Kohl's + Babies"R"Us: Early Learnings from Newly Opened Michigan Locations

Just over a month ago, Kohl’s embarked on the roll out of its ambitious collaboration with Babies”R”Us, aimed at filling a white space opportunity and hopefully retaining younger consumers attracted to the brand by its partnership with Sephora. Over the course of August, a subset of stores with the concept opened, although the full rollout isn’t expected to be completed until the end of this month.

From initial concept photos and e-commerce product pages, the concept and assortment evokes the mostly-shuttered buybuy Baby, which is certainly intentional to provide that visitor with a new option nationwide. Notable and popular high-end brands in baby hardlines such as Doona, Nuna, and UPPABaby are noticeably missing from the assortment.

While we won’t have a full understanding of the performance of all stores equipped with the Babies”R”Us outpost until the fourth quarter, we wanted to get an early read on states who have opened all of their stores in the initial rollout. Michigan has 7 Kohl’s stores that received a Babies”R”Us upgrade, about 15% of the state’s store fleet, and all opened in August.

From a foot traffic perspective, initial reads indicate that there hasn’t been a significant change in performance of the subset of Kohl’s + Babies”R”Us stores in Michigan. However, they are still faring better than Kohl’s traffic statewide, and still growing in an otherwise challenging environment for the brand holistically.

Looking at the openings from a strategic perspective, the locations selected to get the Babies”R”Us shop-in-shops do have a higher share of visits compared to Kohl’s totals in Michigan compared to their share of stores, with the seven stores accounting for 41% of the visits statewide. Beyond that, the dwell time at the newly opened Babies”R”Us locations in August was almost 41 minutes, 9 minutes higher than the average of Kohl’s locations in Michigan.

The Babies”R”Us locations, as of August 2024, looking at PersonaLive visitor segments, over-index the most with Suburban Boomers, Wealthy Suburban Families and Upper Suburban Diverse Families. Gaining the attention of these groups of current parents and grandparents is likely contributing to the growth in traffic compared to other Kohl’s locations and could be a positive indicator for stores in other states with similar demographic profiles that have yet to receive the collaboration upgrade.

Once the remainder of the 200 Babies”R”Us store locations open, we will have a better indication of the full performance of the program, but early indications are positive for a state that is fully operational, despite the challenges for Kohl’s at a national level and department stores in general with consumer headwinds. The bet on Babies”R”Us is imperative for Kohl’s to get right, especially with so much market share up for grabs in the baby category and few national retailers filling the void for many price points in the market.