Kroger and Walgreens Form Purchasing Alliance to Cut Costs
Kroger and Walgreens Boots Alliance are teaming up to cut supplier costs, forming a new group purchasing organization (GPO) called Retail Procurement Alliance. Building on a unique collaboration that first brought together Kroger with Walgreens, the new joint venture will be aimed at delivering purchasing efficiencies, lower costs and combined resources to help drive further innovation.
Kroger and Walgreens initially announced an exploratory pilot in October 2018 to develop a one-stop shopping experience, which launched in December 2018 as the Kroger Express concept in 13 Walgreens stores in Northern Kentucky. In August 2019, Walgreens and Kroger announced an expansion of the pilot at 35 Walgreens locations in Knoxville, Tennessee and introduced a curated assortment of Walgreens health and beauty products at 17 Kroger stores in the same area.
"This collaboration is an extension of the strategic collaboration announced last year to create value for customers and shareholders of both companies," said Kroger’s CFO Gary Millerchip. "Kroger and Walgreens share a commitment to finding value and efficiency improvements by increasing innovation and competition through sourcing. This concept brings together the best of two great organizations to reinvent critical components of our sourcing practices."
"Through this unique joint venture, Walgreens and Kroger have the opportunity to use our collective resources to create efficiencies across our supply chains," said Alex Gourlay, co-chief operating officer, Walgreens Boots Alliance. "This collaboration will also enhance our ability to drive innovation for customers, including both of our private-label brands, to further meet their evolving needs for value and convenience."