1

Executive Summary..

..3

Business Background.5
Analysis........8
Industry Analysis.10
Competitor Analysis...13
Trend Identification...........15
SWOT Analysis..17
Financial Analysis..... 23
Recommendations for Kohls..28
References.31

Executive Summary
Our group has come up with new technology for customers and for the
kiosks to change the customer experience at Kohls. Kohls new kiosk

technology will not only allow Kohls to stand out from their competitors, but
will also allow the customers an easy way to do multiple tasks with ease. The
kiosk will allow people to shop progressively in store and online. When
customers first walk up to the kiosk, it will allow them to choose from a variety
of options such as:

Checko
ut

My
Profile

Kohl'
s
Onlin
e
Store

Ship
to
Hom
e

This new technology will offer customers the opportunity to create a

personal customer profile online, in which they can input all of their personal
information including demographics and psychographics like: address, name,
age, birthdate, credit card information, past purchase history and also allowing
them to categorize certain merchandise they like. The personal profile will
also allow customers to key in their rewards program number and Kohls
credit card. This grants for all Kohls information to be linked to one central
location essentially allowing for easy access at the kiosks and registers. This
technology will allow the profile to make suggestions on merchandise based
on previous purchase history and what customers have said they liked on
their profiles. Every time an item is scanned at checkout, the profile will give
options to look at as recommendations of other similar merchandise that can

be added to the cart in store or online. This profile will be accessible from
anywhere and anytime just by logging on from the Kohls website or by
accessing it on the kiosk in stores. Another feature of the new technology is
that the kiosk will allow for customers to self-checkout. The kiosks will be
credit card and gift card only which allows for an easy way for the customers
to get make their purchase and leave quickly and conveniently. By having the
kiosks use only credit cards and gift cards, some strengths and opportunities
will arise. Apple is a company that has started to take on the same technology
as the checkout system. By bringing this type of technology to Kohls, it will
allow them to stand out from their competitors like J.C. Penney, Macys and
Target.
Additionally, the kiosk will still provide its previous features of product
shipment to home and access to the Kohls online store. With these additional
features added to the kiosk system it will also help increase credit card
revenue. From 2010 to 2012 Kohls credit card revenue increased by 115%.
Assuming the growth from 2010-2012 will continue, we expect an additional
increase for the credit card sales by 2015 to approximately reach $1 billion
dollars in credit card revenue. This is an $117 million increase from 2012
which was $883 million.
We feel this technology will be beneficial to not only Kohls customers but
with their annual sales and revenues as well. It will potentially help boost their
credit sales and increase their customer base that uses the Kohls credit card.

Business Background
Kohls has grown tremendously over the years with the number of
locations of their department stores. Currently the department store has

grown from 10 stores in 1977 to 1,159 stores in 49 states as of 2014. Kohls

mission is To be the leading family-focused, value oriented, specialty
department store offering quality merchandise to the customer in an
environment that is convenient, friendly and exciting (Fact Book 11). Their
goal has always been to continue offering an exceptional value, convenience
and quality of their products and stores. They continue to try to bring in private
and exclusive brands, technology and store improvements that will give the
customer convenience when shopping. Kohls vision is to continue to focus
their target marketing and advertising on the Her, who is segmented into
family oriented, classic all American, independent taste, self-focused explorer
families. Kohls Her is the woman who does most of the shopping for the
family and continues to know what is important to her family, as well as her.
Their vision is to continue to implement the yes we can attitude within all
aspects of their company and the expect great things concept from the instore shopping experience to the online shopping experience.
Kohls has a variety of strategic assets that are unique just to their
department store. Their Omni-channel shopping experience allows them to
have an easy shopping experience that is about convenience for the
customer. Kohls allows their customers to shop anytime when they want or
where they want to shop. They provide ways of shopping through online, in
store, cell phone, tablet, computer and at the Kiosks located throughout the
store. This allows the customer to be able to shop anywhere at anytime they
choose. By being able to use any sort of technological device to access Kohls
online to either make purchases or see what recommendations are offered,

they are setting themselves apart from their competitors.

