Dive Brief:

• A partnership between Aldi and Kohl's could drive increased traffic to both stores, according to a recent survey. The first location in the tie-up, under which Aldi builds separate stores next to right-sized Kohl's locations, opened earlier this year in Waukesha, Wisconsin. The retailers have said they could open as many as ten of these combo stores.
• Sixty-eight percent of consumers polled by market research firm Field Agent said they would very likely shop both sides of Aldi and Kohl's combo store partnership in the same trip. About 90% of the 3,000 consumers surveyed said they would be at least moderately likely to shop at both the grocery store and the department store, while 38% said they would be "completely" likely to do so.
• Nearly half of respondents (49%) would be more likely to shop at a Kohl’s store if they knew Aldi was next door, while a slightly higher percentage (52%) said the union would make them more likely to shop at Aldi.

Dive Insight:

Teaming up with Kohl's helps Aldi reach customers who may not otherwise have occasion to shop at the discount grocer. Food retailers see heavy traffic around meal times and after work, but the partnership with Kohl’s could help the chain rope in more daytime and weekend shoppers who are curious about what Aldi has to offer.

Creative partnerships aren't anything new in retail, but grocers are probing opportunities more and more as their core business comes under pressure. In December, Kroger began placing 4,000-square-foot mini grocery stores inside Walgreens around Cincinnati. Hy-Vee is now in the restaurant franchise business with Wahlburgers, while Whole Foods and other grocers have been bringing local restaurant operators into their stores.

Looking at the broader food industry, the possibilities are endless. Starbucks and Spotify have synched up their mobile apps, with users funneling to Starbucks’ rewards program. Dunkin' Donuts recently teamed up with Waze to add Dunkin’s locations to its maps, strategically integrating the chain's DD Perks customer loyalty program in the traffic app.

Adding Aldi locations next door is part of Kohl’s mission to diversify its retail space this year with a focus on health and wellness. With 1,100 stores nationwide, it’s partnered with Planet Fitness to open 10 fitness centers next to Kohl’s stores and with WW (formerly Weight Watchers) to open an in-store WW Studio in Chicago. Customers can also now return Amazon purchases at select Kohl’s locations — a move that has boosted foot traffic in stores. 

Adding a discount supermarket chain like Aldi fits right within this strategic plan, offering shoppers a place to pick up healthy snacks and meal ingredients after finishing their shopping at Kohl’s. Overall, Field Agent's survey suggests that Aldi is a solid pick for a new partner, with the largest number of respondents choosing Aldi when presented with a list of other possible partners including Kroger, Barnes & Noble, a dollar store and a drug store.