Grocery Shopping at Kohl’s: ALDI Will Open Stores-Within-Stores

Want to get some groceries along with your clothes and housewares? Soon you’ll be able to, while shopping at Kohl’s.

The department store chain said this morning that it would be leasing space to the discount grocer in 5 to 10 of its stores, with potentially more to come. It’s part of a dual effort to get more people through Kohl’s doors, and better utilize the empty space left over as Kohl’s slims down many of its stores’ product assortment.

“We think we’ve got a big idea here,” Kohl’s CEO Kevin Mansell said, “and we’re very uniquely positioned to execute on it.”

Mansell first said several weeks ago that Kohl’s was exploring the possibility of inviting other retailers to share its space. Kohl’s has been “right-sizing” many of its stores, making them smaller, easier to navigate and ultimately more profitable.

But that left a lot of unused space going to waste. But not anymore.

ALDI is the first retailer to be mentioned by name as partnering with Kohl’s. Neither retailer revealed details about the partnership. So we don’t know yet where these initial stores-within-stores will be located, and whether they will be operated completely independently or if there will be some overlap. Will you be able to earn or use Kohl’s Cash while shopping at ALDI? Can you pile everything into one cart, and pay for your groceries and Kohl’s purchases all together at either a Kohl’s or an ALDI register? And will you have to pay a quarter for an ALDI shopping cart, while continuing to get Kohl’s carts for free?

(Update: An ALDI spokesperson eventually responded to an inquiry about the new arrangement, telling Coupons in the News that “this is simply a mutual real estate decision – both stores will operate independently and have separate entrances.” ALDI sees the deal as an “innovative real estate strategy” that will support its expansion efforts, bringing “more ALDI stores to the convenient locations our customers desire”.)

The ALDI partnership affects only a handful of Kohl’s stores. But Kohl’s says the possibilities are far greater. Kohl’s has, or plans to, right-size as many as 500 stores, which will leave a lot of open space ripe for the taking.

“We’re focused on traffic-driving retailers,” Mansell said, like grocery, convenience or sports and fitness retailers.

Kohl’s sees the ALDI partnership, and others like it, as a win-win for both parties – and customers, too. ALDI gets to take advantage of Kohl’s large parking lots and a steady stream of regular shoppers who might not otherwise visit an ALDI. Kohl’s gets an additional income stream by renting out its unused space, and attracts more customers with the appeal of one-stop shopping. If you need clothing and housewares, but are also looking to pick up a few things for dinner, a Kohl’s-ALDI combination could be an attractive alternative to shopping at Walmart or Target.

Kohl’s is already partnering with Amazon in a handful of locations, hosting Amazon stores-within-stores that sell Amazon electronic products. The same Kohl’s stores also accept and process returns of Amazon purchases.

That raised speculation that Amazon could expand the partnership, introducing groceries to Kohl’s via its Whole Foods Market, 365 by Whole Foods or its Amazon Go concept. So the ALDI announcement was a bit of a surprise – and possibly a disappointing one to Kohl’s shoppers who might have wanted a more upscale grocery option.

But with ALDI opening only a few stores alongside Kohl’s, and Kohl’s having hundreds of stores with available space, the door is still open to Amazon, Whole Foods, other grocers or other retailers of all types to partner with Kohl’s in other locations.

So if you’ve noticed your local Kohl’s store becoming smaller recently, keep an eye on that newly-empty space. If Kohl’s has its way, it may not stay empty for long.

Image sources: Kohls/ALDI