A Look at the Evolution of Kohl’s
Charge Card & Loyalty Programs
The evolution of the Kohl’s Charge (a private label credit card) program demonstrates its importance to Kohl’s – the product currently
accounts for nearly 60% of Kohl’s retail sales, an industry-leading figure relative to peers. In 2014, the company launched the tenderneutral “Yes2You Rewards” program1, which offers a 5% earn rate, to supplement the credit program and tap new customers.
Key Milestones – Kohl’s Charge & Yes2You Rewards
ƒƒ Importance of Credit & Promotions – Credit penetration is
consistently high, driven by the integration of credit with the
company’s retail strategy (i.e., credit events, channel access,
promotions)
ƒƒ Capital One Partnership – In 2011, Kohl’s transitioned its credit
program to Capital One. Kohl’s disclosed meaningful improvements
in underwriting and growth; in 2014, the partnership was renewed
for 9 years, citing a “perfect fit” between the organizations

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20% off first purchase
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$5 per $100 spent (“stackable” with credit)
15% off a future purchase
12 special offers of 15-30% each year
After spending $600 per year (MVC status),
receive additional six “pick-a-day” offers
ƒƒ Tender Neutral Loyalty Program Launch –
In Oct. 2014, after a two-year pilot, Kohl’s
launched its “Yes2You Rewards” program1
nationwide (Kohl’s reported ~40 million
members as of May 2016)
ƒƒ Apple Pay – Kohl’s became the first retailer
to: (1) add live PLCC functionality (October
2015), and (2) fully integrate its proprietary
payment program when Yes2You functionality
was added in May 2016 – Customers can now
pay for purchases and accrue loyalty points
via Apple Pay
Kohl’s Credit and Loyalty Program Trends
% of Kohl’s Retail Sales on Credit
(left axis)
60%
58.0%
# of Yes2You1 Members (MM)
(right axis)
59.3%
58.8%
58.0% 57.6%
45
40
55%
35
Launch
53.0%
30
50%
Renewal
Partnership
45%
25
20
Pilot Program
15
10
40%
5
NR
0
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
Q4 14
Q1 15
Q2 15
Q3 15
Q4 15
Q1 16
35%
NR
8 special offers per year (+ birthday offer)
Redeem rewards via mobile app at POS
Express checkout, order tracking, etc.
Management Commentary
2Q14: “…the credit overlap has probably been the most
exciting thing… We didn’t want to do anything that
would be positive on the loyalty side but somehow
perceived negatively by our customer[s] in our credit
business...” -Kevin Mansell, CEO
2Q15: “Over half of our transactions are now with loyalty
members… We intend to launch a number of new
enhancements… [loyalty members] shop more
frequently, which is really the driver of the [sales]
lift…”
-Kevin Mansell, CEO
1Q16: “…after we roll out a new point-of-sale system, [we
will] use the loyalty information…to do a pre-screen
on them for our credit card and try to get people to
move along the value path…hopefully getting them
to sign up for our credit card.” -Wesley McDonald, CFO
Note: Kohl’s also joined Merchant Customer Exchange (MCX) in July 2013. 1 Initially branded “Kohl’s Rewards.”
Sources: Kohl’s press releases and quarterly earnings materials; First Annapolis Consulting analysis.
For more information please contact: John Grund, Partner, [email protected]; Jeff Kalski, Associate, [email protected]; or
Kyle Sheckler, Analyst, [email protected]
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