Kohl’s Personalized Marketing Plans Driven by Big Data and Technology Show how Brick and Mortar Retailers can Borrow (and Perhaps Enhance) Strategies Used by Online Competitors

Kohl's Store and Personalized Marketing

The competition between brick and mortar retailers and online retailers is well known. Online retailers such as Amazon and Zappos.com are able to offer consumers convenience, personalization, and in many cases lower costs. One of the advantages that brick and mortar retailers maintained was that consumers were able to see and feel the products in the physical world before making a purchase decision which provided an added level of trust in the product and confidence in the decision to buy. However, many savvy consumers began to take an omnichannel approach to purchasing that left brick and mortar retailers as serving in some cases as nothing more than a showroom for consumers who wanted to see and feel the product before finding it cheaper online (a while back we wrote a great post about this phenomenon here).

Brick and mortar stores have increasingly amplified their presence online and enabled shoppers to make purchases that can be picked up at nearby physical locations free of shipping charges. There are numerous examples of how brick and mortar retailers have attempted to combat online retailers including in recent years the choice to open stores on Thanksgiving Day in order to try to reduce the loss of holiday sales to online competitors on that day. Some larger companies have chosen to abstain from this most recent tactic, but many others view it as a necessary move to help stem the loss of crucial holiday business.

An interesting article in the Milwaukee Journal Sentinel discusses how Kohl’s plans to revitalize slumping sales through personalized marketing efforts that leverage technologies powered by big data. One effort in motion by the brick and mortar retailer include the installation of beacons within their stores to be used with their mobile application to provide personalized deals in real time. Another effort is the full roll out of a customer loyalty program that will enable the firm to more clearly attribute sales to individual shoppers and help enable the development of personalized promotions.

Kohl’s is already able to attribute 75% of its sales to specific individuals, but the company has as of yet been unable to leverage this data in anyway close to its true potential.  A recent press release from Oracle announced Kohl’s deployment of multiple retail oriented software solutions that are offered by the technology giant. These solutions will help Kohl’s to analyze and measure the performance of their product offerings both in store and online which in turn will help improve the pricing, promotion, and inventory decisions made for them. Overall, a wise move in improving the performance and efficiency of the organization’s marketing efforts and supply chain operations.

As Kohl’s moves towards using big data and technology to help streamline its operations and improve its marketing efforts through greater personalization, the retailer is already planning on moving towards greater individualization within its stores. In the past merchandising decisions were generalized for seven regions defined within the United States. Moving forward the company plans to personalize merchandise in each store, with the use of its improved capacity to analyze the vast amount of data being collected at each store and online.

One of the great advantages of online shopping is the ability to find exactly what you’re looking for within moments. Kohl’s efforts in personalizing its locations’ merchandise to match the interests of the people within communities where its stores operate should help move the company in the right direction. On a more granular level, the move towards providing personalized messages and promotions through its marketing communications both in store and online should provide a strong synergy with its effort towards more personalized merchandising options at each store. Taking plans into consideration with the fact that consumers still enjoy being able to see and engage with products before they purchase them, these actions might just give the brick and mortar retailer a “leg up” against some of their online competitors. Only time will tell with the retailer optimistically stating that they expect to see sales increase to $21 billion in 2017 from the $19 billion level that they have sat at since 2011.

From a marketing management perspective here are some questions to consider:

  • What are some of the advantages not listed in this post that online retailers have over brick and mortar retailers? Is it possible for a brick and mortar retailer to attempt to level the playing field in regard to those advantages? If so, how?
  • If you were the VP of Marketing for Kohl’s what metrics would you want to closely monitor to evaluate the effectiveness of some of the personalized marketing efforts described in the post above?
  • Take a brick and mortar retailer of your choice and identify some of the other advantages that retailer has over its online competitors (aside from being able to physically display products in-house) and analyze how those advantages could be further enhanced or communicated through their marketing to help improve the retailer’s competitive position.