Why Kohl's CEO Says the Stores Are a 'Strategic Asset'

While its retail competitors close stores by the thousands, Kohl’s is opting for just a little downsizing.

“Our stores are a strategic asset,” says Kohl’s CEO Michelle Gass. “Many people have had to close a lot of stores, but we haven’t. We see stores as an opportunity.” The company is instead splitting too-big spaces with Aldi grocery stores or Planet Fitness locations.

That doesn’t mean Kohl’s isn’t focusing on online sales too. “We’re happy if they buy online or on the app,” Gass says of her customers, “but we still want a presence in the neighborhood.”

Gass spoke at the Fortune Most Powerful Women Summit in Washington, D.C. on Wednesday. The chief executive, who took the top job at Kohl’s in 2018, following a few years at the retailer and 17 years with Starbucks, says a physical presence is crucial to Kohl’s; 80% of Americans live within 15 miles of a Kohl’s store.

This summer, Kohl’s rolled out a partnership with Amazon that allows the e-commerce giant’s customers to return their purchases at Kohl’s locations. The deal between retail’s old and new guard—like “bringing a fox into the henhouse,” as Fortune described it in a profile of Gass last year—offers Amazon an improved customer experience for returns and, for Kohl’s, more customers walking through the door, Gass said.