These possibilities allow the customer to feel that no matter where they shop
with Kohls, they are always getting the best experience possible. By providing
multiple ways to shop, customers can shop at Kohls more often because they
do not have to be in store to purchase an item when they can get it shipped to
their home. This also allows the customer to shop, ship, and receive
merchandise without even having to leave their home. Another strategic
asset Kohls offers is that they have freestanding department stores located
near either malls or other self-standing department stores. This ensures that
they are near other shopping centers, which allows the convenience of

bringing in customers. By having 1,155 stores in 49 states, they have made it

possible to be available virtually everywhere in the United States. They
implemented this strategy to reach a younger customer base as well. Kohls
has a variety of exclusive brands ranging from: LC Lauren Conrad, Vera
Wang, Rock & Republic, Elle, Marc Anthony, Candies and many more. These
are strategies that have been carried out to allow the customer a convenient
and enjoyable experience as well as allowing Kohls to continue to give
excellent customer service.
When visiting the Kohls in Okemos, customers will first notice the large
amount of parking that is available in front of the store. As they walk up to the
store, there are two main entrances, one that enters near the womens and
juniors department and the other into the mens department and the other
side of the juniors department. Strike points are highly visible for exclusive
brands to be seen upon entering. Each department has its own strike points
that are displayed in the front to ensure visibility of the exclusive brand
products. Along with these departments, cash registers are also located at the
front near the entrances. This is convenient for customers to cash out instead
of searching around the store for registers.
Kohls has a grid like layout that allows the customer to access various
departments with ease. The lighting in the store and the racks and shelves
with merchandise allow the customers to clearly see all the products. Every
rack has digital displays that show the original price and sale price. All of
Kohls department stores accommodate customers and employees. Kiosks
are available in stores that offer customers the opportunity to order
merchandise that is not currently in store and have it shipped to their house.

The kiosks enable customers to not miss out on any opportunity to purchase a
product they desire.
Upon our groups visit, we noticed some negative aspects that we felt
could be fixed. One major condition we noted was organization of the clothing
racks and shelves. Throughout the store clothes were unfolded and thrown on
the shelves and even the floor. By keeping up on the organization of the
merchandise, customers would have a more pleasant shopping trip. Another
negative aspect we examined was the lack of employees on the floor. This
made it difficult when it came to needing assistance with merchandise and
wanting to have a quick and convenient shopping experience. Having more
employees on the floor would help the store with organization of merchandise
and allow for people to get their shopping done sooner. The final negative
feature we observed was the outside signage and the overall appeal of the
outside was not eye catching compared to a colorful and inviting store. We
agreed that the store should be more inviting from its outer appearance by
adding features like windows, intriguing colors, and greenery.
Market Opportunity Analysis
After completing extensive research on Kohls and Kohls customers we
decided our idea for integrated kiosks was the best strategic fit for Kohls
model. We believe the self-checkout and customer profile we will integrate
into the kiosks will provide more efficiency for the store and ultimately
generate more sales. This is a strategic fit because Kohls is a store that runs
primarily the with emphasis on what is the most efficient way to operate and to
be user friendly to customers. Currently, not many retail stores have selfcheckout systems. This idea would put Kohls as one of the first making their

stores the most modern. The customer profile will give recommendations to
customers, which will end up in an increase in sales for the company. Our
second top idea was to update the digital displays to work along side the kiosk
and RFID technology. This idea would put what sizes are available on all
items at Kohls on the digital displays. If Kohls were out of a specific item or
size, customers would be directed to the kiosk to make an order and have it
delivered to their house. Each item would be tagged with the RFID technology
and the displays would light up to notify customers of when an item needed to
be replenished. This idea would benefit both employees and customers by
providing them with the information of what is available in stores. Our second
idea also fits with Kohls user friendly and efficiency tactics.

