Word: retailing
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...come is evident. Consider the results for the third quarter: Penney, which only a few years ago was in deep trouble, reported a 22.6% increase in net income, while Kohl's racked up a 45% gain. "It's the sweet spot in the market," says Marshal Cohen, a retail-industry analyst for the NPD Group. "The lower end is reaching upward...
Penney and Kohl's are taking advantage of the middle opportunity. "They're cannibalizing the market from beneath them, and they're benefiting from the trickle down from traditional department stores who are trading out of Middle America," says David Wolfe, a fashion-retail consultant for the Doneger Group in New York City. "They're getting it coming and going...
...open 50 stores annually through 2008, while the 817-store Kohl's intends to tack on 400 stores to the chain by 2010, some inside urban malls. The company has also said it will remodel at least 40 older stores by the end of 2007. But Robin Lewis, a retail consultant and newsletter publisher in New York City, says Kohl's will grow sales faster than Penney because its corporate structure is less bureaucratic and layered. "Kohl's has an advantage because it is leaner and meaner," says Lewis. "It can respond more quickly, and its low-cost business model...
...merchandise is less cluttered and more invitingly displayed, some of it on mannequins, fixtures not previously seen in Kohl's. Fitting rooms are larger and more comfortable too. "Both chains have made a tremendous effort to freshen up their stores and their image," says Amanda Nicholson, assistant professor of retail management at Syracuse University's Whitman School of Management. "They've relaunched their private labels, reduced merchandise cycle times and introduced new lively and appealing graphics and put them front and center in their stores...
There's also plenty of action in the retail-technology department. New point-of-sale software at both chains has helped them keep the optimal mix of inventory on store racks, according to Citigroup's Weinswig. "It's increased profit margins and made them more efficient," she says. Specifically, Penney will have installed 35,000 new devices at checkout counters by the end of the year...