Kohl's spent years leaning on private labels that went stale, then dropped eight

For years Kohl's bet heavily on its own store brands — higher margins, more control, something customers could not get elsewhere — and they once generated more than half of sales. But too many of its private labels grew stale, particularly in apparel, a weakness that stood in stark contrast to Target's knack for launching fresh brands that send shoppers flocking. Kohl's stagnated for years while strip-mall rivals Target, Ulta Beauty, Dick's Sporting Goods and T.J. Maxx took the same shopper.

By October 2020, CEO Michelle Gass was unwinding the bet. Kohl's had already ditched eight exclusive brands — JLO, Rock & Republic and Dana Buchman among them, with more exits to come — while lining up national partners like Lands' End and Cole Haan; exclusive brands were down to 37% of sales from more than half. 'We will be more focused', Gass said. The pivot leaned into what worked: activewear, built to 20% of sales since 2013 and targeted for 30% by owning athleisure for the whole family, plus beauty shops triple the current size after the 2014 'Greatness Agenda' push missed its targets.

The plan landed mid-pandemic. Kohl's had intended to unveil it to Wall Street in mid-March 2020; COVID closed its stores instead, and sales fell 33% in the first half of the fiscal year. E-commerce, nearly a quarter of sales pre-pandemic, spiked to as much as 40% at the peak and was expected to settle in between. In stores, Kohl's began cutting assortments within some brands by up to 40% and shrinking handbags, fine jewelry and men's suits — categories in decline — to make room for healthier ones.

Sales fell 33% in the first half of fiscal 2020; Old Navy and Target outperformed while Kohl's stagnated for years

Private labels carried higher margins, so Kohl's leaned on them even as the apparel lines aged out of fashion.

With no mechanism to retire or refresh labels, stale brands crowded floor space that faster categories needed.

The 2014 Greatness Agenda showed the same pattern in beauty: big targets, little traction against Target and Ulta.

A shelf full of dated exclusives made Kohl's look dated next to rivals carrying hot national brands like Nike.

Exclusive brands only pay while they are refreshed; a private-label portfolio left to age becomes the reason shoppers skip your store.

Kohl's unveiled the reset in October 2020: fewer store brands and more national partners, activewear targeted at 30% of sales, beauty shops triple the size staffed with advisors, and tests such as personal care in 50 stores. 'That gives us the flexibility to lean into growth categories, test, learn, iterate — kill what's not working, scale what is', Gass said.