10

Industry Analysis
Kohls identifies themselves as a hybrid store; a mix between a
department store and a specialty store. They are considered a department
store, classified by the United States Department of Labor in the SIC Industry
Group 5311. Our idea, however, would place them in either group 3572, for
computer storage devices, or 3575, for computer terminals. (U.S. Securities
and Exchange Commission) Kohls seeks to provide its customers with the
ultimate level of comfort and convenience during their shopping experience in
order to separate itself from other companies in the industry. Its stores, for
example, are located near malls, but not in them, allowing easy access and
plentiful parking for Kohls shoppers. Kohls family-friendly approach to retail
is one that they believe their customers value over the efforts of their
competition.
Where Kohls department store competitors have struggled in recent
years, Kohls has fared considerably better. Kohls boasted revenues in the
fiscal year of 2013 that was a 2.5% higher than the previous yes revenues.
Meanwhile, J.C. Pennys revenue fell a staggering 24.8%, and Sears dropped
4.1%. (Marketline,19)
2014 is the year organizations really start to focus on the Omnichannel, says Barb Zinck of Inside CXM. (Zinck,1) Kohls, along with
competitors like Macys and J.C. Penney, have recently introduced RFID
inventory tracking systems. RFID, or radio frequency identification, allows

11

companies to track inventory electronically, saving both money and time,

while allowing business to run more smoothly. This is a prime example of an
industry trending toward technology-driven adjustments to help in-store
processes run more smoothly. Apple Inc. has provided the benchmark for
technological advancement at the point of sale. They have recently
implemented an Easy Pay system by which customers can purchase select
accessories right from the Apple Store app on your iPhone, (Apple, 2014).
This, coupled with their mobile-exclusive checkout process, allows customers
to browse the store and checkout at their convenience, void of any lines. This
move toward technology is something that has not yet been perfected in the
department store industry, and we believe it is something that Kohls can
benefit from both in-store and online.
In addition, to streamlining the point of sale, our idea will separate
Kohls from its competitors within the department and discount store sectors
by offering distinct personalization to each customer. The kiosk technology will
not only allow for self-service checkout at the point of sale, but it will also
allow customers to develop a profile that is integrated throughout in-store
kiosks and the Kohls website. The International Data Corporation conducted
a roundtable discussion in December, 2013 in which they predicted that
roughly 80% of consumer data will be wasted by companies in the coming
year due to immature data enterprise, or the general misuse of collected
data. (IDC, 1) Those companies that are able to capitalize on this misused
data are at a clear advantage, and future purchase recommendations by way
of personal customer profiles are a great way for Kohls to exploit this market
opportunity.

12

Brick and Mortar stores face the challenge of integrating technology

into their day-to-day operations while competing with online-only retailers for
business. Kohls prides itself on its unique in-store displays and store traffic
maneuverability. Margaret Bogenreif from Business Insider believes
consumers view Kohls as a kind of retail showroom, where consumers visit
stores to see the merchandise but end up buying online. (Bogenreif, 2012)
This notion asserts that sites like Amazon are viewed as the ideal point of sale
for products that consumers have tried on or viewed in stores such as Kohls
and J.C. Penney. The integrated kiosks will allow customers to make
purchases from the Kohls website in-store, minutes after theyve tried on and
seen the merchandise in-person. This combined with the existing ship to
home feature and the addition of the personal profile will provide a seamless
combination of all aspects in the purchasing process.
While future growth is difficult to explicitly outline, there is no denying
the impact of kiosks on American business. Consumers are becoming
increasingly more familiar with kiosk use in a variety of settings. Banks,
airlines and sports venues have all incorporated kiosk technology that is
operable even by people lacking computer experience. (Elo, 2003) Since
2010, Kohls has experienced a sharp increase in credit card revenue,
growing over 115% from 2010-2012. With consistent growth, plus a revenue
spike between 10-15%, credit card net sales should reach $1 billion by the
end of the 2015 fiscal year.

