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Kohl’s lays groundwork for mobile payments with holiday investments

October 23, 2013

The Kohl's iPhone app

Kohl’s has unveiled its holiday marketing plan that centers around the retailer’s iPhone application, possibly hinting at a larger mobile payments plan from the retailer in the future.

Kohl’s is focusing its holiday efforts around its branded app to integrate Kohl’s Cash and location-based offers this year as part of a broader focus on building out a more comprehensive mobile strategy. Kohl’s is also one of the retailers involved in Merchant Customer Exchange, which is slated to roll out soon and will incorporate mobile payments into the participating retailers’ point-of-sale systems.

“Many retailers are boiling the proverbial frog when it comes to their existing apps,” said Jordan McKee, analyst for Yankee Group, Boston.

“Slowly they’re integrating more features and functionality, and their apps are starting to look much different than they originally did,” he said. “This will be the case for many MCX merchants like Kohl’s, who have added new features over the months and will soon incorporate payment functionality once MCX goes live.”

Mr. McKee is not affiliated with Kohl’s. He spoke based on his expertise on the subject.

Kohl’s provided background information for this article.

Streamlined shopping
Kohl’s will update its iPhone app with a new savings wallet that lets shoppers track their Kohl’s Cash that lets shoppers earn points from each purchase. The feature will work for consumers that are logged into their Kohl’s accounts via the app.

Additionally, the Kohl’s app will be refreshed so that shoppers can scan the bar code associated with the Kohl’s Cash number to cut down on the number of steps that consumers need to take to redeem rewards.

Moreover, Kohl’s plans to send out geo-targeted push notifications and offers to opted-in app users.

Kohl’s is also rolling out an enhanced Wi-Fi experience to all stores this season. The Wi-Fi will give information about what is new and include an offer that consumers can redeem on the spot.

Mass roll-outs of Wi-Fi have generated buzz in the mobile space as a way to combat showrooming, but it is often expensive to implement. By investing heavily in Wi-Fi, Kohl’s is aiming to give consumers exclusive content and offers in exchange for connecting to a network that the retailer can use to track in-store shopping habits.

A screenshot of the Kohl’s iPhone app

Paving the way for mobile payments
Kohl’s is one of more than 30 retailers working with MCX to roll out mobile payments at point-of-sale systems (see story).

Some expect MCX to roll out this quarter in time for the holidays, and the mobile news from Kohl’s may give marketers a glimpse of what to expect from the service.

The MCX service will include a bar code-based payment, which Starbucks has seen great success with and is likely fueling some of the retailer interest, according to Mr. McKee.

“Merchant apps are an excellent engagement strategy and an effective tool for combating showrooming,” he said.

“Integrating payment functionality can greatly increase the utility of these apps and make them more attractive for shoppers. I expect to see more retailer-led wallets in the next 12 months, given that MCX will allow its partners to integrate MCX payment functionality into their existing applications.”

Early shopping season
The mobile push is part of Kohl’s broader holiday strategy that also includes keeping stores open from 8 p.m. Thanksgiving Day through Black Friday.

Kohl’s will also leverage Facebook this holiday season to push out exclusive offers and flash sample giveaways.

The move to open up doors earlier on Thanksgiving Day is a strategy that several retailers are using this year to differentiate themselves and get a head start on Black Friday sales. In many of these cases, big box retailers are relying on mobile as a way to give consumers exclusive access to offers before shopping in-store.

For instance, Macy’s is also opening its doors at 8 p.m. on Thanksgiving Day and will push out Black Friday specials via its app (see story).

Kohl’s will also integrate mobile into the in-store experience past Thanksgiving weekend.

According to the brand, shoppers will be able to download an app called Kohl’s Snapshots with Santa to take a picture with a holiday background featuring Santa that can be shared via email and social media. Consumers who take pictures via the app will qualify for $20 off of a greeting cards purchase from Shutterfly.

The goal behind the Santa app is to cut down on the often massive lines that children and parents wait in to see Santa in-store during the holidays and will presumably boost sales as consumers have more time to spend shopping.

Although Kohl’s holiday efforts are more focused on building loyalty and brand awareness, the retailer’s initiatives could give the retailer a better understanding of the value proposition of a mobile wallet to eventually roll out into payments.

“Mobile payment adoption amongst retailers remains slow, and this will be the case for some time,” Mr. McKee said.

“Most remain unsold on the value proposition of the mobile wallet and are not seeing an overwhelming business need, especially given low consumer adoption,” he said.

“However, retailers are starting to see the benefit of integrating payment functionality into their own apps as evidenced by the number of retailers that have joined MCX, and that’s trend I see continuing to grow.”

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York

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