Walgreens expands grocery experiment with 'Kroger Express' shops inside test locations

KEY POINTS

• The pharmacy chain will stock 2,300 Kroger products on the shelves of Kroger Express locations.
• The companies are testing Kroger Express in 13 Kentucky locations.
• The continuing partnership is meant to give both companies a competitive edge, as pharmacy chains face pressure to consolidate and Whole Foods threatens grocers.

An employee bags a customer's purchases at a Kroger Co. store in Peoria, Illinois.

Daniel Acker | Bloomberg | Getty Images

Walgreens and Kroger are expanding their partnership by testing a branded Kroger Express grocery section inside the drugstore chain.

The companies, which announced a partnership in October to sell some Kroger products inside 13 Walgreens locations, said Tuesday they decided to expand on the original pilot. Walgreens' shoppers soon will be able to buy 2,300 Kroger products, including Kroger's Home Chef meal kits and its organic brand Simple Truth, at the 13 test stores in Northern Kentucky, near Kroger's headquarters in Cincinnati.

Decreasing sales for household products have hurt pharmacies, while grocers are looking for any edge that make them more competitive against Amazon's Whole Foods.

A Kroger Express is already operating in Florence, Kentucky, and the remaining 12 stores will be operational "early next year," the companies said.

In addition to selling Kroger-branded products in stores, Walgreens will also allow customers to order online from the grocer and pick up the items at the pharmacy chain. The two companies originally announced the online order pickup in October.

The companies also announced on Tuesday that the grocery chain has stocked its Home Chef kits in dozens of the pharmacy's Chicago locations. The "Express" meal kits will rotate recipes biweekly, with three unique options offered in participating stores.

Pharmacies and grocery stores have been searching for ways to beat out the competition. Kroger's competitor Walmart has its own partnership with health insurer Anthem. CVS closed a merger with Aetna last week, although a federal judge might halt the integration of the two companies.

Walgreens is also reportedly looking to continue expanding into health care with a deal with health insurer Humana. The two companies currently have a partnership meant to serve seniors.

Shares of Walgreens and Kroger were each down 1.3 percent.

WATCH: How Amazon's Whole Foods deal will change the US grocery business