13

Competitor Analysis
"Kohl's is a discount department store, closest in position to a Target
and J.C. Penney and Macy's, but with a little sharper pricing," says Tim
OConnor, VP of RetailNet Group (SOURCE). This puts them in the unique
position of competing above traditional department stores like Target and
Sears, while sitting just below more high-end department stores like
Nordstrom. The Kohls stock price has been volatile over the last five years. It
emerged from the recession strongly, posting a five-year high of $60.03 in
October 2009. Since dropping below $45 at the beginning of 2013, it has
maintained a price between $50-$56 for the majority of the last 15 months
(Yahoo Finance, 2014). By comparison, Target fell as low as $38 in 2009, but
has risen quite rapidly, posting a five-year high of $72.55 in March of 2013.
Nordstrom Inc. has seen a steady rise since bottoming out below $19 in mid2009, and currently trades higher than both Target and Kohls at $62.98
(Yahoo Finance, 2014).
Kohls leans on its pillars of convenience, value and customer service
in order to deliver quality brands to middle class shoppers. They have relied
on tremendous customer service, employing a yes we can attitude in order to
best serve their loyal customers. Sites like Amazon and Zappos threaten
Kohls ability to target its existing customers online and on mobile devices, as
they have established themselves as the top of online retail. Edward Jones
research analyst Brian Yarbrough believes that Kohls needs to continue to

14

improve their Omni-channel shopping experience, which will help them to

better position themselves in the coming fiscal year. Part of this process was
initiated last year when Kohls hired Oracle Corp. to help better develop their
website, optimizing it for multi-platform use and allowing the potential for
further development (Milwaukee Journal, 2013).
Advanced technology for Kohls existing kiosks is an additional step
toward Omni-channel development for the specialty department retailer. We
believe that implementing the customer profile, along with the self-checkout,
will provide a unique shopping experience that sets Kohls apart from its
competitors. Forbes believes in-store pickup to be one of the top Omnichannel retailing trends in the next few years (Forbes, 2011). With this in
mind, the kiosk functions will allow for even more flexibility, offering a
multitude of options for consumers both in-store, as well as online. Both
Macys and J.C. Penney have shifted to an RFID inventory system similar to
Kohls, and J.C. Penney has indicated the desire to move to a self-service
checkout system sometime this year (SC Digest, 2012). These
implementations are still in infancy, however, none of Kohls direct
competitors have fully developed a system that integrates checkout with
additional online purchases in their stores.
The company that has most closely mimicked the idea of technologydriven checkout in department store retail is Oasis, a U.K. based specialty
retailer who has equipped its employees with iPads in an attempt to develop
the ideal Customer Experience Management (CEM) program to help with
customer acquisition, engagement and retention (Kurt Salmon Research,
2012).

15

Trend/Idea Identification
Our idea involves upgrading the Kohls kiosks in a more functional,
efficient and consumer friendly manner. We want to revamp the kiosks so that
customers can use them for self-checkout as well as using their new
customer profile. Kohls customers will now have the option to create their
own customer profile. This profile will make shopping easier for customers
because it is designed to know the customer based on their typical shopping
habits at Kohls. Customers will be able to access their profiles online and at
the stores from the kiosks. The profile will give recommendations based on
purchases made by the customer and based on their demographics and
personal likes. These recommendations will make it easier for customers to
find what they are looking for while increasing sales at the same time. Using
customer information, as well as recent searches on the Kohls main website,
will help Kohls to more narrowly target prospective customers with this new
kiosk technology.
The second function we are integrating the kiosks with is a selfcheckout feature. Customers will be able to quickly scan their items and make
their purchase right at the kiosk instead of having to wait for employees at the
cash register. Employees will also have more time to focus on other tasks
instead of standing at the register. The Kiosk system will be beneficial for
both customers and the employees by allowing customers to get in and out
faster. Because Kohls already has kiosks, implementing these features will be

