Kohl's considers adding grocery departments to stores

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Kohl's considers adding grocery departments to stores

Post by Brian Lutz »

http://www.supermarketnews.com/news/koh ... ve-traffic

I can't see something like this ending well. A lot of Kohl's locations are already next to much larger grocery stores, and even a Trader Joe's sized store would take a huge chunk out of most of the stores they have here.
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Re: Kohl's considers adding grocery departments to stores

Post by pseudo3d »

Brian Lutz wrote: January 11th, 2018, 8:01 pm http://www.supermarketnews.com/news/koh ... ve-traffic

I can't see something like this ending well. A lot of Kohl's locations are already next to much larger grocery stores, and even a Trader Joe's sized store would take a huge chunk out of most of the stores they have here.
It might work if they had excess square footage or already had a better merchandise mix, but they don't. Their stores are also too way too middle market to allow for a gourmet foods department.
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Re: Kohl's considers adding grocery departments to stores

Post by mbz321 »

So..it sounds like Kohl's is just trying to lease excess space to a specialty grocery retailer, not actually sell groceries themselves.
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Re: Kohl's considers adding grocery departments to stores

Post by BillyGr »

One might have thought that, if they wanted to bring in groceries they would be the chain to do it themselves (since they do have experience in the supermarket area...).
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Re: Kohl's considers adding grocery departments to stores

Post by pseudo3d »

BillyGr wrote: January 12th, 2018, 9:12 am One might have thought that, if they wanted to bring in groceries they would be the chain to do it themselves (since they do have experience in the supermarket area...).
They sold the Kohl's Foods stores in the early 1980s. I don't even know if they operated any combo stores.
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Re: Kohl's considers adding grocery departments to stores

Post by storewanderer »

Most Kohl's already are in shopping centers with grocery or grocery very nearby. For instance Kohl's in NW Reno shares a center with Safeway. Kohl's in Carson City shares a center with Raleys. Kohl's in Sparks has a Wal Mart Supercenter next door. Kohl's in South Reno has a Wal Mart Supercenter across the street and the location is not at all suited for a grocery to be next to it.

Maybe Kohl's will have better luck with this concept in markets other than mine.
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Re: Kohl's considers adding grocery departments to stores

Post by Brian Lutz »

On top of that, grocery stores tend to include clauses in their leases that prohibit other grocery stores from operating in the same shopping center, which is another obstacle. There are rare exceptions (Trader Joe's opened a store in Redmond WA a few years ago a few doors down from a longstanding QFC in the same shopping center.) This probably isn't as common for big-box discounters like Walmart and Target, but several Kohl's locations here are next to Fred Meyers, which probably would include that.
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Re: Kohl's considers adding grocery departments to stores

Post by pseudo3d »

Based on Supermarket News, it's not so much grocery departments as whole sub-leases with grocery stores. I've attached a partial cut of a Supermarket News article.
Kohl’s has streamlined the offering in hundreds of its stores, and plans to use the excess space in at least some of those locations to showcase grocery items that draw customers to its stores more frequently, CNBC reported. The retailer operates more than 1,100 stores, most of which measure between 80,000 and 90,000 square feet, in 49 states.

However, unlike those retailers’ grocery operations, the grocery stores that partner with Kohl’s would have their own entrances and would be separated from Kohl’s by an internal wall, according to a report in the Milwaukee Journal Sentinel.

Kohl’s already has a partnership with Amazon to offer Amazon products in its stores and accept returns, but Mansell declined to comment on whether Kohl’s might extend that partnership by working with Amazon’s Whole Foods division to pilot the grocery project.
What immediately comes to mind is what a few Sears stores did a few years ago, downsizing and turning part of the store into a Whole Foods. It certainly didn't work to drive traffic to Sears, I'm not sure why Kohl's would think differently. Secondly, Sears actually had the space to use, it could lease some 40,000 square feet and still have a comfortable 100k square feet to use. Kohl's doesn't, and any sub-lease would really cut into their existing selection.

If Kohl's is doing that badly, what they should look into is the other way around, just closing down and leasing the store to a supermarket, then sub-leasing clothing "store-within-a-stores" inside, not unlike what Hy-Vee has now.
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Re: Kohl's considers adding grocery departments to stores

Post by arizonaguy »

Looks like they're adding Aldi to 10 stores.

https://www.cnbc.com/2018/03/01/kohls-t ... r=sharebar
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Re: Kohl's considers adding grocery departments to stores

Post by rwsandiego »

The locations acquired from Mervyn's are smaller than the ones Kohl's built previously. I'm guessing they have figured out that they can turn a profit with a combination of smaller stores and a robust online store. That allows them to downsize some of their larger locations and monetize the extra space. They are piloting with ten stores, which is a drop in the bucket. I can see Aldi being successful in some locations. If that's the case, perhaps they could expand their offering to Trader Joe's or Lidl or even to a drugstore (hey, Ritebertsway).
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