When consumers know that discounts are coming, they won’t make a purchase at full price. That’s why Apple only offers discounts once or twice a year.
It makes the discounts special, but also forces people to make full-price purchases because they’re not going to wait for a once-a-year discount.
When Apple’s Ron Johnson, the man credited for making Target hip and launching Apple’s stores, took over as CEO of JCPenney, one of his first moves was getting rid of the retailer’s discounts.
“In early 2012, Johnson announced a major overhaul of the way JC Penney does business, with a new ‘fair and square’ everyday low pricing scheme to replace the ‘fake prices’ used commonly in the past. The idea sounded great — in theory. Didn’t everyone hate those ‘fake prices,’ which were inflated only so that the inevitable discounts would seem tempting?” Time reported.
Consumers responded poorly, and Johnson’s tenure was a giant failure.
“There is nothing good to say about what he’s done,” Mark Cohen, a former CEO of Sears Canada, who is now a professor at Columbia, said at the time. “Penney had been run into a ditch when he took it over. But, rather than getting it back on the road, he’s essentially set it on fire.”
Getting rid of discounts to create a pricing baseline makes sense in theory, but actually doing it risks alienating a retailer’s core fan base.
That’s at least partially why, despite all of its struggles, Kohl’s has been careful to not change its popular Kohl’s Cash Discount program.
“Kohl’s Cash is earned during special promotions, usually $10 for every $50 spent on qualifying items. It’s issued as a coupon, email, or in-app Kohl’s Wallet, and can be redeemed like cash during the specified period. Kohl’s Rewards members earn extra Kohl’s Cash on all purchases, stacking savings for even bigger discounts,” according to Kohl’s.
Redeem Kohl’s Cash like cash during specified redemption windows: Once earned, Kohl’s Cash can be used toward future purchases during the stated redemption period. Unused Kohl’s Cash expires after that window and isn’t redeemable for cash back, according to Kohl’s Investor Relations.
Kohl’s Cash works together with Kohl’s Rewards: Members of Kohl’s Rewards automatically earn Kohl’s Cash on every purchase (5% back, or 7.5% back with a Kohl’s Card), which is then issued in Kohl’s Cash coupons in $5 increments on the first of the following month on top of any Kohl’s Cash earned during promotional earn periods, shared Kohl’s.
“Kohl’s Cash is fast becoming part of popular culture, much the way Bed Bath & Beyond’s ‘Big Blue’ oversize 20% off coupons were a touchstone before the retailer filed for bankruptcy,” wrote the Wall Street Journal’s Suzanne Kapner.
Some blamed Bed Bath & Beyond’s bankruptcy in large part on the coupons that trained consumers to never pay full-price, RetwailWire reported.
“The iconic 20%-off coupons, which became known as Big Blue, ultimately contributed to the cornerstone retailer’s fall into bankruptcy,” CBS News reported.
It was death by a thousand discounts.
“They eroded Bed Bath & Beyond’s profit margins, hurt its brand image and trained customers to only shop at stores if they had a coupon stashed away. This made it much harder for Bed Bath & Beyond to sell merchandise at full price, as customers began to perceive Bed Bath & Beyond’s products as overpriced unless they had a coupon. That led to a perhaps inevitable bankruptcy,” the news website reported.
Kohl’s has been losing customers.Shutterstock
Bill Warshauer, chief revenue officer at Tillo, a rewards and incentives platform, said shoppers, on average, spend 38% more than the value of the coupon in redeeming rewards. Many rewards are also never redeemed, reducing the costs to a retailer of such a program, RetailWire reported.
Kohl’s interim CEO Michael Bender vehemently defended the Kohl’s Cash program.
“We’re leading with compelling value to our customers, leaning into Kohl’s cash and awards, which helps drive repeat trips and increased engagement,” he said during his chain’s third-quarter earnings call.
TD Cowen’s Oliver Chen called Kohl’s Cash “iconic” during the call and asked for updates on the program.
CFO Jill Tim spoke up to answer.
“I think from a Kohl’s Cash perspective, I mean, you nailed it. It is iconic. We did actually celebrate our Kohl’s Cash anniversary and put a whole event around it during this quarter, which was great,” she shared.
More Retail:
Tim made it clear that the program would be continuing.
“As we move into the holidays, we’ll continue to leverage this as well. We have events planned around it. It’s a way for us to get around. Obviously, it could be used in everything. So there is no exclusions. You earn it, you can come back and redeem it. People love to earn it on gifts that they’re giving and use it on a self-gift during the holiday period,” she added.
Scott Benedict, who has over 30 years of retail experience, shared that he supports Kohl’s Cash because it reframes spending as earning, turning routine purchases into future shopping power.
“During designated Kohl’s Cash earning periods, customers receive $10 in ‘cash’ for every $50 spent, redeemable like a coupon on a future trip — a mechanic that drives repeat visits, larger baskets, and a kind of gamified savings behavior that consumers proudly share and strategize about on social platforms,” he wrote on RetailWire.
It’s easy to see why the program works for some, but as a frequent Kohl’s shopper with over 30 years of experience covering retail, I actually the find the program not useful for me.
I go to Kohl’s when I need something, buy it, and won’t return again just because they offer me a cash incentive, unless I actually need to buy something else. In my case, I’d rather have an actual discount than the promise of a future one I won’t use.
But, while some shoppers (including me) may not use Kohl’s Cash for repeat visits, data shows the program still drives increased basket size across a significant portion of the customer base.
For some shoppers, however, a traditional rewards program offers more value. An example is Target’s Circle program, where rewards build and can be used when you choose.
GlobalData Managing Director Neil Saunders thinks Kohl’s has bigger problems than its loyalty program.
“Kohl’s Cash is a strong program and is very important for core customers, and it has likely prevented Kohl’s sales from cratering more than they have. But it is not a replacement for a good proposition and, on that front, Kohl’s continues to fail,” he wrote.
The chain, he shared, has a lot of work to do.
“Over the longer term, Kohl’s Cash cannot save Kohl’s if it doesn’t fix the core of its business. Indeed, that fact that Kohl’s has lost over 1.4 million customers over the past six or so years, demonstrates that Kohl’s Cash isn’t a magic wand that can simply be waved to retain customers,” he added.
Related: Popular gift retailer shuts stores, cuts jobs over holidays
This story was originally published by TheStreet on Dec 28, 2025, where it first appeared in the Retail section. Add TheStreet as a Preferred Source by clicking here.