16

somewhat inexpensive. We intend costs to come from the software

implementation and adding a side table to hold items and hooks to hold bags.
This feature will make the shopping experience even more efficient and easy
for the customers and employees.
Our idea is a tactic that provides many benefits for Kohls as it fits with
Kohls pledge to provide the ultimate level of convenience to their customers
while running an efficient store. This directly fits to Kohls goal to continue to
offer exceptional value, quality and convenience, (Kohls Fact Book, 2013).
Todays world requires businesses to keep up with modern technology. People
want the fastest and easiest way to accomplish tasks. We believe that Kohls
can benefit from using the existing kiosk technology to make the customers
shopping experience even better. This idea acts as a time-saver for Kohls as
well, as it would require less employee-run checkout lines. This means more
customer service on the floor while providing more flexibility for customers
shopping in the store. This will also drive more online purchases, as the kiosk
suggestions for further purchases will undoubtedly generate more sales for
the company. Most of the technology required to make our idea work already
exists; it just needs to be updated. The benefit for Kohls is that this is a
function that is not readily available in most clothing specialty retailers. It
would be a new way to shop for existing Kohls customers that provides an
incentive for new customers to give the technology a try. Our idea is a
strategic fit to Kohls because it is advancing on ideas they are already using
to make the store run more efficiently while bringing a new aspect that will get
customers attention. It will ultimately be advantageous to Kohls by increasing
efficiency to increase sales.

17

SWOT Analysis
Kohls could benefit from adding the customer profile feature and the
checkout feature that will be available at the kiosks in store. By using the
integrated kiosk machine, this allows customers to personalize a profile for
themselves that they can use from their phone, online, at home or in-store.
This allows the customer to know their purchase history, gives them
recommendations of other merchandise when shopping and allows the
customers to checkout straight from the kiosk in store. The kiosk will also still
allow customers to have items shipped straight to their home from the store.
This integrated kiosk is beneficial because it allows the customers the
convenience to do everything on their own without hassle. With the mission of
Kohls being convenience, value and quality, this kiosk enhances this mission
because it continues to allow the customer to get a variety of tasks done in
one shopping experience. Especially with Kohls targeting the female who
does all of the shopping, this allows her to get all of the shopping done in
one convenient location. With this high technology being implemented, this
will help set them apart from the various stores they are competing with by
allowing a convenient and enjoyable shopping experience. There are many
strengths, weaknesses, opportunities and threats that come along with this
idea. Here we lay out many of them in our bullets, as we will further expand
on some of the ideas in the paragraphs below.

18

Strengths
Enhances customer experience while
being more practical for employees
Already have kiosks in-store

Inexpensive to update
Encourages customers to make more
purchases

Fits in with Kohls convenience

ideology

Helps increase sales of Kohls various

product assortment and brands
Opportunities
Kohls would be one of the first retail
stores with self-checkout and personal
customer profiles

Provides flexible checkout options for

customers, allowing them to buy in-
store or ship them straight to their
home
Gives Kohls the opportunity to be more
modern with technology

Gives employees the opportunity to

take on new tasks

Weaknesses
Organization of store and layout of store.
There is not a lot of space
Ensuring that we get the technology out
there before other department stores
implement it
The technology is new and may not fit into
the store well
If customers do not use the technology it
will be a waste
Threats
Market competition has exclusive brands
as well.
Other companies could adapt the same
technologies and put them in their stores.
Online retailers like Amazon, Zappos, etc,
who allow customers to shop without
leaving the house and already offer
recommendations
Shipping incentives from Amazon/Zappos,
offering free shipping to certain customers
(Amazon Prime)

Strengths
Helps increase sales of Kohls various product assortment and brands
Kohls has a strong marketing strategy by providing a variety of
merchandise that is sold in store and online. The various departments consist
of womens, mens, childrens and teens clothing, shoes, accessories, kitchen,
home furnishings and other miscellaneous items. By providing these various
products this allows the her shopper to get everything she needs for the

