Kohl's Slashed Technology Jobs, Continues Testing New Tech

Department store retailer Kohl's is cutting 60 technology jobs from its corporate team as the company goes through a restructuring of its technology area, which includes moving to Cloud technologies, "creating efficiencies through automation."

"While it is very difficult to reduce positions, this decision was one we took very seriously and approached thoughtfully for our business and our teams," said Jen Johnson, the company's senior vice president of corporate communications in a statement.

The move comes at a time when Kohl's has been actively investing in cloud technologies and other tech initiatives.

"All major lines of business reported expense leverage, except IT where we're making deliberate investments in the cloud and other technology initiatives to drive future efficiencies and growth," said CFO Bruce Besanko during the retailer's second quarter earnings call.

To this end, Kohl's has been testing new retail concepts in its 58 Your Store labs across the country. The labs allow the retailer to build a long term road map to evolve its future store. Tests include "ideas that both elevate the store experience and enhance store operations," according to CEO Michelle Gass, "all enabled by technology and analytics."

Some of the retail technology Kohl's is testing in the Your Store labs include mobile checkout, way finding, in-store lockers for online order pickups, new merchandising and staffing concepts, store layout changes, including its right-size initiative, and store manager tools. Kohl's also plans to test a new customer service center concept in two stores later this year.

The company reported comparable sales increases in both stores and its digital channel in the second quarter. The comp sales increase of 3.1% was the retailer's fourth consecutive quarter of positive comparable sales.  

The digital business had a mid-teen increase in sales and 70% of total digital traffic and almost half of digital sales came from the mobile channel. Stores fulfilled close to 40% of digital units in the quarter.

In late July, Kohl's launched Buy-Online-Ship-to-Store (BOSS). The service is currently available in about 20 stores, Kohl's plans to roll it out to all stores in the next few months.

"BOSS will significantly broaden the assortment available to our customers for free pickup in store, complements our existing buy online pick-up in store platform and is another great way that we can drive traffic into our stores," said Gass.

Kohl's Personalization

Kohl's is also making "making significant investment and progress" in personalized marketing, which the company sees as the future of its customer engagement effort.

"The vision of our personalization initiative is to drive both traffic and conversion by having our customer see the right message at the right time, in the right place in response to their preferences," said Gass.

To help consumers shop seamlessly throughout mobile, the website, and store the company has three active initiatives:

• The Smart Cart program launched on desktop in the third quarter of 2017 and was expanded to the mobile channel in Q2 2018. This program incentivizes customers via Kohl's Cash rewards to come to the store to pick up their online orders rather than shipping it to their home. Smart Cart generates in-store sales in addition to reducing shipping cost.
• Kohl's is deploying personalized search, dynamic media personalization and product recommendation, which all continuously learn from customer behavior to recommend products to shoppers.
• Kohl's has scaled personalized triggers of top selling relevant products, which include savings alerts and personalized emails.

"Our personalized efforts are enabled by the investments we are making in best-in-class technology including an artificial intelligence and machine learning framework which constantly adapts to customer behavior to drive optimal result," said Gass.

Kohl's Inventory Management

Kohl's currently has four key inventory management initiatives in place:

• Its standard to small initiative continues to drive lower inventory levels and higher profitability and the retailer expanded the program to another 200 stores in 2018.
• Localization efforts are giving Kohl's the right product in the right store at the right time.
• The Speed initiative has positively impacted Kohl's proprietary portfolio by allowing it to better flow receipts to match customer demand.
• Kohl's strategically reduced customer choice while increasing depth in key items.

"All of these initiatives have resulted in improved inventory metrics," said Besanko. "Our inventory per store decreased 8%, our tenth consecutive quarter of inventory reductions. Our inventory is turning faster, our clearance levels continue to be well managed, and our aged inventory is decreasing. The inventory initiatives have also contributed to our already strong cash position."