The North American arm of discount grocer Aldi has thrown down a challenge to Amazon, unveiling a deal with multibillion-dollar delivery startup Instacart to roll out home deliveries in a move retail experts say will only further raise customer expectations of supermarkets.
Aldi announced on Monday it will pilot a delivery service in Los Angeles, Atlanta and Dallas, allowing shoppers to order Aldi goods via the Instacart app and have them delivered within the hour.
“We know customers are looking for new ways to save time and money. Instacart provides easy access to our low prices at the click of a button,” the US chief executive of Aldi, Jason Hart, said in a statement yesterday.
Instacart is a San-Francisco founded grocery delivery service with a valuation of more than $US3 billion that has recently been in the headlines after Amazon’s acquisition of Whole Foods. The startup had received investment from Whole Foods and had a delivery deal with the chain that many believed would evaporate after Amazon’s acquisition of the grocer, reports Techcrunch.
“Many people had asked, ‘what would happen with it [Instacart’s deal with Whole Foods]?'” retail strategist at Retail Oasis Pippa Kulmar explains, saying the grocery delivery startup has been “quietly chugging away” developing something that is “highly useful for the consumer”.
The new partnership suggests Aldi may now be better placed to fight Amazon, which has been refining its delivery processes down to a window of a couple of hours and is clearly looking to expand into fresher food with the Whole Foods deal, Kulmar says.
For Aldi’s presence in the US, the deal could also mean a brand new customer base for the supermarket, she believes.
“It will also make Aldi there so much more accessible to an audience that is a bit more affluent,” she says.
Asked whether the Instacart deal could mean Aussie shoppers might soon see Aldi home delivery as well, a spokesperson for the supermarket in Australia said such as service is not high on the priority list at the moment.
“We have no current plans to establish an online offering or home delivery service in Australia. This enables us to focus on creating the best possible in-store experience, while continuing to deliver high-quality products at permanently low prices,” the spokesperson says.
However, if the local arm of the business was to adopt a delivery partnership with the likes of Instacart, it would “smash” Coles and Woolworths in terms of convenient shopping, Kulmar believes.
“It’s an interesting time to be in the unsexy area of logistics at the moment, but I definitely think it will become a highly competitive area,” she says.
Aldi Australia tells SmartCompany the current priorities for the supermarket chain are “a passion for low prices and a desire to keep operations simple”.
However, with retail experts warning that a seamless delivery experience is essential in an Amazon era, things could become naturally complicated as customers start to expect shorter delivery windows, Kulmar says.
“For example, with Amazon Prime Now, I’m quite sure Amazon will launch that service in Sydney and Melbourne, and that will be two-hour delivery,” she says.
This makes it incredibly important for the supermarkets to start thinking about fast delivery of goods, because as soon as the number of options increase, shoppers will be happy to pay for the service.
“I think what will happen is as we start to get a level of better competition, the expectation will get higher and higher,” Kulmar says.