Kroger Rolls Out $4 Generics Chainwide

DAN ALAIMO

CINCINNATI — With the addition of its West Coast divisions, the Kroger Co. here has expanded its $4 generic prescription drug program to all 1,900 of its pharmacies, according to spokeswoman Meghan Glynn. Kroger has 2,486 supermarkets in 31 states, she noted.

Finishing a process that began last year with tests in Cincinnati and Columbus, Ohio, Kroger earlier this month first added its Mid-Atlantic region and then, a few days later, five Western banners to the program. With the addition of City Market and King Soopers in Colorado, Ralphs in Southern California, and Fred Meyer and QFC in the Pacific Northwest, the chainwide rollout was complete.

While the Kroger program follows other retailers, notably Wal-Mart Stores, Bentonville, Ark., it is not seen by industry observers as solely a reaction to competition. For instance, in Southern California where Ralphs has most of its stores, Wal-Mart has a relatively low market penetration.

“This is about giving our customers an affordable option when it comes to health care, and it has been received very well. This has led us to introduce it to other markets,” Glynn said.

Over 300 generic medications are covered by the program, which offers a 30-day supply. Family planning drugs are available at $9. The program is promoted on Kroger's national website, which also includes a list of covered drugs.

Other retailers with discount generic programs or free offerings of select antibiotics include: Giant Eagle, Pittsburgh; Hy-Vee, West Des Moines, Iowa; Target, Minneapolis; Meijer, Grand Rapids, Mich.; Martin's Super Markets, South Bend, Ind.; Bashas', Chandler, Ariz.; Schnuck Markets, St. Louis; and Publix Super Markets, Lakeland, Fla. Kroger pharmacies compete with some, but not all of the grocery chains on this list. The big three drug chains — Walgreen Co., Deerfield, Ill.; CVS/pharmacy, Woonsocket, R.I.; and Rite Aid, Camp Hill, Pa. — have remained on the sidelines.

Wal-Mart recently reported that its program has resulted in increased market share of the generics involved, as well as $1 billion in savings to consumers.

“We have various competitors everywhere,” Glynn said, “but with our program, customers can rely on the professional counsel they get from our pharmacists. In addition to that, now they can get access to meaningful savings while filling their prescriptions.”

As to expansion of the program — some retailers have added more generics after launching their $4 efforts — “we will continue to monitor customer reaction and make future decisions based on that,” she said.

“What you are trying to do in pharmacy is grow your business and drive traffic into the stores,” said retail consultant Neil Stern, partner, McMillan Doolittle, Chicago. “The $4 program has the ability to do both.” He noted that the Kroger program was a reaction to competition.

“We think that Kroger is doing this for sound financial reasons, because it expands their business and, given many of the banners they chose to put it in, they were probably not forced by competition to do it,” countered Meredith Adler, equity analyst at Lehman Brothers, New York.