Kroger and Walgreens establish new group purchasing organisation. Credit: PRNewsfoto/The Kroger Co

US retailer Kroger and retail pharmacy chain Walgreens have established a new group purchasing organisation to deliver cost savings.

Known as Retail Procurement Alliance, the new joint-venture will also help realise other efficiencies across the supply chain, including purchasing and drive innovation.

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Kroger chief financial officer Gary Millerchip said: “This collaboration is an extension of the strategic collaboration announced last year to create value for customers and shareholders of both companies.

“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 organisations to reinvent critical components of our sourcing practices.”

Last year, Kroger and Walgreens announced an exploratory pilot, with the aim of developing and testing a one-stop shopping experience.

The new concept involved offering customers access to products and services from both the brands, as well as order groceries on kroger.com for pick-up at Walgreens.

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As part of this programme, the partners selected 13 Walgreens stores in Northern Kentucky to launch the Kroger Express concept.

A curated selection of Walgreens’ owned-brand health and beauty products will feature in 17 Kroger stores in Knoxville, Tennessee.

Walgreens boots alliance co-chief operating officer Alex Gourlay said: “Through this unique joint-venture, Walgreens and Kroger have the opportunity to use our collective resources to create efficiencies across our supply chains.

“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.”