Kohl’s Faces New Leadership and Challenges as It Struggles to Rebuild Its Business

Kohl’s, the largest department store chain in the U.S., is navigating a tough period in its history, marked by declining performance and a significant loss in stock value. The company has been grappling with 11 consecutive quarters of falling sales, a nearly 50% drop in stock price over the past year, and a loss of customer trust. Amid these challenges, Kohl’s has appointed Ashley Buchanan as its new CEO, in hopes that her leadership will reverse the company’s fortunes and restore its place in the competitive retail market.

The Struggles Facing Kohl’s and the Broader Retail Industry

Operating more than 1,150 stores across the United States, Kohl’s has become emblematic of a larger retail crisis. The rise of e-commerce, persistent inflation, and the long-lasting effects of the COVID-19 pandemic have forced many companies in the industry to reevaluate their business models. Many retailers have downsized, declared bankruptcy, or closed their doors entirely as consumer behaviors shift and economic pressures grow.

While Kohl’s is taking steps to adapt, its recent performance mirrors the struggles faced by other traditional retailers. In particular, it has been hit hard by the increased competition from online giants and changes in consumer spending patterns.

Strategic Shifts Under Previous Leadership

Buchanan steps in following the tenure of Tom Kingsbury, who led the company through a series of mixed strategic changes. Kingsbury continued efforts initiated by previous leadership to modernize Kohl’s brand, which included scaling back on private-label offerings, petite clothing lines, and fine jewelry departments. These were replaced by partnerships with well-known brands such as Sephora Cosmetics and Babies “R” Us. While these efforts aimed to attract younger, trend-focused shoppers, they also distanced the company from its core customer base, which valued Kohl’s for its affordable and high-quality clothing.

According to Jean-Pierre Dubé, a Research Associate at the National Bureau of Economic Research and Marketing Professor at the University of Chicago Booth School of Business, Kingsbury’s focus on younger shoppers “disconnected from their core customer and failed to connect with the younger generation.” Despite growth in the Sephora partnership, the sales boost wasn’t enough to offset the steep declines in other important categories, including apparel, footwear, fine jewelry, and home goods.

A Broader Retail Trend: The Decline of Traditional Department Stores

Kohl’s is far from alone in facing these challenges. In 2024, over 7,300 retail stores closed, marking a 57% increase compared to the previous year and the highest number of closures since the pandemic’s peak in 2020. Chains like CVS, Walgreens, Big Lots, and Family Dollar have also been forced to shutter locations, signaling a widespread struggle in the traditional retail sector.

Department stores, which traditionally cater to middle-income consumers, have been particularly vulnerable. With inflation increasing the cost of living, shoppers have had less disposable income to spend on non-essential items, leading many to turn to discount retailers like Walmart for better pricing. As Dubé explains, “Competition is a lot different now,” pointing to the evolving pressures on traditional department stores to adapt to shifting consumer behaviors and economic conditions.

The Path Forward for Kohl’s

Ashley Buchanan’s appointment as CEO signals that Kohl’s is looking to tackle its operational and strategic hurdles head-on. To regain its footing, the company will need to find a way to reconnect with its loyal customer base while also innovating to attract a new generation of shoppers. As the retail industry continues to evolve, Kohl’s future success will depend on its ability to differentiate itself in a marketplace that is increasingly competitive and cost-conscious.

Buchanan’s challenge will be to steer Kohl’s through these turbulent times, restoring both customer trust and profitability. As she takes the helm, the world will be watching to see whether her leadership can revitalize a retail giant that has struggled to adapt in an ever-changing industry landscape.

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