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Kohl’s mobile conversion jumps 59pc as omnichannel investments pay off

February 29, 2016

The Kohl's app

The Kohl’s app

Kohl’s said it is seeing results from its focus on omnichannel initiatives, with more than twice as many digital orders either shipped from or picked up in a store.

The retailer expects buy online, pick up in store orders to double over the next few years, with mobile driving much of the increase. Improvements to the Kohl’s app have also paid off, with a 59 percent increase in the mobile conversion rate.

“Our Kohl’s app was used by more than 11 million customers and growing,” said Kevin Mansell, president and CEO of Kohl’s, during a conference call with analysts to discuss the retailer’s financial results. “And new mobile in-store capabilities, including mobile pay, were successful as well.

“Our digital and mobile-centric Yes2You Rewards Program has quickly become an industry-leading loyalty program, and we now have the opportunity to cultivate that membership base and increase our share of wallet from them by giving them more relevant and more personal experiences to draw them into the brand and back into the store,” he said.

Omnichannel fulfillment
Kohl’s has been focused on building its omnichannel capabilities over several years by investing billions of dollars in digital technology.

The investment is paying off, with online demand driving sales.

Online-generated demand was up 25 percent for the year and 30 percent for the fourth quarter.

Screen Shot 2016-02-26 at 2.13.15 PM

Much of the demand was fulfilled with the retailer’s ship-from-store and buy online, pick up in store capabilities.

During the fourth quarter, almost 30 percent of Kohl’s digital sales were either shipped from or picked up in the chain’s stores. This is more than twice as many as the previous year.

Looking ahead, Kohl’s expects its omnichannel fulfillment capabilities to create more opportunity for growth.

Better apps
Delving deeper into the numbers, about 25 percent of orders were ship from store while 5 percent were buy online, pick up in store.

Over the next couple of years, Kohl’s expects the buy online, pick up in store number to double to 10 percent and possibly even reach 15 percent. Mobile is driving much of the growth and is expected to continue to be a big source of growth going forward.

Screen Shot 2016-02-26 at 2.09.21 PM

The 59 percent increase in mobile conversions suggests Kohl’s updates to its app, which has had 11 million downloads, have been well received by customers. A big portion of Kohl’s IT investment going forward will be in its app.

Overall, Kohl’s conversion rate was close to 4 percent for all devices.

Last fall, Kohl’s introduced store mode in its mobile application so shoppers can more easily search inventory and locate in-store deals (see story).

Kohl’s also introduced an in-app mobile wallet, which was driving 30 percent of mobile traffic by the middle of last year.

Understanding smartphone-savvy shoppers
Going forward, Kohl’s will be leveraging the insights it has gained from its efforts to meet the needs of smartphone-savvy shoppers to further drive its omnichannel success.

For example, the chain has observed that shoppers are most interested in buy online, pick up in store in the last few days before Christmas Eve and last-minute before holidays such as Valentine’s Day, Mother’s Day and Father’s Day.

“I think we’ll learn more throughout the year now that the capability is well understood and well launched for us,” said Wesley S. McDonald, chief financial officer, senior executive and vice president of investor relations at Kohl’s.

“And then all the traffic really came from mobile, the increases this year,” he said.

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