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The Washington Post reports that the Kohl’s department store chain “is teaming up with discount grocer Aldi to test groceries at up to 10 of its department stores. Soon, some customers will be able to pick up milk and eggs along with their cargo shorts and yoga pants.”

CNBC says that while the Aldi partnership will begin in 10 stores, expectations are that it will roll out to another 200 later this year.

“The key priority we have as a company is to drive traffic,” says Kevin Mansell, Kohl’s CEO. “We’re focused on traffic-driving retailers: Groceries, supermarket chains, they drive a lot of traffic. We’re finally on a path where we’re getting more [shoppers].”

According to the Post story, “The arrangement allows Kohl’s to gain additional foot traffic without having to figure out how to operate a grocery business. And for Aldi, renting space within Kohl’s stores is likely to be less costly than building stand-alone locations. The partnership would also help familiarize mainstream America with the German grocery chain, which is planning to rapidly expand in the United States, opening 900 stores by 2022.”

Kohl’s already is in business with Amazon - selling Alexa-powered devices and Kindles at 10 of its stores, and even accepting Amazon returns at some locations, packing and shipping eligible items to Amazon fulfillment centers for free.
KC's View:
The department store business being problematic these days, it makes sense for a company like Kohl’s to develop as robust an offering as possible. Where it can develop partnerships with companies like Amazon and Aldi, Kohl’s is smart to do so.

Quite frankly, this is what Target ought to be doing with its grocery departments, which generally tend to underperform and underwhelm. Target ought to find a partner to run them, in the same way that it got CVS to take over its pharmacy departments.

Which, now that I think about it, might end up being the next step for Kohl’s - finding a drug store partner (Walgreen?) to open up inside its stores.

All this adds up to a competitive landscape that is increasingly crowded and challenging, with it becoming harder and harder for any single entity to differentiate itself.