Kohl's is expanding its shop-in-shop deal with the once-bankrupt Babies R Us brand into 56 additional stores this fall, a bet on baby products at a time when its Sephora partnership is showing cracks.
The department store chain plans to open dedicated Babies R Us sections inside 56 more locations by September, with California and Texas absorbing the bulk of the expansion. California alone will receive 25 of the new shop-in-shops, spread across cities from Fresno to Huntington Beach to Temecula. Texas follows with 20 locations, from Abilene and Amarillo to the Houston suburbs.
Nine other states round out the rollout: Arizona, Colorado, Idaho, Illinois, Nebraska, New Jersey, New York, Oregon, and Pennsylvania. Each is getting one or two new locations. The move builds on a 2024 deal that already planted Babies R Us sections inside roughly 200 Kohl's stores nationwide.
The timing is hard to ignore. Sephora sales inside Kohl's stores fell 4% in the second quarter, The Sun reported. That beauty partnership was supposed to be the traffic driver that pulled younger shoppers into a chain better known for coupons and clearance racks. A 4% decline does not signal collapse, but it does suggest the beauty play alone is not enough to reverse Kohl's broader struggles.
Baby products offer a different value proposition. New parents buy on necessity, not impulse. They come back for diapers, wipes, and onesies whether the economy is humming or not. Kohl's appears to be chasing that repeat-purchase cycle by loading its stores with brands like Millie Moon diapers, Hallmark baby gift sets, stroller toys, and children's books.
By fall, the company says every Kohl's store will carry baby-gifting options, with a focus on items priced under $25. That is a play aimed squarely at grandparents, aunts, and co-workers looking for a quick shower gift, the kind of low-friction purchase that can move volume without heavy discounting.
Babies R Us is not the powerhouse it once was. The brand went through bankruptcy and lost its standalone stores, a collapse that left millions of American parents without a dedicated big-box baby retailer. Its revival as a shop-in-shop concept inside an existing chain is a lower-risk model, no new leases, no standalone overhead, just dedicated floor space inside stores that are already open and staffed.
Whether the brand name still pulls shoppers through the door is the open question. Parents who remember pushing carts through cavernous Babies R Us warehouses in the 2000s may feel a tug of nostalgia. Younger parents who never set foot in one may not care about the name at all. Kohl's is betting the former group is large enough, and loyal enough, to justify dedicating floor space in 256 or more stores.
The expansion also signals that Kohl's sees the initial 200-store rollout as a success worth scaling, though the company has not released specific sales figures for the baby sections. An exclusive coordinated baby essentials collection is part of the new push, adding products that shoppers will not find at competitors.
The geographic spread tells its own story. California's 25 new locations cluster in Southern California, Corona, Fontana, Ontario, Riverside, Temecula, with a few reaching into the Central Valley and the Ventura County coast. Texas leans heavily on the Houston metro area and its suburbs, with additional stores in midsize cities like Abilene, Amarillo, and Georgetown near Austin.
Smaller additions dot the map from Chandler, Arizona, to Blue Bell, Pennsylvania, and from Nampa, Idaho, to South Plainfield, New Jersey. The Illinois stores land in Aurora and Mount Prospect, both Chicago-area suburbs. New York gets two on Long Island, Commack and Deer Park. Oregon picks up one in Hillsboro, outside Portland.
The concentration in California and Texas, the two most populous states, is straightforward. More people, more babies, more potential customers. But it also means Kohl's is leaning into markets where competition from Target, Amazon, and Walmart is fiercest.
Brick-and-mortar retail has spent the last decade learning a hard lesson: floor space that does not earn its keep gets cut. Kohl's is making a clear choice about what earns its keep, and right now, the answer is cribs and car seats over lipstick and foundation. Whether that bet pays off will show up in the next few quarterly reports. Until then, the chain is putting real square footage behind the wager.