Albertsons partners with Instacart for grocery delivery

Date : 29 November 2017

Albertsons has signed an agreement with Instacart to offer same-day deliveries in as little as one hour.

Service available in 1,800 stores by mid-2018

Starting next year, customers will be able to choose delivery by Instacart from Albertsons’ range of banners across key markets. This will operate alongside its existing home delivery service, which Albertsons has been extending into several banners following the acquisition of Safeway. Partnering with Instacart requires less capital investment upfront in building a delivery infrastructure, potentially an important consideration given the scale of the Albertsons business. The delivery service will be available in more than 1,800 stores by mid-2018.

Complements store pickup service

In addition to extending home delivery, Albertsons has also been rolling out its click and collect proposition, Drive-up & Go. As one of the largest supermarket retailers in the US, its efforts had been lagging several its key competitors including Walmart, Kroger and Ahold Delhaize. Its latest results revealed strong growth for the channel with sales up 19%, driven by the roll-out of Drive-up & Go. The retailer has also recently increased its home delivery fleet to almost 1,000 vehicles.

Source: Albertsons

Extended online presence with Plated acquisition

In September, it extended its online presence with the acquisition of leading meal kit company, Plated. The retailer is currently in the process of integrating this into its operations. Albertsons is aiming to transform the experience for its customers in this area by creating an omni-channel meal kit service. This will include being able to purchase the products in-store, ordering online for store pickup or home delivery via Albertsons’ ecommerce service, or having a regular subscription to the service.

Several deals signed by Instacart since the summer

The partnership with Albertsons is the latest in a string of deals which have been signed over the last six months by Instacart. Recently it announced its entry to the Canadian market in partnership with Loblaw, while it has also announced new programs with Aldi, Wegmans and Publix. There had been concerns that the business would be negatively impacted by Amazon’s acquisition of Whole Foods Market, one of its earliest partners and investors.

Retailers targeting $20bn growth opportunity

The high level of activity in this area also demonstrates the urgency with which retailers are looking to build a presence with grocery ecommerce. While Amazon’s acquisition of Whole Foods Market may have spurred some interest, the pace of Walmart and Kroger in building out their pickup sites is likely to have been a more meaningful factor. While grocery ecommerce remains a small proportion of the US market overall, we forecast that it will grow by almost $20bn to $34.7bn by 2022.

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Stewart Samuel, Program Director, IGD Canada: based in Canada, Stewart heads up all of IGD's research and coverage on Albertsons. He is also responsible for shaping IGD's research program across North America. Contact Stewart at [email protected] for further insight on the region's markets, channels and retailers. Follow Stewart on Twitter: @Stewart_IGD

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