Aug 23, 2022In the past few years, the retail world has undergone a whirlwind of changes brought on by the COVID-19 pandemic and the resultant push toward omnichannel retailing. A lot of retailers have had to adapt their inventory-management and customer-fulfillment processes as a result, and those that have embraced radio frequency identification have survived and sometimes even thrived in the retail sector's new normal.
According to a recent CNN article, Kohl's has not been so fortunate (see Kohl's Has an Inventory Mess On Its Hands). Founded nearly a century ago, the company has grown to become one of the United States' largest department store retail chains, with more than 1,100 locations and a reported $19 billion in annual sales. With so many stores under its operation, and with such a wide array of goods for sale—clothing, footwear, jewelry, bedding and beauty products, as well as furniture, appliances, electronics, housewares and toys—Kohl's has a lot of inventory to keep track of.
As CNN reports, that effort has not been entirely successful. "The department store chain on Thursday presented a dour outlook for 2022," writes CNN's Parija Kavilanz, "saying it expects full-year sales to fall 5% to 6% compared to a year ago and blaming high inflation for preventing shoppers—specifically its middle-income consumers—from spending more at its stores. The company also reported a drop in sales and profit for the quarter ended July 30. Kohl's shares fell more than 7% Thursday." Meanwhile, Kohl's has a great deal of excess inventory it has been unable to move. "The chain's inventory in the quarter was 48% above where it stood at the same time last year," Kavilanz adds.
The retailer has tried various tactics to attract young consumers, which has included partnering with cosmetics brand Sephora, as well as launching a self-pickup option for orders placed online. But as Neil Saunders, GlobalData's retail analyst and managing director, told CNN, "In our view, the main source of Kohl's woes are internal. Most notably, the company has lost the plot in terms of merchandising and range planning and appears to be taking a seemingly random approach to buying. The result is a jumble of disjointed product in stores, which is exacerbated by a very serious deterioration in shopkeeping standards."
A February 2022 article from Forbes explains that the inventory problems Kohl's has faced in recent years likely stem from its past decision to abandon the use of RFID-based smart labels. That decision, Forbes notes, has prevented the company from successfully undergoing a digital transformation, and the retail chain is now suffering for its lack of technological foresight (see The Curious Case Of Kohl's: Why The Retailer Has Struggled To Embrace Smart Labeling).
As writer Marshall Kay says in the Forbes article, "Unlike many of its direct competitors, Kohl's had been absent from many of the conferences at which Macy's and other peer retailers were collectively discussing their progress with RFID. That fact was brought to the attention of Kevin Mansell, in a 2009 letter. Mansell had been the company's President since 1999, and by 2008 served as the CEO too. The letter's author encouraged Mansell to ensure that his company begin attending these conferences. It failed to have an impact—not in 2009 or for the better part of the ensuing decade."
Macy's, Target, Walmart and other large retailers have achieved great success with RFID, so why hasn't Kohl's embraced the technology, despite its ability to address the chain's inventory-management dilemma? That's the real question. Instead, Kohl's pulled the plug on its RFID efforts back in 2015—and here we are, seven years later, with the retailer facing the financial consequences. Had the department store chain deployed RFID like its competitors have, this situation might have been avoided.
As Kay puts it, "To call this a head-scratcher is an understatement, leading many outsiders to question the rigor of the company's analysis." RFID technology can be an enormously useful resource for retailers, as it enables them to improve their stock accuracy, product availability and employee efficiency, and thus their bottom line. Perhaps it's not too late to course-correct. Perhaps Kohl's, too, will see the light.
Rich Handley has been the managing editor of RFID Journal since 2005. Outside the RFID world, Rich has authored, edited or contributed to numerous books about pop culture. You can contact Rich via email.
