Kroger Co., the nation’s second-largest grocer, is working with Walgreens Boots Alliance Inc. to test a “new format and concept” that will allow customers to order Kroger grocery items online and pick them up at a Walgreens drug stores.
The two retailers will conduct this pilot over the next several months at 13 Walgreens stores in Northern Kentucky, near Kroger’s Cincinnati headquarters. During the test, Walgreens will also sell some Kroger’s private-label products, at the participating Walgreens locations. The assortment, which will include Kroger’s Simple Truth organic brand and other private-label grocery products, will complement Walgreens’ current products and services, the companies say.
For Kroger, the partnership is the latest step in its goal to reposition the retailer under its Restock Kroger strategic plan announced last year. Among other things, the plan aims to expand Kroger’s digital and e-commerce efforts and make broader use of personalized customer data. As the plan unfolds, Kroger has been actively investing in technology and omnichannel capabilities.
For example, in August, Kroger launched a new e-commerce website that sells non-perishable grocery items directly to consumers in select markets. The same month it began working with the University of Cincinnati to operate an “innovation lab” there. The lab will be housed at the school’s 1819 Innovation Hub—a facility created to help companies solve problems and connect with students and faculty doing research in their industries. Kroger says it will staff the 1819 Innovation Hub with research and development engineers and software developers, alongside university faculty. The partnership will feature a student co-operative education and internship program.
Over the summer, Kroger also announced plans to work with autonomous vehicle startup Nuro to test grocery delivery via an unmanned road vehicle that will steer itself from the grocery store to customers’ homes. (Meanwhile, rival Walmart Inc., No. 3 in the Top 1000 and the largest grocery seller in the U.S., plans to test using autonomous vehicles to bring customers to their stores.)
Those moves came on the heels of the grocer in May buying a stake in U.K. online grocer Ocado Group PLC, No. 24 in the Internet Retailer Europe 500, and licensing Ocado’s automated warehouses and delivery technology.
Walgreens, meanwhile, has sought to position itself as a digitally connected source for healthcare and not just a purveyor of drugs, health and beauty supplies, food and household items. For example, the retailer in July launched Find Care Now, a digital platform and marketplace that connects mobile and online visitors to healthcare services at Walgreens stores and other providers.
Walgreens e-commerce efforts are increasingly focused on mobile devices. More than 50 million customers have downloaded the Walgreens app, which allows shoppers to submit and refill prescriptions, and the drugstore chain offers online prescription orders and refills at about 8,100 locations in the U.S., the retailer says. About 200 million of the 1 billion prescription orders Walgreens processes each month are completed online.
As of June 28, 2018, Walgreens operates approximately 9,800 drugstores with a presence in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.
Kroger is No. 86 the Internet Retailer 2018 Top 1000, and Walgreens Boots Alliance ranks No. 37.