shoe assortment, one that's growing but diffuse enough to require firm direction. Aldo, signed on as Kohl's footwear coordinator, can provide that, dedicating design and production capacity to ensure the company's product assortment can pace the fashion and marketplace trends that drive sales.
Kohl's has lots of footwear, with much consisting of private labels and exclusive brands it licenses from other companies, with Candie's being a prime example. But it's limited by space to how it presents the product category. In fact, its assortment is a bit of hodgepodge, cluttered with footwear lines that are an extension of the various apparel labels the retailer carries.
Now the guiding hand of Aldo gives Kohl's the chance to organize the styles it offers based on current fashion trends. If consumers begin shifting toward more glamorous looks, Aldo can help Kohl's deliver more sophisticated styles across its exclusive and private label selection, and at the same time expand the in-store presence of an upscale label such as Simply Vera Vera Wang (pictured) as representative of the move.
Conversely, if trends go younger and bohemian, Kohl's and Aldo can put a more casual spin on store brands and build the presentation of Avril Lavigne's rock-inspired Abbey Dawn. However the market moves, Kohl's can follow with a presentation that customers can readily understand and appreciate.
The private label and exclusive licensed brands that Kohl's has added over the past few years have been sufficiently successful to keep Kohl's adding more. CEO Kevin Mansell, said private and exclusive brand penetration increased by almost three percentage points to 47 percent of sales in the first quarter, even as the top line gained 11 percent, which resulted in gross margin expansion and contributing to a 45 percent net income gain to $199 million.
Yet even Mansell, an architect of the private/licensed label strategy, conceded that the expansion of Kohl's-only brands has limitations. The retailer already offers 35 brands in the women's product category alone, the majority exclusive and private. That's a lot of labels for consumers to take in on a store visit and Kohl's to support in a world of changing tastes. The fashion strategy currently operated by rival Sears (SHLD) evolved from a decision to consolidate scores of private labels that had become so numerous they were hard to distinguish one from the other.
With the Aldo move, Kohl's is adding the kind of fashion expertise it has gotten in the past by arranging exclusives from recognized brands and designers. Only now, it isn't wedging in another brand but getting help to organize what it has in a way that should help it build sales. Target (TGT) has been expanding footwear departments in its latest remodeling efforts and Payless ShoeSource (PSS) has been building an fashion accessories business on its core operation. Other retailers recognize they can grow their business with cost-conscious fashion shoppers by basing initiatives on footwear. So Kohl's decision to upgrade its footwear operations with Aldo is a timely move to win shoppers who otherwise might get snapped up by rivals.
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