As it reduces the size of many of its stores, Menomonee Falls-based Kohlโs 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 Kohlโs locations this year. The pilot program will announced today by Kohlโs CEO Kevin Mansell.

If successful, the deal could be expanded to the hundreds of Kohlโs stores that have been โrightsizedโ by the company over the last year.
Kohlโs, 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 Kohlโs 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.
โWe are piloting this and may be looking for other traffic-driving retailers,โ Mansell said. โKohlโs 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.โ
Kohlโs 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.
โOver the course of the year, we saw consistent, sustained improvement in sales trends,โ Mansell said. โWe improved our merchandise margins through strong inventory management and improved promotional and permanent markdowns. And, we ended the year with 7 percent less inventory.โ
Kohlโs ended the fiscal year with 1,158 Kohlโs stores in 49 states. During 2017, the company opened four Kohlโs stores, relocated one Kohlโs store and opened one Off/Aisle location.