What Kohl’s “Phoenix” Moment Can Teach Us About the Market

It’s been a long time since Polish immigrant Maxwell Kohl opened his corner grocery store in 1927. Then Kohl’s grew tremendously, becoming a department store in the 1960s and going on to become the country’s largest department store chain in the United States in 2012.

But while things seemed OK on the surface then, the chain quickly discovered it had become difficult to compete with other stores.

With Amazon and Target becoming the go-to places for younger consumers, Kohl's noticed its customer base may have remained faithful, but over time, they were also growing older. The result? Revenues were going nowhere.

By 2017, the firm had had enough. Instead of letting the ship sink, it joined Amazon, bringing about a partnership that made the brick-and-mortar retailer popular again. In no time, Kohl’s was reporting two consecutive years of positive sales growth.

Beginning in late 2017, Kohl’s started selling select Amazon products such as Echo virtual assistants and Kindle readers. In addition, customers are allowed to walk into participating Kohl’s stores to return something they bought on Amazon — even if they don’t have the original packaging. The firm then uses its own resources to ship the products back to the online retailer.

The radical initiative has made customers excited, Kohl’s CEO Michelle Gass said.

"It's really unique. It takes a lot of the hassle out of returning items."

By finding a way to make the life of consumers easier, Kohl’s managed to stay relevant while boosting its sales in the meantime. In this case, the firm learned that if you can’t beat them, you might as well join them. And by working on something new, something that has drawn in younger customers to its stores, the company has used Amazon’s popularity among the younger crowd to get more people to walk inside its shop.

Quite frankly, only someone who’s truly dedicated to giving customers what they want could have come up with such a genius move. And it is only in a capitalist environment that you see this taking place.

Competition Leads to Excellence

In an open market, not all competition will drive rivals out of business. Quite the contrary.

As demonstrated by Kohl’s, competitors may inspire more established firms to think outside the box. And sometimes, even old rivals can become partners if firms find a way to better serve the consumer.

While our current economy is far from a free and unrestricted market economy, it does provide retailers with some freedom to experiment. And it’s because of this freedom that being an average consumer in 2019 is much easier (and pleasant) than being a consumer just a few decades ago.

Unfortunately, not all markets enjoy this kind of freedom. And what consumers are left with when markets are completely crushed by the hand of government is nothing but an unsafe and hostile environment where violence replaces open competition.

In these black markets, competitors become deadly rivals, and product providers become dealers who aren’t in the least concerned about quality. In the end, it is the consumer who pays the ultimate price for having to go to the black market for their wants or needs.

If anything, Kohl’s story illustrates the importance of letting competitors enter the market freely. It is only then that firms are able to prosper — and only because they meet the consumers’ demands.

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Chloe Anagnos

Chloe Anagnos is AIER's Publications Manager. She is a writer and digital marketer and has been an AIER contributor since 2017. Her work has been the subject of articles in FOX News, USA Today, CNN Money, and WIRED. She has been a writer, commentator, and panelist for media outlets around the country on subjects like political marketing, campaigning, and social media. Follow @ChloeAnagnos.