Kohl’s bets big on buy online and pick up in store
August 13, 2015 04:49 PM
Several months ago Kohl’s Corp. stopped breaking out most e-commerce sales metrics on its quarterly financial briefings to Wall Street analysts.
But CEO Kevin Mansell was positively chatty Thursday about the initial plans and results for Kohl’s biggest e-commerce initiative so far this year: a buy online and pick up in store program.
In the second quarter ended Aug. 1, Kohl’s, No. 22 in the Internet Retailer 2015 Top 500 Guide, finished rolling out a buy online and pick up in store program to all of the chain’s 1,164 stores in 49 states. After a quiet pilot phase Kohl’s has big plans to make the program a companywide strategic initiative, Mansell told analysts on the company’s quarterly earnings call.
“We’ll begin to market this feature across all of our platforms this fall,” he told analysts according to a transcript from SeekingAlpha.com. “Based on these early results we now expect buy online and pick up in store to be a significant percentage of our digital sales and a driver of incremental store traffic this holiday season.”
At present, the program represents about 3% of total e-commerce sales, Kohl’s says. For Kohl’s, which posted web sales of $2.168 billion in 2014, buy online and pick up in store sales would only generate about $65.04 million in annual web sales, estimates Internet Retailer.
But Kohl’s expects to grow its program quickly and use it as a significant cost saver for its e-commerce program. “Buy online, pick up in store from a profitability perspective is the best thing you can get, because you’re not shipping it, so you save the $5 to $6 per package that it costs to ship it to the house,” Mansell told analysts.
Kohl’s offers buy online, pick up in store only on the desktop version of Kohls.com, but it expects to add mobile commerce capability shortly. “We have not marketed it at all and in fact it has not been available in any format other than desktop so both mobile and tablet will be new in the third quarter, and with the launch of mobile and tablet comes a really aggressive marketing campaign,” Mansell said.
Kohl’s also considers an aggressive buy online and pick up in store program as a way to attract and retain customers. “We’re planning a much larger percent of digital sales to come as buy online and pick up in store,” Mansell told analysts.”
For second quarter ended Aug. 1:
- Total sales essentially were flat at $4.26 billion.
- Comparable-store sales grew 0.1%.
- Net income was $130.0 million compared with $232.0 million in the same quarter last year.
“Sales in the quarter fell short of our original expectations,” Mansell said.