How does Kohl's make money?

[meg1620]

Their prices seem to be especially high on "regular priced" merchandise. I can walk and pay $20 for a shirt but I "saved" $80. Now really, who would have paid $100 for that shirt?? No one - but more people will buy that sale item thinking they are getting a deal.

 

[GAGirlInVA]

Lots of people don't redeem their Kohl's cash either.

 

[StephMK]

I'll tell you... they make their own MSRP tags!

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.

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."

I did the same thing the other night! DH & I went there to spend the Kohl's cash & he needs socks/boxers. I told him to wait because those prices were crazy for 3 boxers & 2 pairs of socks. The buy 1/get 1 1/2 off is usually a horrible deal, imo. I ended up getting DD a jacket & DH some jeans online that were a much better deal. We'll go elsewhere for the other items. I think you definitely have to know your prices to get the most out of Kohl's sales.

 

[NYCDiane]

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.

With clothing, there is a HUGE markup --- close to 95%. Also, Kohls is way overpriced so they always have sales to make it appear you're getting a major bargain. The only time I ever go to Kohls is when they're having a huge sale and I have those $10 things they send in the mail or a 20% card they send in the mail. Even then, I only buy exactly what I go in there for and nothing more.

 

[eliza61]

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.

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

They sell crap (just my opinion) sorry but the kohls in my neighborhood is the worse. I've brought merchandise from there that didn't even last 1 washing.

Macys does have alot of discounts but you have to take it with a grain of salt because it's usually on a very limited amount of stuff. usually their store brand stuff.

 

[AnninIowa]

Kohls, and other major retailers, source many products directly from China. They buy massive quantities at dirt cheap prices, then mark it up. They sell many items at a much higher price than other retailers - such as kitchen items - so even on sale you are still paying more. I only go into Kohls if they send out a free gift card. Got one last week for $10 towards anything in the store. Went and got a $7.99 calendar that was on my dad's Christmas list.

 

[NYCDiane]

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.

She should have charged more. I have a friend with small store and she marks things up 3 to 5 times what she pays and she sells A LOT of items.

 

[QVCshopper]

I'm not a huge fan of Kohls. I find it very claustrophobic and filled to the brim with stuff. I also don't think they are that cheap, but I'm a pretty hard person to impress with sales. I honestly think they trick customers with coupons stacked with sales, and it drives me nuts how things can change in price from day to day. Target's 90% off and Goodwill are more my style.

 

[edk35]

My son just started working there and he said the same thing today. He really wanted to know how they make money. I know I was in there Friday spending my 30 in Kohls cash and I also had a 20% off card. I bought some items that were in the Christmas dept. for 50% off and got an additional 20% off. Personally I love Kohls. It is a great one stop shop for me for a lot of things.

 

[SettinSail]

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.

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."

I did the same thing the other night! DH & I went there to spend the Kohl's cash & he needs socks/boxers. I told him to wait because those prices were crazy for 3 boxers & 2 pairs of socks. The buy 1/get 1 1/2 off is usually a horrible deal, imo. I ended up getting DD a jacket & DH some jeans online that were a much better deal. We'll go elsewhere for the other items. I think you definitely have to know your prices to get the most out of Kohl's sales.

We noticed the same thing. After 30 % coupon and BOGO, 2 packs of Men's Hanes undershirts were $21 at Khol's. Total of 6 undershirts. The total w/o coupon and BOGO would be over $50

A package of 5 Hanes Tshirts were less than $14 at WM.

Know your prices

 

[si-am]

Really?

Kohls is one of the biggest rip-off stores I can think of. Their sale prices are way higher than normal price anywhere else. I hate Kohls.

 

[MUFFYCAT]

I love Kohl's but I watch the prices. Regardless of what "huge sale" is going on I look at wether the item is even worth the discounted price.

 

[cseca]

Really?

Kohls is one of the biggest rip-off stores I can think of. Their sale prices are way higher than normal price anywhere else. I hate Kohls.

I agree.
But I still think they are a darn good store if you can watch for coupons and have their credit card.

