Kohl's broke new ground as a retailer in the 1990s creating a kind of streamlined department store. Shoppers turned up in droves to purchase moderately-priced apparel and home goods. The chain is now reinventing itself for the digital age following a re-evaluation of its merchandise mix—too many store brands, not enough national labels—and needed the systems to support the shift.
Kohl's completed a series of business changes designed to support more targeted planning, more fluid cross-channel fulfillment, and new mobile and e-commerce offerings.
Kohl's overhauled its core merchandising, inventory and pricing operations with the launch of a new Oracle Retail Merchandise Operations Management solution in all 1,162 U.S. stores. The new system gives the retailer a unified system of record for inventory in an omnichannel, or cross-channel, operation.
"Kohl's didn't used to be viewed as an innovator, in terms of the technology that supports us, and that's one of the things we're aiming for," said Kohl's CIO Janet Schalk. "We've put in enough foundational investments that we've now been able to be more innovative.
FierceRetailIT sat down with Schalk to find out more.
FierceRetailIT: What prompted the shift to the new (Oracle) platform and system, and what were your initial objectives?
Janet Schalk: The initial driver for this was the need to be more nimble in an omnichannel world. Like a lot of retailers, we had a portfolio of homegrown systems, certainly in merchandising, that were created before we were an omnichannel company. We needed to have in place a new set of systems that can help us be more responsive for the business and move more quickly to support what we need to do differently for merchandising. So we started with some of the basics, like purchase orders and pricing, which are important if we want to be able to support more flexible pricing strategies than we could with our old set of systems. The other piece will be—and we're not finished with this yet—supporting localized assortments, to be more locally relevant.
For example, [the urban shopper is different than the suburban shopper], so we need to make sure that the customer who shops in each of those stores will see merchandise that's relevant to them. Historically, our stores were more cookie-cutter and had too much merchandise that was identical.
FierceRetailIT: How does your job, as CIO, change as that changes?
Janet Schalk: The job of CIO is one of those interesting roles where you merge from the very tactical of "what broke today" to strategic: Where do we need to be in five years? To me, that's a lot of fun and a challenge, especially in retail because customers' expectations have just been changing so quickly. They are calling the shots. So as a retailer, we need to be able to respond quickly and to provide technology to support that. Every day is different.
FierceRetailIT: As customer expectations change, so too have the expectations of retail leadership. Is the CIO's position and what happens within the IT department of that store changing as well?
Janet Schalk: Yes; if you think about how we engage with the marketing team, for example, we're much more at the table than we were before. If you think about initiatives such as personalization, our executive VP of marketing says that our two teams share a brain. We are side-by-side, providing the information they need, helping them do analytics, helping them with campaign management through systems that support that. We're hand-in-hand on all those initiatives, where, historically with marketing, we wouldn't have been so closely aligned.
FierceRetailIT: You have a long history of working for retailers and were at Target (as CIO) before Kohl's. In your career, how have you watched the CIO's role shift?
Janet Schalk: The formula for success a few years ago for [apparel] and other retailers was to open a lot of new stores in a year as you're building out the geography. We're in 49 states today, which is great, but each store has to have something that's specifically relevant. Then we need to drive traffic to the digital channels, really driving traffic both directions between digital and brick-and-mortar. So technology gets a lot more complicated in some ways, to provide what our customer wants, to make it easy to have a great experience shopping, regardless of whether she's shopping on her couch or shopping in our store.
FierceRetailIT: Personalization means something different to a great many different players, what does it mean to Kohl's?
Janet Schalk: There are two aspects. One is localization with relevant merchandising in the stores. The other piece is very much one-to-one. [For example] with our mobile wallet. It's part of our mobile app and we know who you are if you've opted into our app and our loyalty program. As we learn more about you, and as you share information—your likes and dislikes—and we understand your shopping patterns, we can either provide more relevant offers to you or more relevant product information in the moment.
We're testing beacons in a small number of stores today. We'll be able to personalize some of the messages that we share at that point.
FierceRetailIT: What have been the early reactions to the Yes2You Rewards program, and the opt-in options that you mentioned?
Janet Schalk: The Yes2You Rewards have been very well-received, we're up to about 25 million enrollees. We've been piloting it for a couple of years in multiple markets and then we went nationwide in October. A good number of those customers enrolled right before the holiday season, so it's been a great success for us. We're going to continue to add more features around "save, share and surprise," so that it won't just be transactional, in terms of sharing points with friends and family, or sharing with charities.
FierceRetailIT: What challenges have you encountered? Particularly as a traditional retailer with the legacy systems, what are the biggest challenges in terms of implementing the technology?
Janet Schalk: We've needed to invest a lot of money over the last three years to put in new foundational systems across the board for merchandising. Then we re-platformed our e-commerce engine in 2013, and re-platformed mobile in 2014. We're doing work in our e-commerce fulfillment centers. We're doing a lot of work to refresh systems in the stores. There are certainly infrastructure things that go along with that. We have WiFi in all of our stores, but as we engage differently with customers and do things differently from an associate standpoint, our needs for WiFi in the stores has grown and evolved as well.
There's the pressure of wanting to invest in things that are going to move the business forward, and you also want to invest in ways to reduce costs—to see what you can retire of the old world while you're investing in the new.
FierceRetailIT: Are there any technologies that are being pushed at retail that you're skeptical of, things you want to move more slowly with than others?
Janet Schalk: There are a lot of shiny objects out there, and there are a lot of interesting [possibilities]. We're always out there evaluating what's going to make sense for our customer. So when you think about all the really great, interesting things [on display at NRF's BIG SHOW in January], we want to make sure that it can make a difference [across 1,100 stores], either for our associates to make things better or faster, or, more importantly, make some things more compelling for our customers.
I don't want to pick on any particular thing that doesn't hit the mark, but we're always out there kind of assessing what's realistic and practical in a way that will engage with our customers. We have an innovation lab where we're trying a lot of different things, so you'll have to keep coming to our store to see what new things we're doing.