How does Kohl's make money?

JodiR

DIS Veteran
Joined
May 27, 2003
With all the percentage off coupons and Kohl's cash, how does Kohls make money? Is with the charge card interest?

I own a retail store and it seems that people want the deals and will only buy on sale.
 

auntmeme7577

Mouseketeer
Joined
Nov 24, 2010
I'm in retail too and have often wondered the same thing! Kohls and Macy's both have so many layered discounts, I wonder how they turn a profit
 

EMHDad

DIS Veteran
Joined
Apr 18, 2010
I cant say Kohl's specifically, but I have seen reports that with department stores (like kohls), their number one profitable item is their credit card. They make more money from its interest than any item in store.

ALso, their profit margins on items may be razor thin, but with the large number of stores and items, the profits still add up.
 

JoiseyMom

<font color=orange>Have you had your SPANX today??
Joined
Nov 5, 2003
Not everyone only shops their sales. Many people don't care and pay full retail.
 

maxiesmom

The Mean Squinty Eye Works
Joined
Jul 6, 2004
Not everyone only shops their sales. Many people don't care and pay full retail.
I don't agree with this statement at all. I don't know anyone who shops and doesn't pay attention to whether an item is on sale or not.
 

MagicalMawMaw

DIS Veteran
Joined
Sep 30, 2009
I love Kohl's.

It is one of the few places you can shop, get good merchandise & not break the bank.

Like today I got 4 items & each were 50% off. Then I had a 20% off cpn. Then on top of that...they gave me a $10 customer reward cpn. when I checked out. Of course..they know the free $10 will get me to return & use it & my other 20% off cpn...plus spend abit more.

I think they make less $ per item... but sell so much more by using things like kohl's cash & % cpns that they come out way ahead.
 
  • southern_redhead

    DIS Veteran
    Joined
    Jul 12, 2010
    You said you own a retail store. How do you price your items? When I worked for an independently owned retail store, we "keystoned" our merchandise. I'm sure Khol's and Macy's mark up significantly more, for several reasons. For one, they buy in MUCH larger quantities - this means that they get their items at a lower cost. Also, they might mark up three times as much as it cost them (or twelve, or whatever...LOL) and then put it on sale to bring it back down to twice (or ten times, etc..) their cost. The customer sees a percentage off or whatever and can't wait to whip out their pocketbook for the "deal". I find it akin to the ".99" pricing thing that has gone on for decades. People will say that $30.00 is too high, but $29.99 sounds better for some reason.

    Also, as another poster mentioned. They simply make more sales. I know we were in a very slow market, we might make 10 sales a day on a good day. Privately owned stores also carry a smaller selection. For instance, our store was books and small gifts. Well, if you needed clothing or bedding, you had to go elsewhere. Many times that meant the customer would rather buy their comforter, coat, and gift item all at one time. Other times, we simply didn't stock the kind of item they were looking for. Our items were almost exclusively religious, which is fine, but I also don't want EVERY item I give to people to have a picture of a cross or scripture on it. That meant that many times, I bought gifts in other places. I imagine you run into the same thing in other small stores. Not everyone wants to give sports items or a certain brand EVERY time they gift.
     

    Bob NC

    DIS Veteran<br><font color="red">I am a trained pr
    Joined
    Mar 3, 2000
    How does Kohl's make money?

    By selling things for more than they pay for them.
     

    furb & dez

    City Bear Jamboreers
    Joined
    Jan 18, 2011
    Basic business principles: to remain in business, all products must be sold for at least twice (100% markup) what the business paid for it. Most businesses will take an item and mark it up about 200-400% (for restaurants, it's more like 800-1000%).

    So if their markup is 200% (i.e., they purchased the item from a wholesaler for $5 each, and are selling it for $15 each to their customers) they can have a 50% off sale (item is 'on sale' for $7.50) and they are still making 50% profit (50% more than their cost for the item). This is obviously less than the 100% markup required to grow as a business, but such sales are usually loss-leaders, with the idea that the customer will also purchase items not on sale, or those marked up enough to make up for the profit lost on the loss-leader.

    So don't get too excited about those $80 jeans you "got for a steal" for $40... the retailer probably only paid $2 from the wholesaler.
     
