Kohl's making space for Aldi

Kohl's and Aldi are teaming up, sort of.

Kohl’s, the Menomonee Falls, Wis.-based department chain, is shrinking the size of about 12 stores and plans to lease the opened space of several of those locations to Aldi, the Batavia, Ill.-based deep discounter that specializes in private brands. The Aldi locations will be next door to the Kohl’s stores, not inside them. The locations of the new-Aldi-next-to-Kohl stores is not yet known.

"We believe the opportunity to leverage our real estate through this effort has benefits on both the top line with increased traffic, and the bottom line through expense offsets,'' Kevin Mansell, Kohl's CEO, said in an earnings call with investors on March 1.

Interestingly, the first Kohl's store was a corner grocery store that opened in Milwaukee in 1927.

Aldi is investing $3.4 billion to expand from 1,600 to 2,500 stores nationwide by the end of 2022. Aldi is also spending $1.6 billion to remodel 1,300 stores by 2020.