A Look at Kroger’s In-Store Pharmacy Segment


Nov. 5 2015, Updated 1:08 p.m. ET

Kroger’s Pharmacy segment

An important revenue segment for Kroger (KR), the Pharmacy segment accounted for 8% of its sales in fiscal 2015, which ended on January 31, 2015. During the year, Kroger operated 2,111 pharmacies and held the fifth position in the number of pharmacies operated in the US.

Kroger’s pharmacy operations generated a retail value of ~$9.0 billion through 175 million prescriptions.

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The growing in-store pharmacy industry

The focus of present-day consumers on health and wellness has been on the rise. Consumers appreciate the convenience of in-store advice on basic healthcare needs such as vaccinations, cholesterol testing, and blood pressure monitoring.

These services have become a growing opportunity for companies like CVS Health (CVS), Rite Aid (RAD), Kroger (KR), Walgreen Boots (WBA), and Walmart (WMT) to build customer loyalty.

CVS Health, Kroger, Walgreen Boots, and Walmart Stores are a part of the portfolio holdings of the Consumer Staples Select Sector SPDR ETF (XLP). Together, they account for 19.2% of the portfolio’s holdings.

Kroger’s endeavors in the pharma space

In order to expand its presence in the growing retail clinic industry, Kroger purchased The Little Clinic in 2010. Currently, The Little Clinic operates under the Kroger, King Soopers, Fry’s, and JayC banners. It provides its customers with the convenience of using the healthcare services inside the store where they are already shopping. In fiscal 2015, The Little Clinic opened 38 new clinics, bringing the total number of clinics to 148. Patient visits grew over 35% versus the prior year.

Another important acquisition by Kroger in the pharmacy segment was in 2012, when it acquired Axium Healthcare Pharmacy. Axium offers specialty pharmacy and provides drug therapies and patient support services to treat complex diseases such as hepatitis C, multiple sclerosis, cancer, and rheumatoid arthritis.


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