Kohl’s is shrinking stores, leasing extra space to Planet Fitness

At 10 Kohl’s stores later this year, you’ll be able to get in a workout and some retail therapy.

On Tuesday, Kohl’s said it would shrink its retail space and lease it out to Planet Fitness at 10 of its stores beginning this year. If the experiment takes off, Kohl’s could expand the partnership to more locations.

Advertisement
It’s not known where the Kohl’s/Planet Fitness locations will be located.

Teaming up with Planet Fitness is Kohl’s CEO Michelle Gass’ latest creative tactic to court customers.

Last year, the retailer announced a pilot program with supermarket chain Aldi to lease out space at up to 10 stores. Kohl’s has more than 1,100 locations around the country.

The retailer faces pressure from Amazon and brick-and-mortar rivals online, as well as growing discount companies like TJX — the parent of TJ Maxx, Marshalls and HomeGoods.

Kohl’s hopes customers will head to Planet Fitness for a workout and visit Kohl’s next door to buy new jeans or a top. The retailer has been aggressively adding new athletic wear to its lineup, including products from Under Armour and Fitbit.

“We see the Planet Fitness partnership as a real win-win,” Gass told analysts on an earnings call Tuesday. “This going to be a great fit for us and for our customers.”

Downsizing its existing space is also part of the strategy. Kohl’s says it saves money by carrying less inventory and employing fewer workers. And the company says the smaller spaces are easier for customers to navigate.

Small is the new big in retail.

Macy’s, another chain, also has shrunk the size of some stores. Target and Ikea have opened smaller versions of their shops in big cities, too.

Kohl’s has been partnering with more businesses to futureproof its business in other ways as well.

The retailer joined with Amazon in 2017 to offer free online returns and mini-Amazon shops within some stores. It has expanded those tests with Amazon to more stores.

Last month, Kohl’s struck a partnership with WW — formerly Weight Watchers — to open a studio later this year that will host workshops and diet coaching.

Some analysts argue that Kohl’s needs to take bigger steps to attract customers and shrink stores, especially since people do more of their shopping online now.

“We believe the management team needs to get more aggressive in the near term closing stores and moving towards the smaller format,” said Brian Yarbrough, analyst at Edward Jones.

For Planet Fitness, teaming up with Kohl’s will help it gain exposure. The company wants to double its U.S. footprint to 4,000 stores in the coming years, CEO Chris Rondeau told analysts last week.

The Kohl’s partnership factors into that strategy, as does a plan to open new stores in malls and empty retail lots across the country.

“Real estate trends appear to remain in our favor,” Rondeau said. “Bricks-and-mortar retailers continue to close stores and landlords are increasingly looking to Planet Fitness as key tenants to drive traffic.”