19

family and the home. By recommending items to her from these categories,
Kohls will have more sales of these products and their brands.
Variety of Exclusive Brands
Kohls offers a variety of exclusive brands that sets them apart from
their competitors like J.C. Penney and Macys. Kohls already has exclusive
brands like LC Lauren Conrad, Vera Wang, Simply Vera Wang, Marc Anthony,
Elle and Bobby Flay. These varieties of womens, mens, and kitchen brands
allow Kohls to be apart from other department stores. With each of their
exclusive brands they have various price points as well from the more
expensive, higher quality to the cheaper and good quality brands. By
continuing to grow their exclusive brand base this will allow for new customer
bases and for the existing customer base to continue to shop there.
A few other strengths are that Kohls already has kiosks available in
store, which saves some money when it comes to purchasing more. This
technology will allow a more convenient approach to our customer base by
allowing this profile technology to be accessed through various channels of
technology including phone, computer, tablet, Kiosk in store.
Weaknesses
Organization of store and layout
The organization and layout of the store is a weakness that can be
easily fixed to ensure a easy shopping experience for the customer. By
keeping up with the organization of the fitting rooms, clothing racks and
shelves this will make the customer feel more at ease when they are shopping
and not feel so stressed over not being able to find items. Kohls stores are
tightly packed with merchandise, which does not allow for room for new items.

20

The kiosks need an addition of a table and hooks. A weakness is these

additions fitting onto the kiosks without having to rid of any merchandise. We
do not want to make allowances to give up any merchandise for these
additions and do not plan to rid of anything.
Ensure that we get the technology out there before the competition
does.
Kohls has the opportunity to try this new technology before their
competitors. This can be a weakness if they do not get the technology out
there before its competitors. If they do not get these systems and technology
out before it can end up not allowing them to stand out from everyone else.
Opportunities
Being one of the first in the retail market to have a self-checkout station
and a kiosk that allows for multiple functions.
Allowing customers the option to go to a self-check out this will allow
customers to get in and get out quicker along with possibly signing up for the
online profile account. The kiosk allows you to not only check out the
merchandise you have in your cart but, order products online and have them
shipped to your home, create a profile for yourself that will track all your
purchases and recommend other various merchandise options. According to
CNN Money article online it states Amazon recorded an estimated 29 %
sales increase to 12.83 billion during its second fiscal quarter from $9.9 billion
during the same time last year because of the recommendation system
(Mangalindan, 2012).
Provide flexible checkout options for customers, either ship to home or
purchase in-store.

21

This is a major opportunity for Kohls to continue to grow not only as a

company but grow in the technology aspect as well. These flexible kiosks
provide customers to be able to still continue using their usual features of ship
to home, and purchase in store but now it will allow you to add or create a
profile as well as checking out in store with a credit card. This will allow
customers to get in and out much quicker while allowing other people who
have cash or a credit card to still go to the normal cash registers as well.
Threats
Market competition has exclusive brands
A major threat is that many of Kohls competition has exclusive brands
as well. This does not set Kohls apart by the specific brands that they have
and they need to make sure that they continue to promote their exclusive
brands to the customers and keep up to date on the fashion trends. By
implementing the suggestion technology it will allow people to see
merchandise items that may go with what they are purchasing at the time.
This will also allow their online and credit card sales to increase as well.
Competition could adapt same technology
Kohls will need to ensure that they continue to adapt their technology
to the ever-changing society. Apple is one store that is starting to have
technology that allows people to check out quicker by using just a credit card
or by using a machine instead of having to check out with a person. By
continuing to have technology that other people do not have it will allow them
to stand out from their competitors and let their customers know that they are
always improving their shopping experience.

22

Online shopping services like Zappos, Amazon provides you the same
kind of technology without having to leave your home.

