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Kohl’s Enters Crowded California Retail Market with Planned Stockton Location.

Knight Ridder/Tribune Business News January 16, 2003 By Bruce Spence, The Record, Stockton, Calif. Knight Ridder/Tribune Business News Jan. 16–Target and Kohl’s, a new player to the California department-store marketplace, will anchor the A.G. Spanos Cos.’ upcoming retail center at Interstate 5 and Eight Mile Road.

The 125,000-square-foot Target store would be Stockton’s second.

That and a Kohl’s department store of the standard company size of 88,000 square feet would eat up about 30 percent of the 750,000 square feet of retail space in the retail parcel running alongside I-5.

Although the entire lineup for the retail development isn’t sealed yet, retailers will include 14 nationally known companies plus restaurants and small businesses such as boutiques, said Dean Plassaras, a consultant working with Spanos to develop Spanos Park West.

The two stores are expected to open in February 2004.

The Spanos Park West project, still in its first year of development, will combine retail and office space with apartments and 1,200 upscale homes.

More than 200 homes are either already built or under construction, but the retail project is still on paper.

“You’re going to like some of the names coming in here,” Plassaras said. “And some of the names are first-time entries into the Northern California market.” Kohl’s and Target corporate executives didn’t return calls for comment Wednesday.

But Malcolm Gibson, in Target’s Sacramento district office, said the existing Stockton store at March Lane and Pacific Avenue, will be staying open.

“It does great for us — it’s very busy.” The arrival of Kohl’s, one of the country’s fastest-growing department-store companies, is going to rattle an already rugged department-store marketplace in California, said Jack Kyser, chief economist with Los Angeles County Economic Development Corp.

“If you’re looking at the department-store industry in California, it’s pretty confused,” said Kyser, also a member of the California Chamber of Commerce’s economic-advisory group.

Sears is struggling. Sales for Federated Department Stores — owners of Macy’s and Bloomingdale’s — are down. Although JCPenney is having a surge, thanks to a turnaround specialist, many analysts are wondering whether Kmart will survive bankruptcy to the end of the year, he said.

Meanwhile, Target is loss leading merchandise such as toys and electronics to attract shoppers, which affects other big merchandisers such as Toys “R” Us, Circuit City and Best Buy, Kyser said.

Plus, many shoppers feel a sameness in many department stores, he said.

“And you have the onslaught from the value retailers such as Target and Wal-Mart.” Although Kohl’s isn’t a discounter, it very aggressively prices name brands and puts so much emphasis on the customer that in each store, in the early afternoon, every employee, regardless of rank, hits the sales floor to put jumbled merchandise back in order so it looks good, Kyser said. website kohls coupons printable

“They understand consumers are turned off about poor housekeeping, which is what you find in a lot of retail operations,” he said.

Kohl’s model is focused on selling moderately priced clothing, shoes, accessories and home products targeted to middle-income customers.

Stores also have fewer departments than traditional, full-line department stores but offer shopping carts and express checkout at the front.

“It’s the first major new tenant we’ve seen in our market in a long time,” said Jim McMasters, a senior retail broker for the commercial real estate brokerage firm Colliers International.

Expect some major competition to Mervyn’s, a midlevel department-store chain that has seen its sales fall while Kohl’s is showing major gains.

December 2001 to December 2002 comparable-store sales were down 8.2 percent for Mervyn’s and up 1 percent for Target, according to Target Corp., owner of both retail chains.

Meanwhile, Kohl’s reported gains of 3.3 percent.

Kohl’s is looking at other Northern California sites.

The company has signed a letter of intent to build an 88,000-square-foot store in a new 550,000-square-foot Gilroy Crossing shopping center south of San Jose, said McMasters, a Walnut Creek executive who handled the Gilroy deal.

There may be between 20 to 25 more Kohl’s coming into Northern California as the company steps into this market, he said.

“Everything we’re seeing is nothing but positive news,” he said. “They’re financially solid. They’re a great concept — good-looking stores well-merchandised.” Kyser said Kohl’s avoids malls and goes for strip retail centers, where shoppers can get in and out quickly and conveniently.

Kyser said most retail watchers think the biggest gains for Kohl’s in California will come at Mervyn’s expense.

“Everybody says Mervyn’s is the most obvious one to get whacked around by Kohl’s, but they also say Sears could feel some pain and even the weaker locations of a Macy’s, … so it’s going to be a wild time in retail.” The publicly traded Kohl’s, a 40-year-old company, has grown from a single store in Milwaukee into a network of 457 stores in 33 states — most of them east of the Mississippi.

That’s up from 382 stores a year ago. Plus, the company plans to build 80 new stores this year, including 28 that will have simultaneous grand openings in Southern California in March.

Kohl’s also is planning to open stores in the Sacramento metro area.

In its December sales report, the company said sales for the five-week period ending Jan. 4 were up 19.4 percent of the same period the year before.

For the 48 weeks ending Jan. 4, sales were up 21.8 percent, while comparable-store sales increased 5.3 percent. website kohls coupons printable

For the November-December holiday-sales season, comparable-store sales were up 9.8 percent year to year.

Kohl’s CEO Larry Montgomery said the company had expected much stronger comparable-store sales in December.

“Going into the new year, we will continue to be aggressive in our marketing, and we are well-positioned to increase market share,” he said.

Executives at Kohl’s, Mervyn’s and Target didn’t return calls for comment. Macy’s declines to make comments on the retail marketplace. Dillard’s executives declined comment.

It’s too soon to say what Kohl’s arrival will do to the marketplace, said Fred Bentelspacher, vice president of marketing for Gottschalks, a regional department-store chain headquartered in Fresno.

The company has a store in Stockton’s Sherwood Mall.

“They’re a good operation,” he said. “That’s why they’re expanding all over the country.” Roger Hanson, manager of the JCPenney store in Stockton’s Weberstown Mall, said he wasn’t sure how Kohl’s would fit in, because the company has no stores in the area yet.

“We’ll see how we stack up against them.” Sears spokeswoman Peggy Palter, in the giant retailer’s corporate offices in Chicago, said Sears knows that Kohl’s is formidable competition in parallel lines of soft merchandise.

But Sears offers a different mix of merchandise, including tools and big-ticket hardware such as appliances, she said.

The retailer also is improving its apparel lineup to include new high-profile brands such as Land’s End and Covington, she said.

“We think that’s going to be a strong differentiation, so we think we’ll measure up pretty well against Kohl’s when they come into your market,” Palter said.

Kohl’s began in 1962 with a single store in Milwaukee. Part of the founding Kohl’s family was Herb Kohl, now a Democratic U.S. senator for Wisconsin.

Before going to the Senate, Kohl helped build the family owned business, Kohl’s grocery and department stores and served as president from 1970 through the sale of the corporation in 1978.

In 1985, he also bought the Milwaukee Bucks.

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