Kroger and Walgreens formed a buying pool

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cw06
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Kroger and Walgreens formed a buying pool

Post by cw06 » December 11th, 2019, 11:50 am

Looks like Kroger and Walgreens are combining their purchasing. Kroger will also start producing private label products for Walgreens. Other companies are invited to join this purchasing group as well.

I'm wondering if the feds might start taking a look at stuff like this as anti-competetive trade. We'll end up with Amazon, Walmart, and Kroger driving the retail landscape, and any company would have to ally a "superpower" to have any chance at competing.

https://www.supermarketnews.com/retail- ... ganization

jamcool
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Re: Kroger and Walgreens formed a buying pool

Post by jamcool » December 11th, 2019, 7:50 pm

Most of the independent chains buy from Topco. And most of the private label products are made by the same national brand manufacturers.

pseudo3d
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Re: Kroger and Walgreens formed a buying pool

Post by pseudo3d » December 11th, 2019, 8:33 pm

I thought I remember reading that America's Beverage Company (Kroger soft drinks) did produce brands for non-Kroger stores, and I seem to also remember reading that many Safeway production plants in the early days did the same thing. Since it's not an exclusive partnership and others can join, I assume it's not necessarily a predecessor to a Walgreens/Kroger merger but you never know...

mbz321
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Re: Kroger and Walgreens formed a buying pool

Post by mbz321 » December 12th, 2019, 9:58 am

I wonder if this will mean drastically lower prices for Walgreens brand stuff, which is already drastically overpriced (although not as bad as CVS) compared to similar private label products anywhere else.

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Re: Kroger and Walgreens formed a buying pool

Post by drpep » December 12th, 2019, 12:28 pm

A former coworker of mine once worked at the long gone A&P manufacturing plant in Horseheads, NY. He said the made product for more than just A&P.

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Re: Kroger and Walgreens formed a buying pool

Post by BillyGr » December 12th, 2019, 3:54 pm

mbz321 wrote:
December 12th, 2019, 9:58 am
I wonder if this will mean drastically lower prices for Walgreens brand stuff, which is already drastically overpriced (although not as bad as CVS) compared to similar private label products anywhere else.
Not all of them are that bad, and their sales on these items are often cheaper than even grocery stores (and some of the sales are frequent enough that you can pretty much know it will be at the sale price one or two weeks of any given month).

Brian Lutz
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Re: Kroger and Walgreens formed a buying pool

Post by Brian Lutz » December 13th, 2019, 8:59 am

This is pretty common practice due to economies of scale. For example, if you look at a product commonly sold as a store brand such as dry roasted peanuts, you'll notice that pretty much every store brand is sold in the same packaging (although the cap color may vary from brand to brand) and quite likely all come from the same source (which is probably John B. Sanfilippo, since they own the Fisher brand and package theirs in the same packaging,,) I imagine it would be cost prohibitive for each store to do their own manufacturing for a product like that, and it's much more efficient to have one source, even if everyone else is using it.

Similarly, my Dad spent about 15 years working at the (now closed and demolished) Kimberly-Clark paper mill in Everett, and a significant portion of the mill's manufacturing capacity went to producing Kirkland Signature toilet paper for Costco.

storewanderer
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Re: Kroger and Walgreens formed a buying pool

Post by storewanderer » December 14th, 2019, 8:23 pm

We will see what comes of this. Will it be a common private label?

Walgreens is a pretty weak merchandiser from a volume perspective. Also their private label quality is terrible. They need all the help they can get to get some volume going again.

Kroger, conversely, is very strong on volume and very strong on private label quality.

I keep seeing what Kroger brings to the table in this deal but keep failing to see what Walgreens brings to the table other than a large pharmacy business and many physical locations.

Maybe Walgreens is better on technology too. At least their store accepts Contactless credit cards and their loyalty card also goes through the Contactless reader if you load it to Apple Pay or Android Pay which I find very neat.

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Re: Kroger and Walgreens formed a buying pool

Post by buckguy » December 15th, 2019, 6:10 pm

Have never really had a bad experiences with Walgreen store brands. This does open up new venues for both. Walgreen doesn't have to invest in their grocery lines which take increasing amounts of space in their newer stores and in the Duane Reades, and Kroger finds more outlets for its merchandise. I think supers have been retrenching from health and beauty for awhile. The selection at my very large Giant isn't that great---Safeway does offer a bit more. A partnership like this could introduce efficiencies for Kroger and, frankly, I don't think people are anxious to buy Kroger brand aspirin.

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Re: Kroger and Walgreens formed a buying pool

Post by storewanderer » December 15th, 2019, 7:03 pm

buckguy wrote:
December 15th, 2019, 6:10 pm
Have never really had a bad experiences with Walgreen store brands. This does open up new venues for both. Walgreen doesn't have to invest in their grocery lines which take increasing amounts of space in their newer stores and in the Duane Reades, and Kroger finds more outlets for its merchandise. I think supers have been retrenching from health and beauty for awhile. The selection at my very large Giant isn't that great---Safeway does offer a bit more. A partnership like this could introduce efficiencies for Kroger and, frankly, I don't think people are anxious to buy Kroger brand aspirin.
Their private label food and snack items are pretty horrible. The household items are also low quality, frequently imported when competitor brands are made in USA (talking items like sandwich bags, etc.). I am sure the OTC items are fine.

I'd rather have Kroger Aspirin since it costs 1/3 the price of the identical Walgreens item... same goes for most of Walgreens private label OTC compared to the same items in Kroger brand.

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