After department store chain Kohl's seemed like it was going the way of Sears, a shift in strategy appears to have turned things around.

After a dismal first quarter in 2017, the chain shrunk many of its 1,160 locations across America from 90K SF to 60K SF, and the change has paid off with strong holiday sales and a bump in its gross margin, Fortune reports.

The smaller stores allow for fewer costs thanks to a number of factors: smaller inventories, optimized with a big push into data; fewer registers and smaller footprints corresponding to fewer person-hours required for staff; and fewer fixtures leading to lower electricity costs. The smaller stores also have been revamped to be more open, with fewer walls and brighter ceilings improving both the customer experience and the flexibility of stocking.

Kohl's is taking its strategy one step further by opening 12 35K SF stores across the country and plans on adding even more, much in the same way that Target has seen early success with smaller locations. But unlike Target, Kohl's is focusing on smaller towns with this new shape.

As an influx of department and big-box stores either go bankrupt or close locations, Kohl's is betting that several markets that were victims of closures from the likes of J.C. Penney or Sears are now underserved in terms of retail. The upshot of such a strategy is that Kohl's is now part of an exclusive club of soft goods retailers adding locations, rather than taking them away.