As it reduces the size of many of its stores, Menomonee Falls-based Kohl’s Corp. is planning sublease space freed up by its store reductions to discount grocery store chain Aldi.
Aldi stores will be added to as many as 10 Kohl’s locations this year. The pilot program will announced today by Kohl’s CEO Kevin Mansell.
If successful, the deal could be expanded to the hundreds of Kohl’s stores that have been “rightsized” by the company over the last year.
Kohl’s, like every other brick-and-mortar retailer, is trying to adapt to the changing habits of shoppers in recent years. It announced last year that nearly half of its stores will be operationally smaller by the end of 2017.
The latest Kohl’s store to be rightsized is the Waukesha store at 2140 W. St. Paul Ave. The store will be about 25,000 square feet smaller, according to plans submitted to the city. Those plans show a retailer adjacent to the store, although the retailer is not named.
Mansell did not say which locations will be included in the Aldi pilot.
“We are piloting this and may be looking for other traffic-driving retailers,” Mansell said. “Kohl’s may continue to seek out strong partners during this pilot phase for existing rightsized locations that are well-capitalized companies and will drive traffic to our stores, be it a grocer or other strong retail concept.”
Kohl’s reported strong holiday sales and four-quarter earnings and revenue that beat expectations. Total sales increased 9.2 percent to $6.8 billion in the fourth quarter compared to $6.2 billion the same quarter the previous year.
“Over the course of the year, we saw consistent, sustained improvement in sales trends,” Mansell said. “We improved our merchandise margins through strong inventory management and improved promotional and permanent markdowns. And, we ended the year with 7 percent less inventory.”
Kohl’s ended the fiscal year with 1,158 Kohl’s stores in 49 states. During 2017, the company opened four Kohl’s stores, relocated one Kohl’s store and opened one Off/Aisle location.
