Will ALDI Partnership Drive Shoppers To Kohl’s?

After being one of many department store retail players to shoulder through a difficult holiday season, Kohl’s has been back in action in 2019, looking to reverse the trend of falling foot traffic and sagging in-store sales. Online sales have been a strong point: As of the last earnings call with investors, CEO Michelle Gass was touting the company’s ongoing commitment to building out its digital offerings and expanding its omnichannel reach.

“One hundred percent of our site visits are now touched by personalization in some way,” Gass noted, calling out product recommendations, machine learning and personalized search as critical elements.

The store has also spent much of the last six months figuring out ways in which it can be more than a department store. Last month, for example, Kohl’s announced it will lease or sell retail space at 10 locations to Planet Fitness – and that number could grow in the future. The gym won’t share doors with Kohl’s, but the companies will promote each other. The gyms will be between 20,000 square feet and 25,000 square feet.

“Our stores are a key asset and differentiator for Kohl’s, [as] we continue to innovate to make them more relevant and compelling for our customers,” Gass noted in an emailed comment to PYMNTS.

Working out is not the only new feature coming to Kohl’s – there is also the grocery shopping. About a year ago, the retailer announced a partnership with discount grocery ALDI that would see 10 Kohl’s stores become home to ALDI locations.

The push for Kohl’s is obvious: Grocery is one of the categories where consumers can be counted on for regular purchases, as well as one of the few areas where consumers show a marked preference for in-store shopping experiences. And while it seems obvious how Kohl’s stands to benefit from the ALDI partnership, ALDI’s use for Kohl’s is also pretty clear. The European brand is working to expand its footprint and name recognition – particularly in the middle U.S., where Kohl’s has a large and avid following.

“Kohl’s is a cornerstone American retail brand,” an ALDI spokeswoman told PYMNTS at the time of the announcement. “We think working with them is an ideal way to connect with a large base of American consumers.”

Moreover, as a new study from Field Agent indicates, the partnership makes sense by the numbers, since the two shopper bases are quite similar. Of the 3,000 consumers surveyed by Field Agent, 68 percent said they would very likely shop both sides of ALDI and Kohl’s combined stores in the same trip. Meanwhile, 90 percent said they would be moderately likely to shop at both the grocery and department store, and 38 percent said they would be “completely” likely to do so.

On top of that, Kohl’s becomes much more attractive to customers in general when grocery shopping is on the table. Nearly half, 49 percent, said they would be more likely to shop at a Kohl’s store if it were attached to an ALDI. And yes, the draw works both ways: 52 percent of shoppers noted they were more likely to shop at ALDI because of the attached Kohl’s location.

“If I happened to need something at Kohl’s, I’d almost for sure stop in ALDI to get something,” one respondent said. “I always need something from Aldi.”

According to the report, consumers are big fans of the new “good neighbor” approach Kohl’s uses in retailing and partnerships, and would like to see more of them. ALDI was a leading choice, but consumers also mentioned Barnes & Noble, PetSmart and Best Buy as other potential partners.

“To the extent shoppers can accurately predict their own behavior, expect the Kohl’s-ALDI partnership to generate greater footfall for both stores,” the report concluded.

Will two heads be better than one for Kohl’s and ALDI, as the survey indicates? Too early to tell, and too narrowly applied. But Kohl’s is clearly rethinking its physical shopping experience, and expanding into many other types of experiences.

And if nothing else, they’ve managed to capture a lot of consumer interest by doing so.