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Cutting-edge technology companies and hipsters might not give a lot of credit to retailers as innovators. But when an international department store chain decides to “rumble” and refocus its mobile applications, the resources it can bring to bear on the effort can lead to remarkable success. Just ask Kohl’s, which has prompted an 800 percent increase in usage of its mobile app following a massive overhaul.

The key outcome of the planning rumble that Kohl’s chief digital officer and an interdepartmental team of 30 staffers undertook was the recognition that the retailer’s loyalty programs should function primarily through its mobile platform. That is, the mobile app is the central focus of its loyalty program, rather than an add-on running in parallel with a traditional program. Shoppers no longer need to carry a loyalty card or present printed coupons. Instead, the app maintains a record of everything they have bought and the exact rewards they have earned through those purchases.

Woman scanning QR code in shopping mallWhen consumers return to do a bit more shopping, the app also shows them the prices of the items they select, then details exactly how the rewards and discounts they have earned will adjust those prices. Furthermore, Kohl’s app provides easy functionality for sharing rewards and shopping lists. By making mobile the central platform, Kohl’s enables customers to save items in their shopping carts and access them from multiple devices. For example, if a teen hopes that her parents will buy her a new pair of jeans that she found at Kohl’s while browsing during lunch, she can add it to the shopping cart through her smartphone, then ask her parents to review the item on their tablet later that evening, when they get home from work.

The mobile app is central to Kohl’s recently improved performance; it has seen sales growth for the first time in seven quarters. However, it is not the only factor. In conjunction with its renovation of the mobile app, Kohl’s undertook an organization-wide upgrade, under the umbrella of a “Greatness Agenda.” Stores are being updated, and new merchandising deals are adding popular Frozen-themed offerings to its assortment.

Still to come though is the resolution of the mobile payment decision. As mobile payment methods continue to struggle to find their footing, Kohl’s is cautiously backing the CurrentC option, rather than Apple Pay. If the technology giant underestimates the retailer, as has been common, it may be in for an unpleasant surprise though. Retailers such as Kohl’s, by offering convenient, effective loyalty rewards, get customers hooked on their offerings, and payment methods are unlikely to disrupt such a well-established relationship.

Discussion Question:

Why has Kohl’s mobile app seen such massive and rapid growth in its user base?

SOURCE: Aaron Pressman, “The Department Store App that Outpaced Uber, Tinder, and Nike,” Yahoo Finance, May 1, 2015, http://finance.yahoo.com