Shipping incentives provided by Zappos and Amazon, like Amazon

Prime.
Kohls does offer shipping options that are great but with the various
competitors providing just as good of shipping options, this could a threat.
Most all-online shopping sites provide great shipping options because this is
the only way for customers to get their merchandise. Kohls needs to ensure
that they provide shipping that makes it easy for the customer to purchase
merchandise and have it sent right to their home. The Kiosk will allow
customers to not only checkout some merchandise in store but will allow them
to add their online order to their in store checkout as well.

23

Financial Analysis
The main focus of our project is about adding new features to the kiosks
that are already in Kohls store, so the main concern is about how to integrate
the recommendations and checkout features to Kohls kiosks. All of these
features will help increase the annual revenue but allow the credit card sales
to continue to double over the years.
Cost:
The goal of this project is to integrate the merchandise
recommendation feature and checkout feature to already existed kiosks
placed in Kohls stores, so majority of the cost will be upgrading our old
system. Here's a summary of the cost for a standard kiosk (Bill, 2014):

24

These prices will takes care of the kiosk hardware and technology that will
need to be added in order for the kiosk to work properly. By and large, the
services and ongoing costs of managing a digital signage system are the
same for a kiosk, excepting other services for changing printer paper or toner,
or loading and unloading cash collectors and dispensers. The typical kiosk will
have a useful life of between 3 and 5 years, so you can easily amortize the
cost over 36-60 months. So what does our final total look like now (for a single
kiosk for 3 years):

25

The cost of upgrading a kiosk and tech support for 36 months would be
$400(Software Initial Installation) + $1800 (Management Software) +
$3600(Tech Support) =$ 5800. This is the cost of a single kiosk for 36 months.
There is average 4 kiosks average per store, and there are 1158 Kohls stores
across the nation, so the overall cost of upgrading a kiosk for 36 months
would be $23,200 per store and from this chart we obtained that the expense
for 2013 was 4313 million dollars, so the cost of upgrading kiosks would takes
up about approximately .2% of the expense per year. Listed below is the chart
for Kohls expense from 2009- 2013 (kohls corp, 2013):
From this chart we obtained that the expense for 2013 was $4313

million dollars, so the cost of upgrading kiosks would takes up about

approximately .2% of the expense per year. The percentage of the cost will
decrease year by year due to declining hardware costs and more
sophisticated technologies, which mean kiosks can deliver a positive return-

26

on-investment, as shown in the graph below (Total Interactive Kiosk Market:

U.S. Unit Shipment and Revenue Forecasts, 1993-2003)

Revenue:
Implementing recommendation feature to the site is not new nowadays;
many retailers and online stores have been doing this for a long time and
obtained big revenue bumps over the years. Amazon, one of the largest
online stores in the world, has implemented this feature since 2006, and the
experts predict Amazon gets 30 to 35% of their revenue from
recommendations, compared to 0 to 5% for the average retail merchant
(Beyond the click stream, 2013).
Kohls might be known as a department store that offers discounts on a
broad range of merchandise, but it primarily attracts a fiscally strong

27

consumer. For instance, 27.6 percent of its customers have an annual

household income of $50,000-$74,999, 18.3 percent have an annual
household income of $75,000-$99,999, and 13.2 percent of its customers
have an annual household income of $100,000-$149,000 (J.D. Power, 2014).
This indicates that by adding merchandise recommendation feature to the
kiosks would potentially boost Kohls revenue by a relevantly big percentage
due to Kohls high-income customer base.
Credit card holder is our main target audience. By scanning their credit
cards on the kiosks, our system will gather their purchase habits information
and recommend them related merchandises. According to J.D. Power and
Associates Reports Customers who shop at a midscale department store
spend an average of $109 per visit and $2,393 annually on apparel (J.D.
Power, 2014). Amazon has 10 million prime users, and they spend average
around 20% -30% more with recommendation feature ("Beyond the click
stream, 2013).
Kohls now has 20 million credit card holders across the nation (Rich), so
we predict that our target audience would potentially spend $15-$20 more on
the merchandises base on the data. It comes to $300,000,000 - $400,000,000
sales increase per year according to calculation, and that is 1.5% of the

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revenue. Listed below is the revenue growth for Kohls:

Base on the data we gathered, we predict that Kohls will have a revenue
increase rate of 1.5% per year. Revenue boost for year 1 would be 1.5%, 3%
for year 2 and 4.5% for year 3. Further increase in revenue will be expected
due to promotion and advertise of the feature.

