From Forbes on May 16, 2016:

Heading off its dismal report of a 3.9% same-store sales decline for Q1 2016, Kohl’s, the retail favorite of discount-loving shoppers nationwide, recently made a technological splash with the announcement that they were simplifying the brick-and-mortar purchase process by linking Kohl’s store credit cards and its Yes2You rewards program together under Apple Pay. The Menomonee Falls, Wisconsin, based chain was the first of just two retailers (the other, BJ’s Wholesale Club) to link its store credit card with Apple Pay, and the integration of loyalty rewards into a single-tap mobile transaction indicates that Kohl’s is taking a firm step into the digitally-driven retail future.

It seems more intuitive that an announcement of this kind might have been more likely to come from a retailer touting the latest and greatest in technology (i.e. Best Buy) or from a certain competitor making no secret about courting young shoppers with an elevated store experience (ahem, Macy’s). Instead, it seems that this sometimes underestimated staple in shopping centers nationwide has beaten its retailing peers to the mobile payment punch, allowing shoppers to double up on their loyalty (vis-à-vis their Kohl’s charge and Yes2You rewards) with one tap. The big question remains, though: are Kohl’s shoppers ready for Apple Pay? For this new analysis, we’ll take a look at some of the barriers that Kohl’s may face getting their shoppers to adopt Apple Pay using consumer insights from Prosper Insights & Analytics.

In general, Kohl’s shoppers have been slower to integrate mobile devices as part of their day-to-day lives. Prosper’s Mobile Aptitude Index, which considers mobile ownership, usage (including apps and QR code readers), influence to purchase, as well as frequency of mobile Internet access, rates Kohl’s shoppers below average, in line with their JC Penney perusing peers, but below that of Macy’s shoppers (which score above average Mobile Aptitude). Our research indicates that Kohl’s customers may lag marketplace trends in mobile usage for two key reasons: age and income. As previously reported, Kohl’s is facing a shrinking Millennial shopper base, but it also lacks the higher-income households of competitors like Macy’s or Nordstrom. Younger shoppers, of course, are more prone to be first-adopters in technology, while affluent households can simply better afford access to it.

Overall, consumers have been slow to adopt mobile payment, and Kohl’s shoppers are no exception to this “trend.” In Prosper’s April survey of 7,000 U.S. consumers, just one in ten smartphone users (10.7%) indicated that they had used their devices to pay for a transaction at a store check-out counter. Kohl’s smartphone users were on par with this figure (10.3%), while higher-earning Macy’s shoppers slightly exceed it (14.3%). To add insult to the mobile payment cause: just over one in four device owners overall (27.9%) report that they are “somewhat” or “very” comfortable with the idea of using their device to pay for a purchase at the register. Kohl’s shoppers fall slightly below average (25.5%), while this figure rises to one in three (32.6%) Macy’s customers. When it comes to using their mobile devices, Kohl’s loyalists hold key concerns about the security of their personal and financial data, which likely inhibits their willingness to store credit cards on their phones.

Kohl's Versus Macy's Shoppers: Level Of Comfort With Mobile Payment

Apple isn’t the device of choice among Kohl’s shoppers. Aside from general mobile usage and payment trends, perhaps the most glaring warning sign for Kohl’s is that department store has presently aligned itself with Apple Pay when its shoppers are more likely to own Android-enabled devices. Specifically, more than half of Kohl’s smartphone-carrying shoppers are powered by Android (53.9%) versus the 41.9% who rely on Apple iOS. In contrast, smartphone-wielding Macy’s shoppers are more likely to have an even mix of Android (48.1%) and Apple (47.8%) devices.

  Kohl's Versus Macy's Shoppers: Smartphone Operating System

Given these insights, it’s apparent that Kohl’s will likely face some challenges in convincing shoppers to streamline their check-out experience with Apple Pay. It’s a bold move for a retailer that isn’t exactly known for being an “outside the box” retailer, but in this highly competitive, uncertain selling environment, perhaps it will “pay” for Kohl’s to be ahead of its peers.

Pam Goodfellow is Principal Analyst/Consumer Insights Director for Prosper Insights & Analytics™ and editor of the monthly Consumer Snapshot.