I first offered ideas on this topic a little over a year ago and remain passionate about the possibility of unlikely bedfellows creating new shopper experiences. With recent news of relationships between Kohl’s and Aldi, and Kroger and Ace, and recent innovations in the grocery channel — Dollar General opened a gorgeous, fresh-focused format in Florida and The Salvation Army opened their own grocery store, DMG (Doing the Most Good), in Detroit – I felt it a great time to revisit the concept.
For purposes of this article, I’ll first examine the pros and cons of these two more recent mash-ups and then offer a few ideas to help fire up your imagination.
For Kohl’s, which frankly has been experimenting in a number of ways, it is yet another example of a department store looking to not only attract new shoppers but increase the appeal to visit more often. If you recall, Kohl’s has been working with Amazon in a limited scope trial to serve as drop-off points for Amazon return efforts. Additionally they have not been bashful about foretelling that the space within their traditional footprint needs to be reengineered to create a better experience. Not sure they will go as far as the two entrance test underway with rival Target, but undoubtedly they are considering all options.
As to the pros, I like the idea of bringing more reasons to the forefront for shoppers to visit Kohl’s department stores and the profiles of Aldi and Kohl’s shoppers may not be that dissimilar. Another advantage is that the real estate choices made by Kohl’s may, in many cases, lend themselves to offering grocery in high demand markets.
The cons are certainly worth noting. Placing the Aldi outside the physical structure does little to nothing to leverage the physical footprint of Kohl’s square footage. Also, the two operations may simply coexist in the same proximity (e.g., parking lot) which does not do much to cross-pollinate shoppers nor build the basket. However, I can’t blame them for staying separate – the grocery experience within Target has definitely not reached its stride and many critics suggest it is a failed model.
Turning my attention to the possibilities of the Kroger and Ace combination, I’m a big fan. In fact, not terribly long ago I had suggested a similar home improvement and drug store alignment to meet the needs of family caregivers modifying their homes for home care.
The pros, in my opinion, far outweigh the cons. Not only does such a partnership build a stronger market basket and take advantage of the frequency of trips to the grocery store, but it also is largely non-competitive. For Ace, it adds store count and visibility – two things that can be achieved without the expense of real estate or less-than-optimal inventory. For Kroger, their shoppers should welcome easy access to everyday hardware products.
On the con side, I do see spatial issues. Hardware merchandising demands substantial space. Furthermore, the size, variety, and logistical aspects will put additional strain on supply chain management. I’d also be curious how other Ace franchisees are feeling about this new “competitor” potentially entering their neighborhood.
Wondering which potential partners may boost your bottom line? Don’t confine yourself to traditional thinking. Who would have imagined meatballs in a furniture store (e.g., IKEA)? Here are several other far-reaching partnerships that I can imagine evolving. Feel free to reach out and offer your ideas – remember the impetus for this blog series was my late father’s mantra, “I have ideas I haven’t even thought of yet.”
Could fitness centers introduce mini-electronics’ kiosks with headphones and cases inside (think the vending type machines we see at most every airport)?
What might a natural skin and personal care “store within a store” look like inside a massage franchise?
Would it be inconceivable to team a mini version of the struggling Toys-R-Us assortment within a drugstore operation?
How could a disaster recovery or first aid supply-focused retailer reside in a grocery store?
Is it possible that a more experiential offering like a sporting goods retailer (Dick’s or Bass Pro Shops) could show up inside a department store?
Keep dreaming. The possibilities are indeed endless. Retail must continue to evolve and I truly believe we ain’t seen nothin’ yet!
Dave Wendland is vice president, strategic relations and co-owner of Hamacher Resource Group, a company focused on improving results across the retail supply chain located near Milwaukee, Wisconsin. He directs business development, product innovation and marketing communications activities for the company and has been instrumental in positioning HRG among the industry’s foremost thought leaders. You may contact him at (414) 431-5301 or learn more at Hamacher.com.