Dive Brief:
- Walmart will roll out grocery delivery in Chicago this Tuesday, making the Windy City the 11th metro area to receive the service, according to a Chicago Tribune report. For a flat $9.95 fee, the retailer will deliver orders within a one-hour window to those living in the city and some suburbs.
- Two years ago, the big box giant acquired Jet.com, a grocery delivery service geared toward young, urban shoppers, expediting Walmart's move into the urban grocery market, the newspaper noted. The company’s online sales grew by about a third for the fiscal quarter, as Walmart continues to grow its pickup and delivery services throughout the U.S.
- Walmart plans to expand grocery delivery to 800 stores, providing the service to about 40% of the U.S. population, CEO Doug McMillon said in recent earning remarks. Walmart currently offers pickup in 28 Chicago-area stores, the report says, and delivery will only expand its reach.
Dive Insight:
As consumers grow increasingly comfortable with buying their milk, apples and coffee beans with just a few clicks, the race to provide home-delivery service as cheaply and conveniently as possible is picking up steam.
Walmart’s reach into Chicago is likely to shake up an already competitive chase for online grocery business. As the Chicago Tribune notes, other chains such as Jewel-Osco, Mariano’s, Aldi and Meijer provide e-commerce fulfillment, and are jockeying for positioning as demand for order pickup and delivery accelerates.
In November, local leader Jewel-Osco launched its own home delivery service to complement its existing Instacart service for Chicago-area customers. Delivery fees range from 95 cents to $9.95 depending on order size, time of day and the specific time slot selected. Shoppers can receive their groceries same-day if they order before noon.
Aldi also offers same-day delivery through Instacart, as does Kroger-owned Mariano's. Meanwhile, Amazon, which currently offers Prime Now delivery from Whole Foods stores in ten markets, is likely to enter the Chicago area before too long.
Then there’s Peapod, the Chicago-based grocery delivery service now owned by Dutch grocer Ahold Delhaize. Peapod has struggled in recent years, according to Crain’s Chicago Business, because its parent company slashed costs to balance its books rather than making long-term investments into the service. But Ahold Delhaize — which also owns chains Giant Food and Stop & Shop — is changing its tune now that online groceries are taking off, and recently said it would boost investments to online delivery services by 50% this year.
Walmart’s move into Chicago comes at a time when the retailer is rapidly moving into e-commerce. Last month, the retailer partnered with DoorDash to offer home delivery to customers in Atlanta, according to a news release. Walmart also recently announced a deal with Postmates to offer home delivery in Charlotte, North Carolina. The retailer also offers delivery through Deliv and Uber Eats.
Many expect Amazon and Walmart to be the ultimate winners in the race to bring groceries to consumers’ doorsteps. Both companies have the size, systems and national footprint to most effectively and most profitably convert to the new way of doing business. It will be interesting to see whether consumers use Amazon and Walmart to do bulk shopping and smaller grocery outlets to make smaller, impulse or specialized orders, or if the elephants in the room eventually will stomp out the others — even in cities the size of Chicago.