Dive Brief:
- Kroger has announced plans to buy pharmacy records from 42 Shopko locations, according to the Milwaukee Journal Sentinel. Financial terms of the deal were not disclosed.
- Kroger’s purchase of Shopko comes on the heels of an announcement that the pharmacy company will shut down 39 stores in 14 states. Kroger CEO Rodney McMullen told the Journal Sentinel that the large number of Shopko pharmacy files being acquired shows the grocer's commitment to investing in the state and building its presence to better serve customers.
- Shopko pharmacy customers in Wisconsin will have their prescriptions transferred to their local Kroger-owned grocery store, which includes Pick 'n Save, Metro Market and Copps. Kroger will also take over Shopko pharmacy records in Utah, Nebraska, Idaho, Washington and Montana.
Dive Insight:
Kroger continues to make strategic investments and smart acquisitions. Its purchase of Shopko pharmacy files is a well-intentioned, logical move to generate new customers and better serve existing ones, especially as shoppers seek to streamline time spent in stores and consolidate shopping trips. Kroger is making a clear play in the pharmacy space, with another recent announcement that it would begin selling groceries and offering pickup at 13 Walgreens locations around the country.
This is the first major effort Kroger has made to boost its pharmacy business directly. Kroger recently announced growth in its low-margin specialty pharmacy business during third-quarter earnings, which ate into profits but shows a potential growth area for the company. Taking over Shopko's pharmacy records allows the grocer to tap into an established customer network from a well-known Midwest entity, despite its recent troubles and potential bankruptcy filing.
The fusion of pharmacies and retail is gaining traction throughout the country. CVS operates pharmacies inside Target stores, and though it fell through, Albertsons had big plans to acquire Rite Aid earlier this year. Amazon acquired PillPack in June, showing that it’s not just brick-and-mortar retailers that want in on the pharmacy business.
Though pharmacies can be low margin, many retailers are attracted to the added convenience of a pharmacy inside their stores and the ability to offer one-stop for their shoppers, which should drive customer loyalty. Other grocers, like Stater Bros. think it is a risky investment that detracts from their focus on food and their ability to meet the demands of customers in the ever-changing food and grocery space.
