How does Kohl's make money?

MrsPete

DIS Veteran
Joined
Feb 24, 2002
Lots of correct answers here, and they all together play into Kohl's marketing strategy:

1. They sell moderately cheap merchandise in the first place, so it isn't costing them much. Add in the fact that they're a large retailer, able to buy in huge bulk -- something the small business owner can't match.

2. They mark the prices up beyond what's reasonable. Does anyone believe a sweater is really worth $50-100? A pair of jeans $50-80? People don't complain about this because everything's always "marked down", and it gives the uninformed shopper the idea that they've "saved" X amount, when they've probably paid an average or slightly higher price. Shoppers who compare Kohl's prices elsewhere will find that their sale prices aren't really all that great.

Similarly, when something's marked down, people tend to think, "I've gotta buy now. It'll be full price again next week." So a sale creates an urgency to buy. Also, people will buy two of something when it's on sale, whereas they would've only bought one at full price.

3. People love thier Kohl's cash marketing scheme, but the shopper tends to "give the store credit twice" for that cash: Today the shopper buys $60 worth of stuff and gets a $10 certificate -- mentally, the shopper says, "I really only spent $50." But then the shopper goes in the next week and buys $40 worth of goods and uses the $10 coupon, making it $30. Shoppers like to think they've found bargains, so they bend the truth to themselves, making it seem like the $10 counted on both orders.

And if the shopper loses the coupon or fails to use it, the store profits -- but the shopper still mentally "gives them credit" for being a good company who offers good deals. The shopper doesn't hold the store accountable for her own mistake in not using the coupon.

4. Finally,there's the biggie: The credit card. I read an article in a money magazine (sorry, it's been years, and I can't remember the magazine or the date), and it discussed this store-credit-card scheme, referencing Kohl's as the granddaddy of them all. Essentially the store exists just to support the credit card. For every dollar spent in the store, the credit card earns $4-5 in interest. Most people spend more when they use plastic, and most people don't pay off their balance every month. It's free money for the company.
 

seashoreCM

All around nice guy.
Joined
Aug 25, 2001
I haven't been to Kohl's but since someone mentioned Macy's I'll comment on Macy's.

Every time I have been to Macy's, it seems as if I can get almost the same thing (different brand) for much less at Wal Mart or Target, even after figuring in Macy's discounts.

But there are times I need something and don't want to spent time flitting from one store to another so I end up buying at Macy's.

No, I don't buy those designer jeans with something like "Tommy" (Hilfiger) in big letters plastered down the leg.
 

maxiesmom

The Mean Squinty Eye Works
Joined
Jul 6, 2004
Really? There are many people who don't shop based on sales.
Not anyone I know. We are all pretty darned careful with out money. I can't even remember the last time I paid full price for an article of clothing.
 

JoiseyMom

<font color=orange>Have you had your SPANX today??
Joined
Nov 5, 2003
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.
Well you don't live near me. And believe me, there are plenty of people where I live that don't care if something is on sale or cheaper elsewhere at either retail or grocery stores. They just go shop and pay.
 

disykat

This person totally gets me
Joined
Jun 5, 2000
Not anyone I know. We are all pretty darned careful with out money. I can't even remember the last time I paid full price for an article of clothing.
You can actually be very careful with your money when not watching sales. My main strategy is NOT watching sales unless I am shopping for something very specific. I find looking at ads makes me want to buy things or reminds me of things I "need" - and thus spend money!

I buy as little as possible and watch for sales on big upcoming purchases, but if I need something fast I just go in, buy it and leave. Sometimes that means paying full price. I think this strategy save me tons of money over people who shop all the time.

That is, in fact, one of my biggest dislikes of Kohl's cash back strategy. They want you to shop their sales, they want you to come back to spend your Kohl's cash within a short time frame. The more you are in their store, the more money they make.
 

Allison

DIS Veteran
Joined
Oct 27, 2005
Not anyone I know. We are all pretty darned careful with out money. I can't even remember the last time I paid full price for an article of clothing.
Just because you are not looking for sales does not mean you are not careful with your money. As others have pointed out, you can find something that costs less full price at one store than it does on sale somewhere else.
 
  • furb & dez

    City Bear Jamboreers
    Joined
    Jan 18, 2011
    Not always..grocery stores, for instance often have pretty slim prifit margins. I know where I work for my seond job a good bit of our markup is 30-40 percent, although some items are way higher and some lower.
    This is true - the reason that grocery stores can afford to have a lower market is because of greater volume and throughput; also product expiration.
     


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