Kohl’s And Aldi Look To Boost Business By Being Neighbors

Kohl’s is shrinking its footprint, and leasing the available space at several stores to German discount grocer Aldi, which has been on an aggressive expansion campaign in the U.S.

The concept is not a grocer-inside-a-store, the Chicago Tribune reports. The grocer will have its own store next to the retailer in the five- to 10-location pilot, according to Kohl’s. 

Aldi intends to open 900 stores in the U.S. over the next five years. The adjacent Aldi pilot will ideally attract a new customer base from those stopping in from Kohl's next door.

“The key priority we have as a company is to drive traffic,” Kohl’s CEO Kevin Mansell said on a Thursday earnings call. "We're focused on traffic-driving retailers: groceries, supermarket chains, they drive a lot of traffic. We're finally on a path where we're getting more [shoppers]."

Kohl’s is not the only retailer experimenting with smaller stores. Target, Nordstrom and Macy’s have all introduced concepts with smaller footprints. Nordstrom Local in Los Angeles is a 3K SF concept by the department store that focuses more on services and less on inventory.

The grocer-retailer partnership could help both Aldi and Kohl's, according to reports. Kohl’s could benefit from the increased foot traffic while Aldi will cut costs by renting space from Kohl’s instead of building stand-alone grocery stores. 

The department store may not stop with Aldi. Kohl's leadership indicated on Thursday's call it was looking for other grocery stores and retailers to partner with. Many believed the company's existing Amazon partnership could lead to one with Whole Foods when the department store announced earlier this year it was looking to fill empty store space with grocery stores.