Kohl’s executive tells RILA gathering physical stores still vital to supply chain

In an era of burgeoning e-commerce, physical stores will remain vital to the retail supply chain, according to a top executive of the Kohl’s Corp. department store chain.

Opening the business agenda of the Retail Industry Leaders Association’s 2018 Retail Supply Chain Conference in Phoenix, Sona Chawla, chief operating officer and president-elect of Kohl’s, said Feb. 26 that, while delivery paths are shifting, stores are still key to an efficient supply chain.

“We have a strong belief that physical stores matter,” said Chawla, whose Menomonee Falls, Wisconsin-based company has more than 1,100 stores in 49 states (all states except Hawaii), with 14 distribution centers and annual sales totaling $19 billion. “We have very few customers who shop only digital.”

Chawla told the gathering of 1,500 leaders of retail companies and logistics providers that brick-and-mortar stores and e-commerce should efficiently work together, commenting, “It’s the combination of the two that’s really going to matter.”

While Kohl’s has seen the e-commerce share of its sales increase to 19 percent in 2017 from 5 percent in 2011, Chawla said 90 percent of Kohl’s customers shop in the chain’s stores.

Customers in stores may be picking up items bought online, she said, while store traffic also has been driven by a pilot program announced last year that allows consumers to make returns to Kohl’s stores of items purchased online via Amazon.

Noting that 80 percent of Americans live within 15 miles of a Kohl’s store, Chawla said the stores have become “mini fulfillment centers,” with stores fulfilling 32 percent of the company’s online demand.

Although costs related to speedy shipping of smaller packages are greater than those involved with the traditional siloed supply chain, Chawla said the extra expense is worth it in retaining valued customers.

The future of the retail supply chain, Chawla said, is increasingly interconnected and ultimately is “sensing, self-healing, self-training, faster and cheaper.”

“The future,” she said, “is about people working together to make this happen.”