“Kroger hopes to boost its health business through its pandemic efforts, [aiming] to deliver millions of vaccinations to people nationwide and create more repeat customers for its pharmacies and supermarket offerings,” WSJ writes.
Why It Matters: Thanks to pandemic restrictions, last year was a solid one for U.S. Grocers, including Kroger. But when things go back to some form of normal, the future of supermarket chains is less clear. “Reopened restaurants will likely reclaim some of consumers’ food purchases, industry executives and analysts say, while pandemic-related safety measures elevate supermarkets’ expenses.”
Kroger is “betting that its in-store pharmacies and clinics can keep its supermarkets central to consumers’ lives even as the coronavirus recedes, with shoppers spending more in a continuation of the company’s pandemic-fueled growth.”
- The supermarket chain has done a ton of Covid-19 testing at its stores and drive-through sites. The company has also offered virtual health services and delivered prescriptions at no charge.
Numbers To Consider:
- Kroger posted recorded sales of $132.5 billion in the year ending January 30.
- It has administered around 28,250 vaccine doses at mass-vaccination sites since February. In total, Kroger has administered close to 1.38 million doses.
- Kroger is the fourth-largest pharmacy operator by prescription count, with 2,250 pharmacies and 220 clinics (mostly in the Midwest and the southern U.S.).
- The most recent data, from 2019, shows pharmacy operations made up around 9% of Kroger’s overall sales.
The Takeaway: Kroger is “looking to forge deeper ties with higher-spending consumers, ultimately boosting both grocery and pharmacy sales.” Pharmacy users tend to spend almost three times as much as regular customers.
- And Kroger, and other retailers and pharmacies, are looking to hire to keep up with demand.
- The key here is that vaccines themself don’t boost profit for retailers, so determining how to tap into the new pipeline of customers becomes an important thing to flesh out.