Aldi Will Test Home Delivery Through Instacart In Three Cities

Aldi is partnering with Instacart, the San Francisco-based same-day delivery service, to pluck groceries from the shelf and transport them as quickly as an hour to customers in Los Angeles, Atlanta and Dallas — traffic permitting — by the end of this month, it announced yesterday. 

Aldi does not currently offer customers an option to shop on its own website and the partnership is a way to test online grocery demand, Scott Patton, Aldi's vice president of corporate buying, tells Reuters’ Nandita Bose. 

Customers will order their Aldi products through Instacart's website and app, and its employees will gather the goods and deliver them for a fee. “Some items may cost more than they do in Aldi stores,” the AP reports.



What price convenience? 

“Grocery shopping online is a relatively small part of the business but it is continuing to grow," Patton tells Bose.

“A report from the Food Marketing Institute and market research firm Nielsen in January this year estimated online grocery spending during 2016-2025 to grow from 4.3% of the total U.S. food and beverage sales to as much as 20%, or more than $100 billion. Last year, online grocery sales were about $20.5 billion,” Bose reports.

“We would like to roll this out very quickly,” Patton tells  Business Insider’s Hayley Peterson — assuming the program is successful in the pilot markets. 

“To encourage customer engagement, Aldi is offering shoppers $20 off and free delivery on their first Instacart orders through September 30,” Peterson writes. “The new partnership should help Aldi better compete with upmarket chains like Whole Foods, which added delivery through Instacart last year. Aldi has also been expanding its selection of organic food and remodeling stores to take on Whole Foods,” she reports.

Patton tells  Fortunes Beth Kowitt that Aldi was talking with Instacart before Amazon announced it was buying Whole Foods.

“‘I think we, along with everyone else, are waiting to see how it develops,’ he says of the tie-up. ‘It’s hard to predict at this point.’”

Instacart, which has been attracting investors, “already has grocery delivery partnerships with U.S. retailers such as Wegmans, Publix, and Ahold Delhaize, but is looking to expand its footprint as companies aim to compete with online retail giant Amazon,” Sarah Harford reports for European Supermarket Magazine.

It “has also been threatened by the Amazon deal as it has been a Whole Foods partner,” points out Sam Dean for the Telegraph. “When the takeover was announced in June, Instacart, which was valued at $3.4 billion earlier this year, said: ‘From the beginning, we have been committed to helping grocers compete online. That is more important than ever given Amazon just declared war on every supermarket and corner store in America,’” Dean writes.

Aldi, based in Essen, Germany, has about 1,650 stores in the U.S. In June, it also announced plans to open 900 additional outlets over five years, which would make it the third-largest grocery chain operator in the country behind Walmart and Kroger. Its European discount rival, Lidl, opened its first store two months ago and plans to have as many as 100 operating by the summer of 2018.

“Even though Aldi is a discounter and appeals to customers who want to save money, the company doesn't think that will deter its shoppers from paying extra for Instacart's services,” Fortune’s  Kowitt reports. “We are known for great quality and low prices,” Patton tells her. “All different income levels want to save money.” 

“The grocery industry has fared better against online disruption than other retailers focused on books or electronics. And online grocery delivery may be less appealing to American shoppers than Europeans, says Bryan Roberts, director at TCC Global Retailer, which consults large U.S. grocers,” writes the Financial Times’ Anna Nicolaou.

“The U.S. isn’t structurally set up for online [groceries] in many ways, because everyone has a car outside of downtown Manhattan or big cities,” Roberts tells her. “It’s cheap to drive, why would you bother with home delivery when it’s so easy to just go to the supermarket?”

Where you might also stumble upon a freshly sprayed head of Lacinato kale — or some Ring Dings — that weren’t on your shopping list.

1 comment about "Aldi Will Test Home Delivery Through Instacart In Three Cities".
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  1. Jennifer Jarratt from Leading Futurists, LLC, August 14, 2017 at 10:25 a.m.

    Home delivery can become an inconvenience to those of us who still shop instore. Early on weekdays at Safeway, we have to negotiate our way in the aisles around the big trolleys of the delivery guys picking up their orders to deliver. At least they aren't in the checkout lines!

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