Yesterday, the Kroger Co. (NYSE: KR) and Walgreens Boots Alliance, Inc. (NASDAQ: WBA) announced two initiatives, expanding on the“exploratory pilot” the companies unveiled in October, bringing together America’s food and grocery leadership with Walgreens’ universal proficiency in pharmacy, health and beauty care.
Kroger-Walgreens partnership to counter Amazon
Back in October, Kroger and Walgreens announced a joint venture on an “exploratory pilot” with a new plan and concept combining the position of the former as a grocer with the pharmacy, health, and beauty expertise of the latter. The retailers chose to test the plan and closely track customer feedback.
With nearly half a million employees, Kroger serves more than nine million consumers every day with a perfect digital shopping experience and 2,800 retail food supplies under a variety of brands. Initially, Kroger and Walgreens will build and test a one-stop shopping experience in which customers can access goods and services from both companies.
Walgreens, one of the country’s biggest drugstore chains, is part of the Retail Pharmacy USA Division of Walgreens Boots Alliance, Inc., the foremost global pharmacy-led, health and well-being venture. Roughly 8 million customers deal with Walgreens through stores and online every day. As of the 31st of August 2018, in addition to its omni-channel business, Walgreens manages 9,560 drugstores in all 50 states, the District of Columbia, Puerto Rico, and the US Virgin Islands. Approximately 400 Walgreens stores offer retail clinic services.
To take the partnership forward, yesterday, Kroger announced that it would begin selling foodstuff within Walgreens drugstore. The 135-year old grocery chain will offer 2,300 goods at 13 Walgreen’s stores in Kentucky, Northern Kentucky, near Kroger’s Cincinnati headquarters by early 2019. Named Kroger Express, the concept will provide meal kits, meat produce, dairy, meal solutions, and frozen food.
The Kroger Express range will consist of Home Chef meal kits, national products, admired products from Our Brands, in addition to dairy, meat produce, frozen, and meal solutions. Home Chef is one of the largest food kit suppliers in the USA, supplying more than 3 million meals every month. Established in 2013, Home Chef offers new, pre-portioned ingredients and easy to follow weekly recipes, so that everyone can cook and enjoy them. Home Chef is a subsidiary of The Kroger Co.
The first shop is already functioning in Florence, Kentucky. The remaining 12 stores selected for the pilot project will be operating in early 2019. As reported in October, the partaking pilot stores are providing a one-stop shopping experience where clients can access goods from both brands and place orders for groceries.
Specifically, Kroger also introduces Home Chef Express food kits at 65 locations in Walgreens in Chicago. The latest offer improves the reach of Home Chef’s Express products, previously offered in certain stores of the Kroger family, including Mariano’s selected stores in Chicago. Walgreens will offer three exclusive Home Chef Express meal kits during the trial, with recipes rotating bi-weekly. Other recipes can be delivered via homechef.com, where customers can find an additional weekly variety. Every meal is served for two and starts at $8.50 per serving.
Commenting on the trial, Pat Vihtelic, Home Chef CEO and founder, said: “Making Home Chef Express meals available at Walgreens is another way Home Chef is making mealtime easy. The Express recipes, which cook in 15 minutes, are meals anyone can cook and everyone will love.”
Robert Clark, Kroger’s senior vice president of merchandising, said: “We are redefining the customer experience in a variety of ways through Restock Kroger, including innovative partnerships like our test-and-learn pilot with Walgreens. We are excited to enter the next phase of the pilot. The Kroger Express concept creates easy access to our most popular Our Brands products through a fill-in grocery shopping experience for Walgreens customers, and our Home Chef Express meal kits provide customers with an on-demand solution for tonight’s dinner.”
Richard Ashworth, Walgreens president of operations, said: “We’re pleased to continue working together to explore new concepts that expand product selection to provide a better shopping experience and greater value for our customers.”
The Kroger and Walgreens trial is perceived as a step to counter the industry disruption moves of e-commerce giant Amazon. Only time will tell if the plan will be successful. Still, the market is expected to respond positively to the news.
The price chart of Kroger shows that the stock is trading near the major support level of 28. Additionally, the stock is trading above its 50-day moving average. Furthermore, the MACD indicator is also having a reading of over zero. As a result, we can expect the stock to remain bullish in the short-term.
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