If you wonder what thinking has helped fuel the return to form of Kohl’s, all you need to look at is its just announced partnership with grocer Aldi.
The company, which Thursday posted its largest gain for quarterly comparable sales since 2001, plans to create space at up to 10 of its hundreds of locations for the German discount food retailer.
Kohl’s has been contracting, but not shuttering hundreds of stores to make them easier when it comes to managing, navigating, and maintaining. The company announced that it would offer new partners to take the space that was freed up. Other retailers have done things of a similar nature, such as Sears and Macy’s, but much more modest in scale.
Aldi, which is a well-established discount grocer offering low prices, is facing new competition from Lidl a fellow low-price German grocer, which arrived in the U.S. just last year through an aggressive launch. The partnership Aldi has made with Kohl’s will allow for its store fleet to be updated.
For Kohl’s, the presence of Aldi will likely attract new clientele to the locations and potentially help diversify its shoppers. The Aldi stores may help Kohl’s to take away some business from rival Target, which is working at renewing its grocery business and it occupies many of the same strip malls that Kohl’s is in.
CEO of Kohl’s Kevin Mansell said in 2017 that stores of today can be smaller due to technology allowing that. The company invested billions in e-commerce and tech and some of that was used to help Kohl’s remain leaner and have better inventories so less space was needed.
That has allowed Kohl’s to tailor a store’s assortment better for its local market, making each store more appealing and manageable. No longer are there the days when stores had to keep everything in stock that was available, now that slack can be picked up through e-commerce.
Of the 1,160 stores Kohl’s has, about 300 were small when opened, or approximately 35,000 to 55,000 square feet, in comparison to a standard size of over 80,000 sq. ft. The chain has reconfigured 200 other stores, with an idea of subletting or even selling space to other companies.
However, Mansell is adamant that Kohl’s is in need of approximately the same number of stores to maintain its brand at the top of the mind with its customers.