Kohl's integrates loyalty rewards with Apple Pay

Dive Brief:

Kohl’s announced Wednesday that shoppers are now able to pay for their purchases and simultaneously earn Yes2You Rewards loyalty points with a single tap using the Apple Pay mobile wallet application.
Customers who upload their Kohl’s Charge credit card or other payment account data into their Apple wallet will be able to accrue points with the one-tap checkout service, which is up and running in 250 Kohl’s stores and will be in all stores by the end of the month. Kohl’s said it's the first retailer to offer Apple Pay support that integrates both its private credit card and its loyalty program.
Few retailers so far have enabled their store cards to work with Apple Pay. Kohl’s integrated it last fall, B.J.’s Wholesale has linked it, and J.C. Penney may do so, according to Apple Insider.

Dive Insight:

Kohl’s has been keen on making mobile shopping and payments easy for customers. Its app was moribund until late in 2014, when Kohl’s launched a $1 billion upgrade to its digital storefront, customer data collection and fulfillment systems, placing its loyalty program front and center.

Those improvements led to massive improvements in engagement: By May of 2015, users of Kohl’s mobile app had increased almost 800%.

Kohl's has also succeeded in building out its loyalty program, which Shelley E. Kohan, VP of retail consulting at store analytics firm RetailNext, calls “brilliant.”

“There’s something about the Kohl’s cash that drives the consumer to really plan their shopping around their Kohl’s cash,” Kohan told Retail Dive earlier this year. “People are spending so much effort and time in converting, they have a strong bond with the customer, and are known for that low price.”

It’s somewhat surprising that more retailers haven’t integrated with Apple Pay or Android Pay, considering those wallets’ advantageous marketing potential, Mark Tack, VP of marketing at mobile marketing firm Vibes, told Retail Dive last year. The utility of mobile wallets will be important to retailers regardless of their own app’s effectiveness, he said.

“Retailers ask ‘What role should my app play?’ and our take is ‘You need both,’” Tack said. “It’s a symbiotic role. But all marketing roads lead to mobile wallet.”

Two-thirds of merchants interested in digital payment solutions want Apple Pay, according to a recent survey of payment processing vendors from Piper Jaffray. Android Pay and Google Wallet came in a distant second with 18% of retailers that have or asked about digital systems, followed by PayPal (8%) and Samsung Pay (7%).

Projections say that 148 million people worldwide will use their smartphones to pay retailers this year, up 64% from 90 million in 2015.