I've been able to get clothes for my babies (infants and toddlers) mostly between $2-$8. For coats and heavy clothing I get them for around $20. PackNPlay with bassinet for $50.
For my clothes I get pants and shirts for around $7-$20. Mostly in the $15s.
And that's not putting into consideration their kohls cash. So I get KC on top of those deals/coupons.

I got a babycakes pop maker for $15. A geotrax toy for $30 something dollars. Shoes and boots somewhere between $5-25 dollars.

Also I was able to purchase a bunch of rachael ray's bakeware items for less than any other stores are selling them for, because of their sales+codes.

The best part is that they have their Black Friday sale available online on Thanksgiving. That means getting my shopping done without standing in line...

Basically if you can watch for sales you can get stuff for cheap there. But if you can't do comparison shopping then you're going to lose $.

DH always wonders how Kohls make $ from us because basically I buy stuff there only when I can't get them cheaper anywhere else. But I know they make $ because sometimes I buy stuff I don't really need just because they're cheap. Not too often, but I know that other people do that too... That's how they make $.

 

[Plannin'Shannon]

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'm a bargain-hunter, but I know plenty of people who don't care at all about sales. They buy what they want when they see it, regardless of a sale or coupon.

 

[ClarabelleCowFan]

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).

Did you ask a manager about your Kohl's cash? I was able to use some this week that expired in February of this year. I had to go to customer service and they called the manager. She was able to credit me the $20 for my Kohl's cash even though it expired 9 months ago.

I agree that you can get great deals at Kohl's but only if you know your prices and stack the discounts. I had several of the $10 off $10 purchase coupons and stacked that with the 20% off everything coupon for quite a bit of stuff today. I think for the 5 transactions I had, I paid less than $40 and walked out with a few hundred in merchandise (true retail value not Kohl's retail value).

 

[cornflake]

As above, because they sell cheap crap at a ludicrous markup even with their ubiquitous "sales."

Really hate Kohl's. Before they revamped them, they used to have good deals on some housewares and stuff sometimes (I've always thought their clothes were unfathomably bad and horribly cheap looking) but the last few times I wandered in it was like random dishes priced at $15/plate, 30% off, a regular set of sheets priced at $119, 40% off, plus I'm sure some discount if one had their card and etc.

The last time I went in there, a while ago, I stopped because it's open late and I wanted a pan. A T-fal pan, they said was "regularly" priced at $49, 20% off, so $40, which seemed high but I needed the pan (to replace the same one I'd scratched). Got home, found it was actually smaller, went online to find that Amazon, Macy's, etc., thought the MSRP of the larger, original version, was $39 and they all had it for sale for around $25-30 bucks. Used the scratched pan, returned the thing to Kohl's, not going back.

I know stores have to make a profit, that's fine, but they don't need to play the stupid games. I'm not playing the giant markup/constant sale on everything/get the store card/get the coupons/stack correctly - just to get the normal price I could get at a store that doesn't think I'm a moron.

 

[amylevan]

Their mark-up is ridiculus. I bought my son a cardboard "color me" rocketship. Original price at Kohl's - $49.99, on sale on black friday for $24. Regular price at CVS was $19.99, got it on black friday for $12.99. While it's cute, there is NO WAY it is worth 50 bucks. It's essentially a cardboard box.

 

[Judique]

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 often pay full retail if I want the item. I may not be willing to wait until a $69 skirt is $12.75.

I do shop sales when possible, but often my time is more valuable to me than the savings are.

For example, right now I would prefer to be relaxing on my computer for an hour than shopping at Macy's. If it costs me double the price then it is worth it to me.

I don't shop at Kohl's...too junky looking.

 

[cvjw]

They must be making money. We sold our Kohl's stock a few years ago and bought a Toyota Sienna minivan with our stock profits.

 

[nunzia]

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.

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. As associates we can see cost on our inventory screen, and back in the day, associate cost was 5% higher than wholesale cost..that is no longer the case, but we still get a fairly good dicount on some things. We also buy used product on books, cds, games and dvds and those are tremendous profit makers even though the cost is still a deal to consumers.
The way places like Kohls and Penneys make money, IMO, is they price their items crazy high to so they can 'mark' down for a deal. I buy nothing from either store that isn't on sale or, even better, clearance. I really don't think the stores expect to sell much at full retail, and for those who don't care and pay full price, that's gravy.