Kroger, Walgreens provide back-end support for retail pilot

Leaders in the grocery and drugstore verticals are forming a new group purchasing organization (GPO).

The Kroger Co. and Walgreens Boots Alliance, who initially launched an exploratory pilot of a one-stop grocery and HBC shopping experience at 13 Walgreens stores in northern Kentucky in December 2018 are calling the new joint venture Retail Procurement Alliance. The partnership is aimed at delivering purchasing efficiencies, lower costs and combined resources to help drive further innovation.

In August 2019, the retailers expanded the pilot to include an initiative called “Kroger Express,” a branded section that offers a curated assortment of up to 2,700 grocery products in the initial 13 Walgreens test stores and 35 additional Walgreens stores in the Knoxville, Tenn., area.

Most of the Walgreens pilot stores also offer Kroger’s buy-online-pickup-in-store service, and the pilot expansion also included the launch of a section in select Kroger stores in the Knoxville area dedicated to Walgreens’ private-label health and beauty brands.

"This collaboration is an extension of the strategic collaboration announced last year to create value for customers and shareholders of both companies," said Gary Millerchip, Kroger CFO. "Kroger and Walgreens share a commitment to finding value and efficiency improvements by increasing innovation and competition through sourcing. This concept brings together the best of two great organizations to reinvent critical components of our sourcing practices."

"Through this unique joint venture, Walgreens and Kroger have the opportunity to use our collective resources to create efficiencies across our supply chains," said Alex Gourlay, co-COO, Walgreens Boots Alliance. "This collaboration will also enhance our ability to drive innovation for customers, including both of our private-label brands, to further meet their evolving needs for value and convenience."