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Listed below is the prediction chart for Kohls future revenue increase in
Year 1, 2 and 3:

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Recommendations for Kohls Strategy

Goals and Performance Measures
The goal of the kiosk integration is to increase efficiency in stores and
gain a better understanding of Kohls customers to ultimately increase sales.
There are a few measurements we would make in order to measure the
success of this new technology. To begin, we would the total the amount of
people that created a customer profile by measuring the amount of new
profiles created each day. As of 2011, Kohls had 20 million Kohls credit card
holders (Hajewski, 2011). We project that because there are now over 20
million Kohls credit card holders, that these cardholders will also be the ones
to create a customer profile. The amount of customer profiles should gradually
grow to just under the amount of cardholders. We predict that it will take
around 8 to 15 months for our customers to hear about the program and sign
up to reach at least half as many current Kohls credit card holders. We also
believe that our credit card sales will increase from the number of people each

31

day that use the kiosks to self- checkout. Credit card sales have more than
doubled from 2010 at $180 million to $388 million in 2012 (Market Line, 2014).
We expect this 100% growth to continue in 2014 with an even larger growth
from the additional credit card sales from the kiosks. If the credit card revenue
continues this 115% increase, assuming this same growth plus additional
kiosk sales, we will expect credit card sales by 2015 to be over $836.36
million reaching to about $1 billion. According to Forrester Research, there
will be $248.7 billion online sales that are expected by 2014, with a compound
growth of 10% forecast for the next 5 years (WWWMetrics, 2013). Our goal
for the sales would gradually increase over time once most Kohls customers
start using the services more regularly. At register checkout, we would offer
the opportunity for customers to set up the basic part of their profiles by just
adding their email addresses. Afterwards, customers can go online and
customize their personal information. Finally, we will be able to measure our
sales increases.
Estimation of Timeline for Idea Creation and Implementation
According to Understanding Software Development Processes,
Organizations, and Technologies, the average software development process
takes less than 1000 working hours (Perry, 1994). This process includes:
planning, development, implementation and testing of the software. We
estimate that if the entire process took the full amount of 1000 hours and was
divided by a team of 10 people creating it, the process would be finished
within about 13 working days if each worker put in 8 hours of work daily.
Therefore, this idea can be started and finished this year.
Employee Responsibilities and Promotional Strategy

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The implementation of our idea will need to be overseen by the Human

Resource department at Kohls. After the software is installed, it will still
require maintenance and training employees how to use it. Kohls will have to
upkeep with fixing bugs and adding new features to the programs throughout
the years. We would like to hire a company to create the software such as the
company that redid Kohls website last year, Oracle Corporation. The hiring of
this company was included in our financial analysis on the cost of creating the
software. Our promotional strategy will be primarily based in stores and on the
Kohls website. We intend to have on the front page of the Kohls website a
promotion about the new technology that will tell customers to create a
customer profile and try out the self-checkout feature in stores. We would like
to put billboards in the stores at the front of the store as well as by the kiosk
that indicate that they are now ready for self-checkout. We would like
employees to encourage customers to create a customer profile upon
checkout as well. Our social media features: Twitter, Facebook, Instagram,
Pinterest, and the Kohls application, will all have promotional messages to
customers. Our promotional strategy will be effective as well as being rather
inexpensive. An example of our social media use is shown below as a tweet
from Twitter.

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