Kroger and Walgreens are taking their partnership to the next level—and I'm not just talking expansion-wise. This week, the two retailers unveiled a new group purchasing organization (GPO), a joint venture that will be known as Retail Procurement Alliance and that will reimagine both companies' supplier network.
“This collaboration is an extension of the strategic collaboration announced last year to create value for customers and shareholders of both companies,” said Gary Millerchip, Kroger's Chief Financial Officer. “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."
CNBC reported that the chain retailers are aiming to increase sales while lowering costs by looking for overlaps in the products they are receiving, consolidating on orders and aiding both businesses. Millerchip noted that both companies will also see if Kroger can start manufacturing items in-house for Walgreens, and vice versa.
“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 for 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.”
As more retailers move toward forming their own internal distribution networks, Deli Market News will continue to report on the latest happenings.