CEO of the Year: Michelle Gass

This year was a challenging one for brick-and-mortar retail.

It seemed each week brought yet another bankruptcy, mass store closure or liquidation as companies struggled to keep up with the rise of ecommerce. By late October, U.S. retailers had announced 8,993 store closures, according to a recent report by Coresight Research. By comparison, store closures during all of 2018 totaled 5,844.

However, one national retailer that appears to be weathering the storm that has sunk many of its competitors is Menomonee Falls-based Kohl’s Corp. Steering the $20 billion Fortune 500 company is Michelle Gass.

As chief executive officer, Gass is the thought leader behind what’s considered an outside-the-box approach to an ever-changing retail landscape.

Kohl’s, which has 1,100 store locations in 49 states, made a number of strategic moves this year, including expanding its partnership with retail giant and competitor Amazon.

The company’s annual revenue has stayed steady with slight year-over-year increases in 2017 and 2018. This year started off strong, but revenue dipped during the second quarter with growth returning in the third quarter, according to the company’s earnings reports. Overall, total revenue is up 2% over this time last year.

Instead of closing stores, Kohl’s is experimenting with the size of its existing stores. Plans are in the works to reduce its stores’ square footage, making way for complementary businesses to operate in the same building.

For her innovative ideas and approach to leading Kohl’s through industry disruption, Michelle Gass is BizTimes Best in Business 2019 CEO of the Year.

Gass joined the company in 2013 as chief customer officer after 17 years in various leadership roles at Seattle-based Starbucks Corp. During her tenure, she oversaw Starbucks’ marketing, product and global strategy operations while the coffeehouse giant grew from 1,000 locations to 20,000 within that time frame.

She became CEO of Kohl’s in May 2018 upon the retirement of Kevin Mansell, Kohl’s former chairman, chief executive officer and president. Mansell’s role was split between Gass and Sona Chawla, who stepped down as president of the company in October.

As a newcomer, Gass brought a fresh perspective to the Kohl’s leadership team during a time when the company needed to evolve. Speaking at Fortune Magazine’s Most Powerful Women Summit in October, Gass recalled making one of her first bold moves just six weeks into the chief customer officer role. 

“I had responsibility for the marketing organization and the digital part of the business, which was the high-growth part of the business,” she said. “But what I quickly realized was to transform that part of the business we actually had to transform the entire company.”

Gass relayed her findings to then-CEO Mansell, who heeded her advice for a complete overhaul.

“More than anything, it really galvanized the organization (into) a new future,” she said.

Six years later, Gass continues to drive change.

Kohl’s this year announced and launched a number of new brand partnerships, including those with Fanatics, Mary Kate and Ashley Olsen’s Elizabeth and James, Scott Living by HGTV’s Property Brothers Drew and Jonathan Scott, Nine West, Ellen DeGeneres’ pet collection and Brett Young’s Caliville.

But larger “strategic” deals with Planet Fitness Inc., Aldi and Amazon paint a clearer picture of the company’s long-term strategy for driving foot traffic into its stores.

Planet Fitness is in the process of opening up to 10 new 20,000- to 25,000-square-foot facilities adjacent to select Kohl’s stores throughout the country. Last year, Aldi stores were added to as many as 10 Kohl’s locations.

“…It’s actually demising the space,” Gass said. “So it looks like two separate storefronts, but creates that destination to create that overlap with the customer base.”

Since July, shoppers have been able to return eligible Amazon merchandise at all Kohl’s stores, free of charge. The service was first rolled out in 2017 and had only been available at 100 stores in the Milwaukee, Chicago and Los Angeles markets.

Gass views the move as a vehicle for introducing more customers to the brand.

“Something I certainly learned in my days at Starbucks is you gotta try lots of things,” Gass said. “It has to be aligned with our vision and strategy and, in this case, quite practically, it’s how do we drive traffic to stores, keep our stores relevant?”