Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Kroger and Walgreens Cozy Up in Expanded Pilot Program

By Daniel Sparks - Dec 4, 2018 at 5:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Meet Kroger Express -- the grocer's next move in its Restock Kroger plan.

With Amazon.com ( AMZN -1.38% ) stepping up its grocery and convenience store game as it invests in its subsidiary Whole Foods and its cashier-less Amazon Go store concept, incumbents like Kroger ( KR -2.73% ) and Walgreens Boots Alliance ( WBA 4.28% ) have no choice but to innovate and do their best to stay at the forefront of an evolving consumer landscape. Known for its ability to disrupt retailers, Amazon's foray into the grocery and convenience store business isn't a move to be taken lightly.

One way Kroger and Walgreens are innovating to compete with Amazon is with a new exploratory pilot program in which Kroger sells some products at a limited number of Walgreens stores. Though this pilot program began in October, the two companies announced an expansion of the program on Tuesday.

A Walgreens store with a Kroger Express concept

Image source: Kroger.

Kroger Express

Available at 13 Walgreens stores in northern Kentucky, Kroger and Walgreens' initial collaboration was simply the ability to pick up online orders from Kroger at Walgreens locations, and the availability of some of Kroger's private-label brands, including its popular organic Simple Truth brand, at Walgreens stores.

However, Kroger said Tuesday that its partnership with these 13 Walgreens stores will now feature Kroger Express concepts, a 4,000-square-foot section that will cover about a third of an average Walgreens store's square footage. The Kroger Express store-in-a-store concept features 2,300 products, selected through customer data and insights.

"We are excited to enter the next phase of the pilot," said Kroger head of merchandising Robert Clark in a press release about the program. "The Kroger Express concept creates easy access to our most popular Our Brands products through a fill-in grocery shopping experience for Walgreens customers."

The Kroger Express concept will also include the company's Home Chef meal kits.

While the first Kroger Express concept is already operational at a Walgreens location in Florence, Kentucky, the other 12 pilot stores won't feature an Express concept until early next year.

Walgreens also said on Tuesday that it is making its Home Chef meal kits available in 65 locations in the Chicago area. "The Walgreens expansion provides more Chicagoans convenient access to a quick, simple meal," said Clark.

Staying relevant

Evident by the e-commerce giant's ongoing brick-and-mortar efforts, Amazon clearly has its eyes on Kroger's and Walgreens' markets. At Whole Foods, Amazon gives Prime members special discounts and allows customers to easily order groceries for same-day delivery in many markets. Meanwhile, the company is reportedly considering expanding its cashier-less Amazon Go concept from four locations to as many as 3,000 locations over the next few years, according to Bloomberg.

Person grabbing a drink at an Amazon Go checkout-free store

Checkout-free Amazon Go store. Image source: Amazon.com.

Kroger's Express format for Walgreens stores is part of a broader effort by the grocer to proactively address a shifting marketplace. Kroger refers to this plan as Restock Kroger. With Restock Kroger, the company aims to provide more personalized recommendations to customers, invest in better digital experiences, optimize space in stores, expand its private-label brands, and make strategic partnerships.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$3,389.79 (-1.38%) $-47.57
Walgreens Boots Alliance, Inc. Stock Quote
Walgreens Boots Alliance, Inc.
WBA
$46.53 (4.28%) $1.91
The Kroger Co. Stock Quote
The Kroger Co.
KR
$43.43 (-2.73%) $-1.22

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
640%
 
S&P 500 Returns
139%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/03/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.