Walgreens to partner with Kroger for test one-stop shop

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

Post by Brian Lutz » December 7th, 2018, 7:31 am

Definitely looks like an improvement over the usual Walgreens fare. The main question I'd have is how they would brand it in territories where Kroger stores don't exist? It works reasonably well with Kroger branding, but I'm not sure how well it would work with something like Fred Meyer, Ralphs or Fry's branding.

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

Post by storewanderer » December 7th, 2018, 5:53 pm

Assuming it even gets out of the test phase, they could just keep branding it Kroger.

This seems like a duplication of their previous c-stores that had expanded Kroger private label goods and fresh items. I am still trying to figure out why they sold the c-stores.

At this point people in places like the western US may not know the Kroger brand has physical stores, but they do know it is a brand that has something to do with food/groceries.

I think the various banners are creating a number of challenges for Kroger in its recent efforts. Kroger used to use those different banners to cater to different markets. Now that they have made the banners largely the same, I assume the different banners exist simply because a conversion to a single banner Kroger would draw attention to the fact that Ralphs has been dumbed down to be identical to a usual Kroger, QFC is selling the same stuff as Fred Meyer at much higher prices, etc. and that banner changes would cost too much as far as new signs, etc goes.

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

Post by arizonaguy » December 7th, 2018, 7:08 pm

storewanderer wrote:
December 7th, 2018, 5:53 pm
Assuming it even gets out of the test phase, they could just keep branding it Kroger.

This seems like a duplication of their previous c-stores that had expanded Kroger private label goods and fresh items. I am still trying to figure out why they sold the c-stores.

At this point people in places like the western US may not know the Kroger brand has physical stores, but they do know it is a brand that has something to do with food/groceries.

I think the various banners are creating a number of challenges for Kroger in its recent efforts. Kroger used to use those different banners to cater to different markets. Now that they have made the banners largely the same, I assume the different banners exist simply because a conversion to a single banner Kroger would draw attention to the fact that Ralphs has been dumbed down to be identical to a usual Kroger, QFC is selling the same stuff as Fred Meyer at much higher prices, etc. and that banner changes would cost too much as far as new signs, etc goes.
Maybe in some areas. I can see keeping Fred Meyer, Harris Teeter, Mariano's, Ralph's, and QFC but the rest could be changed easily.

I'd fail to see where a name change from a Dillon's, Fry's, Smith's, King Soopers, Pick 'n Save, City Market, or Jay C would really hurt them.

Heck, they should've done it in Arizona when they eliminated the Smith's and Fred Meyer Marketplace banners in 1999/2000 or so as they had renamed approximately 1/2 of their stores at that time. Fry's wasn't even founded in Phoenix (it was a Bay Area chain) and so there really was no real attachment. Plus, so many people in Phoenix are originally from the Midwest or Texas so the Kroger name would make perfect sense. As little to nothing in the store is even labeled as "Fry's" anymore I'm halfway expecting to go shopping and see a Kroger sign on the building someday.

As for the sale of the C-stores. They sold them to free up cash for their e-commerce / digital initiatives. It's the same reason Walmart has sold off some "non-core" international assets.

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

Post by storewanderer » December 7th, 2018, 11:42 pm

arizonaguy wrote:
December 7th, 2018, 7:08 pm
storewanderer wrote:
December 7th, 2018, 5:53 pm
Assuming it even gets out of the test phase, they could just keep branding it Kroger.

This seems like a duplication of their previous c-stores that had expanded Kroger private label goods and fresh items. I am still trying to figure out why they sold the c-stores.

At this point people in places like the western US may not know the Kroger brand has physical stores, but they do know it is a brand that has something to do with food/groceries.

I think the various banners are creating a number of challenges for Kroger in its recent efforts. Kroger used to use those different banners to cater to different markets. Now that they have made the banners largely the same, I assume the different banners exist simply because a conversion to a single banner Kroger would draw attention to the fact that Ralphs has been dumbed down to be identical to a usual Kroger, QFC is selling the same stuff as Fred Meyer at much higher prices, etc. and that banner changes would cost too much as far as new signs, etc goes.
Maybe in some areas. I can see keeping Fred Meyer, Harris Teeter, Mariano's, Ralph's, and QFC but the rest could be changed easily.

I'd fail to see where a name change from a Dillon's, Fry's, Smith's, King Soopers, Pick 'n Save, City Market, or Jay C would really hurt them.

Heck, they should've done it in Arizona when they eliminated the Smith's and Fred Meyer Marketplace banners in 1999/2000 or so as they had renamed approximately 1/2 of their stores at that time. Fry's wasn't even founded in Phoenix (it was a Bay Area chain) and so there really was no real attachment. Plus, so many people in Phoenix are originally from the Midwest or Texas so the Kroger name would make perfect sense. As little to nothing in the store is even labeled as "Fry's" anymore I'm halfway expecting to go shopping and see a Kroger sign on the building someday.

As for the sale of the C-stores. They sold them to free up cash for their e-commerce / digital initiatives. It's the same reason Walmart has sold off some "non-core" international assets.
The other interesting thing is it sounds like Walgreens private label items will remain where they have them, even in these Kroger Express Stores, and then Kroger will fill in private label for items that Walgreens does not currently have in private label.

I don't think Walgreens private label items are up to the quality standard of Kroger's items. Offering both lines is going to create a pretty bad quality inconsistency on private label. Walgreens probably should have allowed its not so nice private label items to get pitched 100% in the grocery/home areas of the test stores.

Also I thought we read a month or two ago that Kroger and Walgreens were doing a thing where you could pick up Kroger online orders at Walgreens Stores. What happened to that initiative? Did it start and now these next two initiatives came down (Kroger Express and expansion of Home Chef into Chicago Walgreens?). San Francisco Walgreens would be another great opportunity for a better food offering. Too bad Kroger's operations in northern California are so few and far between.

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

Post by Super S » December 8th, 2018, 7:34 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.
Not so sure Kroger would sell that as they even have a Kroger pharmacy inside at least one of their convenience stores.

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

Post by storewanderer » December 8th, 2018, 9:01 am

Super S wrote:
December 8th, 2018, 7:34 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.
Not so sure Kroger would sell that as they even have a Kroger pharmacy inside at least one of their convenience stores.
Kroger closed the pharmacy it had in a FL c-store right before the sale transaction to EG Group closed, and the KS c-store that had a pharmacy was retained by Kroger and not sold to EG Group.

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