An exterior view of the Kohl's store in the Paxton Town Center near Harrisburg. A customer walks with a Nike shopping bag.
Paul Wever | SOPA images | Emily Elconin | Bloomberg | Getty Images
Nike And Kohl's may not win on Wall Street, but it will win on a broad group of consumers still consider them the best in their category, according to a consumer confidence survey published Thursday.
The Consumer Sentiment Index from consulting firm AlixPartners asked 9,000 fashion buyers from Gen Z to boomers about the factors driving their purchasing decisions and how retailers stack up against their competitors.
Nike ranked as the No. 1 active footwear retailer among all four generational cohorts surveyed for the study: Gen Z, millennials, Gen X and boomers. Defeated the legendary sneaker giant Adidas And Foot Lockerwhich tied for second, while upstart competitor On Running finished last among Gen Z and millennials.
Kohl's was the No. 1 choice for department stores among Gen Z and boomers, while millennials chose it Northstream and Generation X chose Macy's.
The study's findings contrast with the recent performance of Nike and Kohl. Nike expects sales to decline between 8% and 10% this quarter. As of Wednesday's close, the stock is down 26% this year as investors prepare for a long road to recovery under new CEO Elliott Hill.
Meanwhile, Kohl's expects sales to fall between 4% and 6% this fiscal year as it grapples with the larger, existential issues facing department stores and tries to stay relevant. The stock is down 32% so far this year, as of Wednesday's close.
Sonia Lapinsky, head of AlixPartners' global fashion practice and author of the report, told CNBC that the study's findings – in addition to the companies' recent performance – indicate that Nike and Kohl's are at critical junctures. The results indicate that consumers are still firmly behind retailers, but that good grace could quickly disappear if they don't quickly diagnose and fix what's wrong.
“We would see in the data what is important to the Nike consumer. It's all about innovation, technical quality, product and… [the competitors] that are growing super fast… they're known for their innovation, they're known for their product development, they're doing it a lot faster than we know Nike is doing it,” Lapinsky said.
She said it's a similar situation at Kohl's, which has changed its assortment strategy many times over the years but has managed to win over consumers with competitive prices.
Consumers “still think they have the best in terms of product price combination. They're still getting a deal. They probably love Kohl's money,” Lapinsky says. “Now let's turn the experience when they're in the store into something they come back for and actually increase your sales.”
Walking the tightrope of inventory
Alix's consumer sentiment report revealed a slew of other findings retailers should keep in mind as they enter the ever-important holiday shopping season, including the No. 1 factor that would drive shoppers to a competitor. The majority of consumers surveyed, or 66% of respondents, said they would shop at a different retailer if the product they are looking for is out of stock.
“The right product, the right place, the right time resonates in every retail conference room, but as retailers have expanded their online assortments and marketplaces to attract new customers and traffic, it has become more challenging to prevent customers from become frustrated when they cannot find their size or their desired item in the store,” the report said.
For example, according to the report, on average only 9% of a retailer's online range is available in stores, based on a sample of 30 retailers.
“It's clear why consumers are frustrated. Macys.com has 24,000 women's tops available online, but for customers entering their Herald Square flagship in New York City, only 2,500 women's tops are available for pickup,” the report said. “For Gap.comThere are 158 tops and T-shirts available online for women, but only 50 are available to pick up at the Herald Square location.
As retailers look to differentiate themselves online and attract attention, they have started offering much wider digital ranges. But when consumers return to stores, they expect to see the same products on the shelves.
It would be too expensive and unrealistic to replicate digital inventories in stores, so retailers need to be able to predict what inventory to place where so that consumers can find what they want in stores.
“This is a perfect kind of recipe for where AI should come into play,” Lapinsky said. “They have to become very smart about where the customer goes and what they are looking for, and they do that with better analytics, possibly AI models, that predict what the customer wants. And then they need to have that same vision of the transition to stores, even per store location, store cluster, store region, where they have a good idea of what the consumer is likely to be looking for.”