Kohl’s is one of the most profitable retail stores in the United States, with a loyal customer base that returns to its stores consistently. However, if you have visited Kohl’s recently, you may have noticed that its prices can be high.
There are many reasons why Kohl’s clothing, shoes, jewelry, and other products may be more expensive than their competing retailers. This article will explore 9 reasons why this may be the case.
9 Reasons Why Kohl’s Is So Expensive
1. High-Quality Clothing Is Expensive To Produce
One of the main reasons Kohl’s products are so expensive is the cost of raw materials and production (ex., The cost and production of clothing made with cotton materials).
Kohl’s stated in 2007 that their company is instructed to raise ticket prices when such increases are implemented, and continue this method.
2. Competition from Major Store Brands
Kohl’s has a fair number of competitors in the retail market. Most significant are T.J Maxx, Target, Macy’s, Belk, Dilliards’, and Bed Bath & Beyond.
Many customers will acknowledge that stores such as T.J. Maxx have lower prices than Kohl’s. However, they also attest that their customer experience is much more positive at Kohl’s locations, and they are, therefore, more inclined to shop at Kohl’s.
Therefore, Kohl’s prices combined with their customer service have been keeping them high on the ranks of retail competitors, ranking #2 just below Target.
3. The Cost of Shipping and Handling
In an effort to make online shopping appealing to their customers, Kohl’s offers free shipping with a minimum of $75 of purchased goods. While $75 seems like a lot of money to spend just to achieve free shipping, it makes the most financial sense.
If a company offers free shipping per singular item, the shipping and handling could end up costing the company more than the price of the product a customer has purchased.
Were Kohl’s to act in a similar fashion, this would cause a large dent in their company’s income, as they would be losing money every time they made a sale.
4. Maintaining Position in the Stock Market
Kohl’s holds a lot of shares in the stock market and is currently considered a strong and stable company to invest shares into.
Over the past five years, the company’s shares have increased by 26.35% and carry a #3 on Zacks Ranks.
In order to maintain this position, Kohl’s needs to remain financially stable by making consistent sales and turning a profit, which may account for its expensive in-store and online prices.
5. Large Amount of Employees to Pay
Kohl’s employs over 110,00 associates, including store managers. Sales associates make between $8-$13 per hour, while managers make between $10-$27 per hour.
In order to maintain their level of employment and increase wages, Kohl’s needs to turn a consistent profit by means of their retail products, which may account for their high prices.
6. Company Tax Bill
Kohl’s has to pay corporate taxes in order to stay in business, and they have only a couple of options for how to provide the funds.
Therefore, it is reasonable to conclude that the high prices of Kohl’s products may contribute to the tax bills they have to pay yearly.
7. Regular Clearance Sale
Clearance sales can eat into a store’s profit quite significantly, particularly if items are marked down more than 50%. More often than not, clearance sales will cost companies money.
Kohl’s runs a daily clearance sale in most of their departments and usually marks down their items between 10-50%.
It may be reasonable to conclude that Kohl’s balances out its financial loss from its daily clearance sale by marking up other store brands and clothing.
8. Cost of Inflation in Product Demand
Kohl’s may run into issues with supply and demand. When the demand for a certain product increases, the available supply also decreases.
Kohl’s being a popular retailer means they may run into situations where a piece of clothing, electronic device, or other product is in high demand.
Therefore, this may require them to raise the prices of high-demand products, knowing that consumers are usually willing to pay more money for a product that is in low supply.
9. Cost of Inflation for Increased Wages
Kohl’s has to adjust starting wages every time the minimum wage is raised.
While opinions on increased wage equalling inflation may differ, in theory, raising the minimum wage may force businesses such as Kohl’s to raise prices on their products in order to stay financially stable.
To learn more, you can see our related posts on the best time to shop at Kohl’s, whether or not Kohl’s takes coupons, and the Kohl’s clothing return policy.
Conclusion
There are a variety of reasons why Kohl’s products are so expensive, and why their prices may continue to rise.
The cost of production and materials, increases in supply and demand, costs of shipping, and maintaining their large number of employees may all be factors in the way that Kohl’s prices their clothing, electronics, jewelry and other popular items.
