“Misery acquaints a man with strange bedfellows.” This quote, from Shakespeare’s “The Tempest,” has become increasingly true in the competitive landscape of retail, where every company not named Amazon is aggressively seeking out new partnerships to stem the tide of the oncoming juggernaut. Perhaps the company that feels it the most is Kroger, the current #2 overall retailer in the United States and the #2 seller of groceries, the two businesses that Amazon is in an all-out blitz to consume.
Prior to the last five years, Kroger heavily relied on its physical stores, winning #1 or #2 market share in 46 of 52 metro areas they serve. However, the chain is notably absent from select major markets like the Northeast. As consumers are increasingly willing to order groceries online, ease and quantity of pickup locations are becoming more important.
This morning, Kroger announced a new pilot with Walgreens, where the retailer would allow customers to pick up online Kroger items in select stores. Walgreens would also begin selling Kroger private label items like Simple Truth, a move echoing Kroger’s recent initiative to expand distribution of these products on the Chinese app Tmall. This would potentially give Kroger access to over 8,000 Walgreens locations across the country.
When combined with Ocado’s autonomous picking and distribution, the strategy could give both Kroger and Walgreens a major line of defense against Amazon’s renewed focus and investment in brick-and-mortar locations through Whole Foods and Amazon Go. With digital growth slowing, Kroger is looking for a “shot in the arm.” Like many Americans this flu season, the chain is hoping to find it at Walgreens.