Walgreens to partner with Kroger for test one-stop shop

wnetmacman
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Walgreens to partner with Kroger for test one-stop shop

Post by wnetmacman » October 2nd, 2018, 7:02 am

Looks like Kroger and Walgreens are going to partner up and build a one-stop-shopping experience that will be similar to things other companies have tried in the past:

http://www.theshelbyreport.com/2018/10/ ... ew-format/

It looks like they will be doing something similar to what Rite-Aid tried (and failed) with Save-A-Lot.

I will be interested in seeing how this turns out.

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Re: Walgreens to partner with Kroger for test one-stop shop

Post by storewanderer » October 2nd, 2018, 10:59 pm

Rite Aid/Save a Lot still exists in Greenville, SC. Those stores were sold to Walgreens but are still running the combo format...

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Re: Walgreens to partner with Kroger for test one-stop shop

Post by babs » October 3rd, 2018, 2:14 pm

This seems like nothing more than a distraction that's bound to fail. Unless the plan is for Kroger to sell its pharmacy business to Walgreen's down the road like CVS and Target. Not so sure the FTC would go for that but who knows in this environment.

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Re: Walgreens to partner with Kroger for test one-stop shop

Post by storewanderer » October 3rd, 2018, 11:10 pm

I have to assume the end game here is some kind of partnership in pharmacy or an outright merger of these two chains.

Maybe Kroger would handle the consumables side of Walgreens business.

I could see it working, maybe.

Kroger just sold 800 potential "grocery pick up locations" to EG Group that would have been a lot more convenient than a Walgreens...

Not to say they couldn't partner with EG Group for a similar initiative.

Walgreens has a nice concentration of inner city locations which is something Kroger has always struggled with having many of. In those densely populated places, grocery pick up strikes me as something that could be very successful.

I'd like to see them pilot this in San Francisco and Chicago next, two dominant Walgreens markets where Kroger is not overly present.

Kroger seems to be throwing a lot of initiatives out there lately. Reminds me of Sears in the 90's. That didn't end well.

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Re: Walgreens to partner with Kroger for test one-stop shop

Post by pseudo3d » October 4th, 2018, 7:56 am

storewanderer wrote:
October 3rd, 2018, 11:10 pm
I have to assume the end game here is some kind of partnership in pharmacy or an outright merger of these two chains.

Maybe Kroger would handle the consumables side of Walgreens business.

I could see it working, maybe.

Kroger just sold 800 potential "grocery pick up locations" to EG Group that would have been a lot more convenient than a Walgreens...

Not to say they couldn't partner with EG Group for a similar initiative.

Walgreens has a nice concentration of inner city locations which is something Kroger has always struggled with having many of. In those densely populated places, grocery pick up strikes me as something that could be very successful.

I'd like to see them pilot this in San Francisco and Chicago next, two dominant Walgreens markets where Kroger is not overly present.

Kroger seems to be throwing a lot of initiatives out there lately. Reminds me of Sears in the 90's. That didn't end well.
I definitely don't see it ending well for the pilot. The first thing they would have to do is actually price it correctly--I tend to avoid drug stores because the prices are way jacked up beyond what a grocery store or Walmart would have.
The second is a good merchandise mix, and while I can see that the meal kits might be worth it, they would also have to sell, too often at my local Kroger, the meal kits are close to or already past expiration, and unless it was a highly trafficked store those things won't sell.

I can't see Walgreens doing the pharmacy business for Kroger, as their pharmacy business probably does far better numbers than Target ever did, nor Kroger taking over Walgreens' food business, and a merger would just waste time and money.

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Re: Walgreens to partner with Kroger for test one-stop shop

Post by Knight » October 4th, 2018, 8:26 am

storewanderer wrote:
October 2nd, 2018, 10:59 pm
Rite Aid/Save a Lot still exists in Greenville, SC. Those stores were sold to Walgreens but are still running the combo format...
I have heard this partnership is ending in 2019.

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Re: Walgreens to partner with Kroger for test one-stop shop

Post by Knight » October 4th, 2018, 8:34 am

babs wrote:
October 3rd, 2018, 2:14 pm
This seems like nothing more than a distraction that's bound to fail. Unless the plan is for Kroger to sell its pharmacy business to Walgreen's down the road like CVS and Target. Not so sure the FTC would go for that but who knows in this environment.
I doubt the Kroger Company divests its pharmacy business. Pharmacy has been a strength of the Kroger Company. The Kroger Company does not want to provide fewer reasons to shop at its Harris Teeter, Kroger Atlanta, Kroger Mid-Atlantic, and Kroger Nashville stores with Walmart and Publix present.

