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Kroger Setting Up Shops Within 13 Walgreens, Launches Meal Kits Offering

Thirteen Walgreens will soon be expanding Kroger Express, a store-within-the-store concept that offers a curated assortment of 2,300 grocery products, modeled after a pilot that opened in Florence, Ky., in October.  The two retailers yesterday also announced Kroger is selling its Home Chef Express meal kits in 65 Walgreens locations in the Chicago area. 

Kroger acquired Home Chef, which was launched by CEO Pat Vihtelic in 2013, earlier this year for $200 million.

The companies say Kroger Express will “soon be offered” at 13 Walgreens stores in northern Kentucky, near Kroger’s headquarters in Cincinnati.

“Along with Home Chef meal kits, offerings will include Kroger’s own brands -- including its Simple Truth natural and organic label -- plus national-brand products; dairy, meat, produce and frozen items; and meal solutions. The products were curated using customer data and insights provided by 84.51°, Kroger’s data analytics and consumer intelligence arm,” writes Russell Redman for Supermarket News.

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“Teaming up the nation’s largest supermarket retailer and biggest drug chain, the effort aims to promote a convenient, one-stop shopping experience for food, groceries, pharmacy, health and beauty, the companies said,” Redman adds.

Kroger was named Progressive Grocer’s 2018 Retailer of the Year and it is No. 2, after Walmart, on the trade magazine’s 2018 Super 50 list of the top grocers in the U.S. It “operates a seamless digital shopping experience and 2,800 retail food stores under a variety of banner names nationwide,” according to the magazine.

Both initiatives “continue the mega-grocer’s quest to deliver on its Restock Kroger strategy, particularly on two of its four pillars: Redefine the Food and Grocery Customer Experience, and Expand Partnerships to Create Customer Value,” the story points out.

“The companies said they would add more of the 4,000-square-foot displays of produce, Home Chef meal kits and other products if customers take to them. They will account for roughly a third of an average Walgreens selling space,” Heather Haddon writes for the Wall Street Journal.

“Like most traditional retailers, Kroger and Walgreens are also racing to reach new customers and reshape their businesses to account for the rise of e-commerce. Amazon.com Inc.’s 2017 purchase of Whole Foods and its $1 billion bid in June for online pharmacy PillPack Inc. have raised pressure on supermarkets and pharmacies to change their businesses,” Haddon observes.

“In addition to selling Kroger-branded products in stores, Walgreens will also allow customers to order online from the grocer and pick up the items at the pharmacy chain. The two companies originally announced the online order pickup in October,” reports CNBC’s Amelia Lucas.

As innovative as Kroger’s may be, “like other grocers in the U.S., [it] has struggled to compete with an influx of new competition, like low-cost brands including Aldi and the now Amazon-owned Whole Foods. In the latest quarter, Kroger shares tumbled more than 9% after reporting lower-than-expected sales. And in June, the supermarket chain laid off about 1,500 employees and sold 14 of its store locations in the Raleigh-Durham area in North Carolina,” Megan Henney reports for FOXBusiness.

“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,” Robert Clark, Kroger’s SVP of merchandising, says in the news release announcing the initiatives.

“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.”

Chain Drug Review reports that Walgreens “will offer three unique Home Chef Express meal kit options, with recipes rotating bi-weekly. Other recipes are available for delivery through homechef.com,  where shoppers can find additional weekly variety. Each meal serves two and starts at $8.50 per serving.”  

Home Chef CEO and founder Vihtelic, says “the Express recipes, which cook in 15 minutes, are meals anyone can cook and everyone will love.”

We’ll see how that love has translated into sales when Kroger reports third-quarter earnings tomorrow.

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