Kohl's Business Strategy Essay

Written Assignment
Developing Generic and Focused strategies for Kohl’s

Business Administration Department, University of the People
BUS 5117-01 Strategic Decision Making and Management
Written Assignment Unit 5
July 19, 2023

Introduction
Keeping cost low is a major component of the cost leadership generic strategy (Kennedy, 2020). Organizations who implement this strategy find and exploit ways to cut costs or seek cost advantages. Some other those ways include purchasing large inventories, therefore having a high bargaining power with suppliers and reduced cost of goods, some organizations like Walmart import low-cost goods from China (Ferguson, 2023). Use of technology and cheap labor are also some other ways that an organization

Background of Kohl
Kohl was formed by Polish immigrant Maxwell Kohl in 1927 as a grocery store in Wisconsin. It quickly took roots and in 1962, the company opened its first department store. It became the largest department store in May 2012, surpassing J.C. Penney which was its biggest competitor at the time. As at 2019, Kohl was the 23rd largest retailer in the US in terms of revenue, with about 1, 165 locations (Wikipedia, 2023).
However, with the emergence of online retailers like Amazon and with the impact of the covid-19 pandemic on in-person shopping, Kohl has witnessed some setbacks (Schwartz, 2022) such as:
• High inventory and fragile cash levels due to reduced store traffic and the presence of online competitors
• Plummeting of the stock price to about 50% in 2022
• Late entry into the online retail market already dominated by Amazon
• Low fulfillment rate of its online sale distribution network
• Large overhead cost from large number of department

During the pandemic, changing rooms in department stores were closed and remained closed for a long time afterwards. Consumer reliance and proficiency with online shipping increased and even though full store operations have resumed, most department stores like Kohls still struggle to capture the market dominance they exerted pre-pandemic. With the introduction of Amazon’s “Try before you buy” program, competition for department stores got stiffer and some retail giants such as J.C. Penney even shut down. While Kohl has managed to stay afloat, its bottom line has been increasingly dropping and this raises some serious concerns (Schwartz, 2022).

Cost-centered business strategy to enable Kohl to move forward as a profitable firm
One of the major drawbacks for department stores in comparison with online stores is the overhead cost incurred by department stores.
To enable Kohl’s move forward as a profitable firm, I propose the following cost-centered business strategy:
• Investigate the least profitable stores by location
• Investigate the least profitable product lines by stores and by