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Kohl’s calls on AI to help power through holiday season

Ad Age 06 Nov 2019 08:31

As it navigates against a bevy of competitors this holiday season, Kohl’s is turning to machine learning to help it power through. The Menomonee Falls, Wisconsin-based retailer is working to incorporate artificial intelligence into its digital media buying, continuing a pilot it began at the end of the summer. The chain is also testing AI in some of its marketing copy, like email subject lines and banner ads.

“The lower level, more tactile work is what’s being replaced, but we’re creating more strategic work in the process,” says Greg Revelle, chief marketing officer of Kohl’s. The company began testing AI in marketing copy earlier this year; he declined to name the vendor partner the brand is using for the test.

Digital advertising spend represents roughly half of the company’s total holiday marketing spend, according to Revelle, who declined to be more specific. He says that Kohl’s approached Google recently in an effort to maximize its ad spend efficiency by incorporating machine learning. Unlike programmatic buying, which is also automated but still requires humans to enter bidding rules, the new AI-based approach implements rules across all key words. Revelle says that Publicis-owned Zenith continues to be Kohl’s omnichannel media partner, but had no comment on any loss of business due to the new Google relationship.

Kohl’s is not the only marketer leaning more heavily on AI. Earlier this year, Chase announced a five-year deal with Persado, a company that applies AI to marketing creative copy, following a successful three-year test.

This week, Kohl’s began running its football-themed anthem TV commercial. The 30-second ad, “Win the Season,” shows consumers kicking off their holiday shopping at Kohl’s. The chain worked on the spot with RGA, its third agency for a holiday campaign in as many years. Last year, Kohl’s worked with the Martin Agency; and in 2017, it worked with Energy BBDO.

“The last couple years had been a lot about value and emphasizing Kohl’s Cash as a primary value asset but now the country knows Kohl’s Cash pretty well,” says Revelle. “This year, we want to combine that with product newness and experience newness, and the fun of shopping as well.”

The spot highlights some exclusive brands at Kohl’s, such as Scott Living, a home brand from the Property Brothers, Jonathan and Drew Scott. This season, Kohl’s will also have new collaborations with designer Jason Wu and Elizabeth and James, the fashion line from the Olsen twins. Proprietary brands, including private-label and exclusives, represent about 40 percent of Kohl’s business, while national brands like Levi’s and Under Armour account for the remaining 60 percent.

For its most recent second quarter, Kohl’s reported a decline in same-store sales (sales at stores that have been for a year or more) of 2.9 percent. Revenue also fell 3.1 percent to $4.4 billion for the quarter, compared with the year-earlier period.

But executives are optimistic about the holiday season as the chain tries new initiatives.

One includes hosting a pop-up shop in New York’s SoHo shopping district this weekend in an effort to highlight Kohl’s new exclusive brands. The shop gives Kohl’s a brick-and-mortar presence, however brief, in Manhattan, where it does not have any stores. In addition, Kohl’s has rolled out its Amazon pilot, in which it accepts returns of Amazon items, nationwide, to all its stores. The partnership has been successful so far, said Michelle Gass, Kohl’s CEO, at a press briefing on Wednesday.

“We’re very pleased,” she says.

Correction: An earlier version of this story included erroneous information supplied by Kohl’s about the company’s media spend.

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