Kroger announced yesterday that it is expanding its same-day home grocery delivery service through a renewed partnership with Instacart. The move will make Instacart’s service available in more than 1,600 Kroger stores by the end of October.
The deal builds on an existing relationship between Kroger and Instacart that started in the fall of 2017 and subsequently expanded in March of this year. For Kroger, the partnership is also another step in what has been a year of consistent, forward-looking steps the company has taken to get groceries to your front door.
To recap, so far this year Kroger has:
- Increased it investment in U.K.-based company Ocado to bring Ocado’s robot-driven smart warehouses and last-mile logistics tech to the U.S.
- Launched Kroger Ship for online ordering
- Started testing grocery delivery via self-driving car
When you take a step back, it looks like Kroger’s expanded relationship with Instacart is almost like spackle, filling in the gaps and covering its bases until some of these other technologies Kroger is working on come to fruition. Grocery delivery is a ruthless business right now, and Kroger has to remain aggressive to fend off rivals like Walmart, Amazon/Whole Foods, Albertsons and Target — all of whom are ratcheting up their own home delivery plans. Expanding with Instacart keeps Kroger in the game while they work out robot warehouses and autonomous vehicles, ideally without losing market share.
Instacart, on the other hand, seems to be going more broad than deep. Last year it signed a big deal with Albertsons, and a quick Google News search for Instacart shows the startup is rapidly rolling out new partnerships across the country with a bevy of retailers. What you don’t see is any type of innovation, at least publicly announced innovation. Peruse the Instacart corporate blog and you see there’s no update since April (which was about making tipping easier). This horizontal thinking could wind up hurting the company.
Instacart has raised $1 billion in funding, including a fresh $150 million in April. They are hopefully working behind the scenes to create some differentiating technology, because it will need it. Delivery competitor DoorDash raised $250 million of its own this month. It’s also expanded its grocery delivery business with Walmart, is using robots and is actively working on moonshot projects. Additionally, giants like Amazon and Walmart are expanding how grocery can be delivered, including to your car trunk or inside your home when you aren’t there (with permission, of course).
For its part, Kroger is playing the long game, and there’s still a full quarter of the year left for it to make even more announcements. While 2018 has been a busy year for Kroger, look for 2019 to be even more action-packed as the moves its making now roll out for real.