Kroger and Walgreens are in a purchasing alliance and seeking more partners
The Kroger Co. and Walgreens have formed a new purchasing organization to cut costs and drive innovation.
The new group purchasing organization (GPO), which will be called Retail Procurement Alliance, further expands joint efforts between the supermarket and drugstore powerhouses. In August, the two companies announced plans to expand a pilot program that places Kroger Express store-within-a-store shops inside of Walgreens locations. In a separate test, select Kroger stores are selling a limited offering of Walgreens health and beauty care products, including Boots No7 and Soap & Glory.
Kroger CFO Gary Millerchip said the new GPO “brings together the best of two great organizations to reinvent critical components of our sourcing practices.”
Alex Gourlay, co-COO for Walgreens Boots Alliance, said the expanded relationship between his company and Kroger will not only “create efficiencies across our supply chains,” it will enhance the ability of the two companies to drive private label innovation and meet the “evolving needs for value and convenience” among consumers.
Kroger and Walgreens are looking for additional partners to join their newly formed purchasing group.
“If another organization thinks they have significant buying in these areas, they could partner with Kroger and Walgreens to save and reduce waste,” Mr. Millerchip told CNBC.
- Kroger and Walgreens Form Group Purchasing Organization as Companies Expand Collaboration with New Joint Venture – The Kroger Co.
- Kroger and Walgreens want to buy products together to cut supplier costs – CNBC
- Where is the Kroger/Walgreens relationship headed? – RetailWire
DISCUSSION QUESTIONS: How will the joint procurement deal between Kroger and Walgreens benefit the two companies, and what will it mean for competition? What other types of retailers do you expect might join the Retail Procurement Alliance?