  • CathrynRose

    <font color=brown>R.I.P. Possibly Un-PC Tag, R.I.P
    Joined
    Oct 5, 2005
    I don't know anyone who shops and doesn't pay attention to whether an item is on sale or not.
    I don't. If I need/want something, I'm not screwing around, driving all over town or waiting for a coupon (that I will always forget to bring, anyways) to come in the mail. I just buy it.
     

    GAGirlInVA

    DIS Veteran
    Joined
    Apr 23, 2010
    Not everything is on sale and their regular prices are pretty high.. They make lots of money off of credit card interest.
     

    vicki_c

    DIS Veteran
    Joined
    Dec 22, 2007
    I don't agree with this statement at all. I don't know anyone who shops and doesn't pay attention to whether an item is on sale or not.
    I really don't pay attention to sales (ironic, since I do always read the budget board). I HATE clothes shopping with a passion. We only clothes shop when absolutely necessary at our house, and so often we miss the sales. The only thing I just about refuse to do now is to pay for shipping when we order from Lands' End, since I know they have free shipping codes out the majority of the time.

    But I NEVER go to the mall because I got a sale flyer in the mail or in the paper. Not even for Christmas!

    I did just order some items from Kohl's online today though and used a 20 or 20% off code, so that was good. And they are having free shipping over $50. Sadly, I didn't get to use the $80 in Kohl's cash I had gotten because it expired (I called our store too and they said they wouldn't take it).
     

    NYEmomma

    DIS Veteran
    Joined
    Dec 5, 2010
    As a former employee of Kohl's, I can tell you that there's quite a few people that don't shop the sales/use coupons. They need something or see something they want, they're going to buy it whether it's on sale or not.

    And the mark-ups on their regular price items are astronomical.
     

    Sadie22

    DIS Veteran
    Joined
    Feb 16, 2010
    I read a marketing book which discussed Kohl's selling items made to sell for a profit when priced less than half the retail price.

    When I worked retail, the independent store operator would buy gift items and price them at more than double what she paid.
     

    ShelsGoingToDisney

    DIS Veteran
    Joined
    Oct 18, 2005
    I was telling my hairdresser a couple weeks ago about all the good deals I got at Kohls.com with the stackable codes and she commented that she likes Kohls but can never seem to hit a good sale. She said she feels like the only person who pays full price there. It's not that she wants to I guess but does!

    I saw an article in the paper in the last couple days talking about the earnings for the big stores for black Friday and Kohls and JcP were both noted as 2 that had decreased sales from last year. So maybe they aren't making all that much money lately! Personally with all the deals lately I've shopped there more in the last month than I have in the last 2 years! :thumbsup2
     

    vaDisneyGuy

    Mouseketeer
    Joined
    Aug 31, 2008
    As a former employee of Kohl's, I can tell you that there's quite a few people that don't shop the sales/use coupons. They need something or see something they want, they're going to buy it whether it's on sale or not.

    And the mark-ups on their regular price items are astronomical.
    I agree I was a Manager for Kohl''s for almost a decade. ASTRONOMICAL mark-up would be correct and the fact that people by so much more because " I have a 30% coupon" then all the money they make off the Kohl's card.
     

    descovy

    DIS Veteran
    Joined
    Jun 5, 2008
    I'll tell you... they make their own MSRP tags! :confused3

    I had it happen with a Samsonnite suitcase I bought. The tag said MSRP of $319... but when I brought it home, I realized they had put a NEW MSRP sticker over the old one that said $289! Yes, the suitcase was 60% off... but that was hardly a "bargain" (just a reasonable price)

    I had some kohl's cash to redeem and realized while packing this week, my dh needs more boxers. Since the store is super close and the kohl's cash would make them virtually free, to Kohls I went!

    So how much would you pay for a 4pk of cotton Hanes boxers? Kohl's wanted $30! And the sale (if you can call it that) was buy 1 get one half off. So for $45 I could get 8 pairs of regular Hanes cotton boxers. :scared1:

    Ended up at Target with a 5 pk for $16.

    That's how Kohls make their money. They mark it way up in order to provide discounts down to "normal."
     

    Swan4Me

    DIS Veteran
    Joined
    Mar 28, 2011
    MOST of Kohl's is private label-or designers who make only for them

    I buy my name brand jeans there-and there's a rack of Lauren by Ralph-but its always colors or styles I dont like (probably overstock of Ralph Lauren)
     


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