Kohl's and rival Macy's are carving out prime space within their sprawling stores and leasing them to other retailers as a means to generate revenue. Kohl's said on Thursday it would operate 500 of its nearly 1,150 stores with much lower square footage and would look to lease out the remaining space to other retailers. Macy's is also planning to carve out storefront space for high-end retailers and lease or sell that space, chief executive Terry Lundgren said on Tuesday.
Total Retail's Take: The struggles of department stores have been well-documented. Declining store and mall traffic is forcing department stores and other retailers with extensive brick-and-mortar footprints to explore other avenues for revenue generation. In addition to digitizing their stores and outfitting them for omnichannel shoppers — e.g., reserving space for customers picking up online orders in-store — Macy's and Kohl's are going a step further and blocking off sections of its stores and making those spaces available for lease to other retailers. It makes sense that these department store chains would look to monetize their expansive stores, as it could prove valuable real estate to smaller brands and only-only retailers that may want to dabble their toes in physical retail before committing to opening their own stores.