Richmond Delivery Wars: 2018 Update

Posted on in Commercial Real Estate, RVA Grocery and Delivery Wars

Grocery Wars has spawned another related battle that I will call Delivery Wars! I have been reporting on the impact of the somewhat incredible influx of grocery stores into the Richmond metropolitan area for several months and, as the local Grocery Wars have heated up, the next level is upon us: the direct delivery of groceries (including perishable items) from stores to your home. The following is a brief rundown of what is currently happening in the Delivery Wars arena.

The big news, of course, is that after Amazon completed its purchase of Whole Foods, it suddenly had a platform for delivery of perishable items, which it had not had at any of its traditional distribution centers. Previously (and still currently in many locations), Instacart provided grocery delivery service from Whole Foods, having picked up the grocery chain as its first national partner in 2014. Instacart has shoppers that work in stores picking out a customer’s selected items, paying for the groceries and bagging and assembling the orders for delivery by its drivers. After the acquisition, Instacart is being squeezed out by Amazon Prime Now delivery from Whole Foods stores. Interestingly, Whole Foods is an investor and partner with Instacart, and Instacart now finds itself dealing with a subsidiary of its largest rival.

In mid-March, Sam’s Club (owned by Walmart and despite the closing of 63 Sam’s Club stores nationwide in 2018) announced that it would begin working with Instacart. Instacart is wisely not dependent on any one grocery source; it now delivers goods for seven of the eight largest grocery chains in North America, including Costco in our area, as well as Wegmans, Food Lion and BJ’s Wholesale Club locally.

March also saw an announcement by Walmart that it plans to offer grocery home delivery for orders placed online, noting that the service will be available to 40% of U. S. households by the end of 2018. Walmart continues to attempt to go toe to toe with Amazon.

Target announced last December that it would purchase Shipt for $550 million to enhance its existing e-commerce and to take advantage of Shipt’s delivery fleet. Shipt began same-day delivery of Target’s groceries in Richmond last month. Shipt also delivers groceries for Richmond-area Kroger and Lidl stores. Kroger will also deliver groceries to your home using Uber.

It is interesting to note that an increasing segment of our society finds that having groceries selected by others and delivered directly to homes is preferable to having an in-store grocery shopping experience. With instant online access in the palm of the hands of this societal segment, time is being managed and energy is being saved, but not so much in the “cost savings” category. Typical delivery costs appear to be: $4.99 for one hour deliver, otherwise free for Amazon Prime Now members (but there is the membership fee, of course); $5.99 to $11.99 for Instacart deliveries (but free deliveries for orders over $35.00 with an annual or monthly membership fee); free Walmart deliveries dependent on time of delivery (other costs for Walmart deliveries are not clear); free for Shipt deliveries over $35.00 from Target (the cost of deliveries for lesser totals is unclear and Shipt also requires an annual or monthly membership fee); and an additional $11.95 for Uber deliveries for Kroger in this area. Delivery costs also are generally dependent on the timing of the delivery desired and the total grocery tab. In summary, saving and managing time comes with a cost and many are willing to pay that cost.

Spotts Fain publications are provided as an educational service and are not meant to be and should not be construed as legal advice. Readers with particular needs on specific issues should retain the services of competent counsel.