11-06-2025
Rethinking Retail- Kohl's Learns The Cost Of Customer Guesswork
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Retailers like Kohl's are learning the hard way that financial spreadsheets may drive boardroom decisions—but they don't drive consumers into stores. Over the past five years, Kohl's steadily alienated its core shoppers by limiting the very thing that brought them in: coupons. In a world of inflation, price-checking apps, and value-driven shopping, Kohl's tried to optimize margins at the expense of understanding the psyche of their customer.
The decision backfired.
After years of market share erosion, declining sales, and shuttered stores, Kohl's is now reversing course—expanding coupon access and reintroducing broader promotional offers. But the damage is done. While Kohl's retreated, Amazon surged. Consumers didn't stop shopping; they just stopped shopping at Kohl's.
Behind this shift lies a critical lesson for retailers: if you're not measuring what motivates your customer, you're guessing. And in today's environment, guessing is expensive.
A newly released book, Rethinking Retail, authored by professors from the Retail Analytics Council at Northwestern University's Medill School, explores the profound challenges reshaping today's retail landscape. According to the book, 'Retailing is undergoing transformational change. What we've experienced in the past is likely never to be repeated. Those who argue that 'once things return to normal, we'll be able to regroup and recover' are likely in for a rude awakening. Today and the near future represent a new normal. …this is a period of discontinuous change. A time when the future is often not foreseeable to anyone.'
The Data They Ignored
Over the past 60 months, Prosper Insights & Analytics has tracked millions of data points from U.S. consumers. Their syndicated monthly survey, one of the largest and longest-running of its kind, reveals not just where people buy—but what drives their choices.
Let's start with one stark trend: preference for women's clothing. According to Prosper, in May 2020, 11.0% of U.S. adults cited Kohl's as their preferred retailer for women's apparel. As of May 2025? Just 7.2%.
Amazon, on the other hand, rose from 3.6% to 9.4% during the same period—more than doubling its share.
Shop Most Often for Women's Clothing
Prosper Insights & Analytics
The shift isn't just about price. It's about consistency, trust, and respect for how consumers make decisions under pressure.
Understanding the Economic Realities of Kohl's Shoppers
Prosper's data also highlights a deeper truth about Kohl's core customers: they're under financial stress. For the past five years, consumer confidence among Kohl's shoppers has lagged the national average—sometimes by as much as 10 percentage points.
Consumer Confidence
Prosper Insights & Analytics
More importantly, they behave accordingly:
Restricting coupons in this environment was not a strategic evolution—it was a strategic oversight. The typical Kohl's shopper wasn't trading down from luxury to mid-tier; she was already stretching every dollar. Removing one of her most powerful shopping tools felt like a betrayal.
The Human Element Retailers Keep Missing
Retail isn't just about what people buy. It's about why they buy—and how they feel about that decision. The problem is, most retail forecasting models don't account for emotional and psychological factors. They're built around transactions, not intentions.
Retailers need data that includes psychographics, future spending intentions, happiness metrics, and emotional drivers like impulsivity and fear of missing out …human-oriented datasets in a world dominated by historical sales figures and backward-looking analytics.
Retailers that fail to tap into these forward-looking insights risk being blindsided—again and again.
Forecasting Failure and the Cost of Disconnection
Consider Kohl's women's apparel sales forecast. Month after month, for five years, Prosper's data shows that spending intentions among Kohl's shoppers have consistently trailed the broader market. If leadership had paid attention to those early signals, they might have reconsidered the wisdom of tightening promotional offers.
Instead, it appears financial modeling won out over consumer reality. That's a common failure across retail: spreadsheets trump psychology. And yet, no retailer has ever cost cut its way to loyalty.
Why Retail Needs Time Series Behavioral Data
Retailers don't need more dashboards—they need better data. Data that reflects the future, not the past. This is where long-term, structured consumer intelligence plays a vital role in helping retailers to:
This kind of foresight is especially critical in the age of AI, where model accuracy is only as good as the data that trains it. Plugging emotional, forward-looking data into predictive engines can supercharge their utility—and protect retailers from strategy missteps that are obvious in hindsight.
Final Thoughts: Don't Just Count Sales—Understand Them
Kohl's course correction is welcome, but overdue. Expanding coupon access will likely slow the bleeding, but rebuilding customer trust takes time. The real issue wasn't the loss of discounts; it was the loss of understanding.
Retailers that want to stay competitive need to rethink how they define market intelligence. Knowing your inventory is not the same as knowing your customer. The future belongs to those who measure sentiment, motivation, and behavior—and use those insights to shape strategy. As emphasized in Rethinking Retail, 'Consumer behaviors are what drive retailers' marketplace success. It is not so much what the retailer buys and stocks, or even what is promoted—it's what consumers do in response to their desires and the retailer's actions.'
Kohl's misstep was not inevitable. It was predictable.
And that's the point.
