Is Kohl’s Cash a Winner?

While Kohl’s may have disappointed customers with merchandise changes and layout tweaks, its Kohls Cash rewards program continues to hold strong appeal.

A Wall Street Journal article, “The cult of Kohl’s Cash,” explores the how the simple program – offering $10 in Kohl’s Cash for every $50 spent – remains a core driver of customer retention for the mid-market department store chain. The program stands out for its ease of use, with Kohl’s Cash facing few restrictions (i.e., no Sephora purchases) in converting to real cash at checkout as long they’re redeemed on specific dates.

Kohl’s Cash’s generous payback, however, is the main attraction. Kohl’s Cash fans are known for bragging about the deals on social media. The WSJ talked to several who raved about the discounts they’re able to score by combining their Kohl’s Cash with the in-store discount. Members of Kohl’s loyalty program further earn 5% on purchases, convertible to Kohl’s Cash, with Kohl’s credit card holders netting 7.5%.

Suzanne Kapner, the WSJ’s retail reporter, wrote in the article, “Kohl’s Cash is fast becoming part of popular culture, much the way Bed Bath & Beyond’s 'Big Blue' oversize 20% off coupons were a touchstone before the retailer filed for bankruptcy.”

Some blamed Bed Bath & Beyond’s bankruptcy in large part on the coupons that trained consumers to never pay full-price. Bed Bath & Beyond brought back the “beloved Bed Bath & Beyond coupon” when reopening physical stores earlier this year.

Bill Warshauer, chief revenue officer at Tillo, a rewards and incentives platform, said shoppers on average spend 38% more than the value of the coupon in redeeming rewards. Many rewards are also never redeemed, reducing the costs to a retailer of such a program.

Kohl's Cash an 'Iconic' and Critical Loyalty Tool?

On its third-quarter analyst call, Kohl’s CEO Michael Bender described Kohl’s Cash as an “iconic” and critical loyalty tool. He said, “We’re leading with compelling value to our customers, leaning into Kohl’s Cash and rewards, which helps drive repeat trips and increased engagement.”

He also said the retailer is doubling down on its “coupon-led promotional strategy” by making more national brands eligible for coupons. In August, Kohl’s published a list of 33 brands that had become coupon-eligible, including Lands' End, Crock-Pot, Keurig, American Tourister, and Yankee Candle. Kohl’s was still able to increase gross margins in the quarter, despite the coupon emphasis, due to strong inventory management and an increased emphasize on proprietary brands.

Bender said the expansion of coupon-eligible led to a sharp uptick in sales being used with coupons to help drive traffic. Bender told analysts, “As we bring back in those [formerly excluded] brands, we continue to market them, we’re going to get more of their footsteps, particularly during this key holiday period.”