Kohl’s Pay Taking Off

by Raymond Pucci 0

Proprietary merchant mobile wallets rule—so far. Another early example of a single merchant integrated pay program appears to be Kohl’s Pay. As the following article describes, Kohl’s has the right mix of features that are driving favorable early adoption by its customers.

In the few weeks since Kohl’s released Kohl’s Pay, the merchant’s proprietary mobile wallet for store-card holders, it has reported extremely positive customer feedback. Kohl’s Pay gives store-card holders the ability to make a contactless payment at checkout via the Kohl’s app while integrating the retailer’s in-store loyalty rewards program and promotions.

Kohl’s Pay has gained traction early on by capitalizing on existing consumer reliance on mobile devices while shopping, which can help revive the company’s brick-and-mortar business and push it further into the digital space.

Initial engagement is already high: There has been at least one Kohl’s Pay transaction in 66% of Kohl’s stores just two weeks after rolling out nationwide. This trend could continue given the likelihood that a large number of Kohl’s customers haven’t had the chance to use the feature yet. And 99% of users who have paid with the wallet are members of Yes2You, the retailer’s loyalty program, a sign it could be driving users to the tool.

Kohl’s Pay could be a boon to the company after sales dropped 2% YoY last quarter. Kohl’s Pay could be made more valuable by targeting millennials who are already reliant on their smartphones for a variety of reasons, including searching for discounts, reading product reviews, and paying for a purchase.

Moving forward, Kohl’s should look to expand its mobile app capabilities to include features like a dedicated promotions section or personalized product recommendations, which would increase the number of entry points for steering customers toward Kohl’s Pay.

This much we know—merchant pay programs that are highly integrated with store loyalty, marketing, and product ordering receive high marks from customers who end up spending and visiting more. Several large scale programs have been introduced this year including Walmart Pay, CVS Pay, and Cake Pay. Quick service and fast casual restaurants are best positioned for mobile order and pay, which is a must have app for Starbucks and Dunkin Donuts fans. Look for more integrated features to appear in 2017 as the competition for consumers and their mobile wallets heats up.

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group

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