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Kohl's Boosts Customers' Experience With New Loyalty Program

Zacks Equity Research
·4 min read

Kohl's Corporation KSS has always been focused on enriching customers’ experience. To this end, the company unveiled the countrywide rollout of its simplified loyalty program — Kohl’s Rewards — which places it well for this holiday season.

Customers enrolling for Kohl’s Rewards will get 5% Kohl’s Cash every day, on every purchase, regardless of how and when they shop. Apart from this, they will be entitled to personalized deals, special birthday gifts and other perks throughout the year. The launch of Kohl’s Rewards is likely to provide more value to customers, by offering them more Kohl’s Cash every day.

Notably, the company has been piloting this program in 13 markets. Customers’ favorable response to this lucrative loyalty program encouraged management to roll it out nationwide. In fact, the Kohl’s Rewards program evolves the company’s existing Yes2You Rewards loyalty program into a more simplified framework. The 30 million Kohl’s Yes2You Rewards program members will be automatically transferred to the new Kohl’s Rewards program, with their current Yes2You Rewards points converted into the new program.

Certainly, the Kohl’s Rewards program is likely to be a hit, given its exclusive deals, increased customer engagement and miscellaneous perks. Also, the program will be easy and enjoyable to use with new features. These include getting a print out of the Kohl’s Rewards balance on their shopping receipt; getting a digital reminder of the Kohl’s Cash coupons available, and synchronizing Kohl’s Rewards balances across different channels.

Kohl’s Customer-Friendly Efforts on Track

This marks another step by Kohl’s undertaken to enhance customers’ experience and boost traffic. The company has been undertaking other moves as well, like strengthening ties with Amazon AMZN to drive traffic. Incidentally, the company has been benefiting from the rollout of its Amazon returns program nationwide. According to this program, Kohl’s stores accept free, unpackaged and easy returns for customers of Amazon.

Further, Kohl’s has been making investments in its digital business, to keep pace with the evolving consumer environment. This becomes more relevant at a time when customers have resorted more to online shopping to maintain social distancing amid the pandemic. Markedly, digital sales witnessed a 58% jump during second-quarter fiscal 2020, given customers’ increased shift to online shopping amid the coronavirus outbreak. Given the need of the hour, management speeded up its digital marketing efforts and enhanced its website to cater to customers’ needs. Further, the company witnessed online sales growth across several categories. Notably, digital revenues in the Home and Active businesses surged more than 90% and 70%, respectively, in the second quarter.

However, coronavirus-led temporary store closures hurt Kohl’s second-quarter fiscal 2020 results. The company’s total revenues were $3,407 million, down 23.1% year over year. Net sales declined 22.9% to $3,213 million due to nearly 25% less operating days compared with the prior-year figure along with reduced working hours amid the pandemic. Further, Kohl's posted an adjusted loss of 25 cents per share against adjusted earnings of $1.55 per share reported in the year-ago quarter. Shares of the company have dropped 6.6% in the past three months compared with the industry’s decline of 5.1%.

Nevertheless, Kohl’s has reopened all its stores, following the relaxation of the coronavirus-induced lockdown restrictions. Moreover, the company’s store drive-ups as well as customer pick up plans amid the pandemic are yielding results. Also, the company implemented the Amazon return program as the stores reopened. In fact, Kohl’s witnessed increased traffic as customers were able to place returns for items bought over the last several months. These upsides, along with the Zacks Rank #3 (Hold) company’s new loyalty program, are likely to keep it going.

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