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Re: Walgreens to partner with Kroger for test one-stop shop

Post by arizonaguy » October 4th, 2018, 10:20 am

Knight wrote:
October 4th, 2018, 8:34 am
babs wrote:
October 3rd, 2018, 2:14 pm
This seems like nothing more than a distraction that's bound to fail. Unless the plan is for Kroger to sell its pharmacy business to Walgreen's down the road like CVS and Target. Not so sure the FTC would go for that but who knows in this environment.
I doubt the Kroger Company divests its pharmacy business. Pharmacy has been a strength of the Kroger Company. The Kroger Company does not want to provide fewer reasons to shop at its Harris Teeter, Kroger Atlanta, Kroger Mid-Atlantic, and Kroger Nashville stores with Walmart and Publix present.
There have been rumors over the past few months that Kroger wants to get out of the Pharmacy business. My guess is that instead of a full out exit/sale like Target and CVS had any partnership with Walgreens would be a joint venture where Kroger owns a stake in the venture.

Kroger and Walmart are following the same blueprint of questionable move after questionable move in order to appease Wall Street while letting their core business languish. There is a market for grocery pickup but I'm not sure if it's as large as both chains seem to believe it is. Plus, the more customers that use this pickup method, the less impulse shopping will occur (as online shoppers tend to be more "targeted" in their shopping).

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Re: Walgreens to partner with Kroger for test one-stop shop

Post by pseudo3d » October 4th, 2018, 11:06 am

arizonaguy wrote:
October 4th, 2018, 10:20 am
Knight wrote:
October 4th, 2018, 8:34 am
babs wrote:
October 3rd, 2018, 2:14 pm
This seems like nothing more than a distraction that's bound to fail. Unless the plan is for Kroger to sell its pharmacy business to Walgreen's down the road like CVS and Target. Not so sure the FTC would go for that but who knows in this environment.
I doubt the Kroger Company divests its pharmacy business. Pharmacy has been a strength of the Kroger Company. The Kroger Company does not want to provide fewer reasons to shop at its Harris Teeter, Kroger Atlanta, Kroger Mid-Atlantic, and Kroger Nashville stores with Walmart and Publix present.
There have been rumors over the past few months that Kroger wants to get out of the Pharmacy business. My guess is that instead of a full out exit/sale like Target and CVS had any partnership with Walgreens would be a joint venture where Kroger owns a stake in the venture.

Kroger and Walmart are following the same blueprint of questionable move after questionable move in order to appease Wall Street while letting their core business languish. There is a market for grocery pickup but I'm not sure if it's as large as both chains seem to believe it is. Plus, the more customers that use this pickup method, the less impulse shopping will occur (as online shoppers tend to be more "targeted" in their shopping).
Maybe Albertsons is right in not creating a bunch of pickup locations en masse. H-E-B is, but they're a private company that can play buy their own rules. I also don't think Walmart is going particularly wrong. They made a right decision, frankly, by closing the Walmart Express stores and the Neighborhood Market locations that were not working. Yeah, I know Walmart is opening a "pickup only" store but Walmart at least experiments and will not push it if it becomes a failure.

Kroger's main problem is that unlike Walmart which more or less has a monopoly on one-stop shopping, it doesn't. For a while Kroger was building Marketplace stores and were building up to be more of a viable Walmart competitor but they put the brakes on that and instead tried to reverse even Fred Meyer's merchandise mix. The existing Marketplace stores and the debt-laden Albertsons give Kroger an advantage in places like the Southwest and the Denver divisions, but in other markets, they can get bowled over. Publix continues its domination on the East Coast, as Winn-Dixie continues to shrivel and Albertsons in Florida has been completely driven out, and if Kroger isn't careful, they can lose ground quickly there.

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Re: Walgreens to partner with Kroger for test one-stop shop

Post by arizonaguy » December 6th, 2018, 3:38 pm

Some photos of the pilot store are in this article:

https://www.chainstoreage.com/store-spa ... lot-store/

This looks nice (and is a definite improvement from a lot of the consumables that Walgreens currently carries). I'm curious if Kroger and Walgreens will expand this to other markets.

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