Monday, October 9, 2017

Walmart adding same-day and in-home delivery to select markets

Walmart announced last week that it acquired Parcel, a technology-enhanced delivery company with experience in same-day perishable delivery. The company plans to use Parcel to help fulfill orders through Jet and Walmart in New York City.

Parcel uses routing algorithms, a fleet of vehicles and trained employees to sort, load and deliver packages to customers. 

A couple weeks earlier Walmart announced it was testing home delivery, including some deliveries where the driver is authorized to unload fresh groceries into the customer's refrigerator, even when the customer isn't home. Fulfillment is provided by Deliv, which is also partnering with Sam's Club stores in Miami.

In this home delivery scenario, drivers are provided with a one-time code to unlock the door, and customers can watch the delivery in real time via their home security cameras. The only eligible customers so far are those in the Silicon Valley who are equipped with August Lock's internet-enabled "smart locks."

Target expanding "Restock" delivery service

Target announced last month that it plans to expand Target Restock, its next-day delivery service, to eight new markets, including Philadelphia.

Target Restock allows customers to fill a shopping cart-sized box with household items and have it delivered the next day for $4.99. Over 15,000 household items, including baby products and cleaning supplies, are eligible for the service.

According to Target, the most popular "Restock" items so far have been snacks, beverages, cereal, mac and cheese, and paper towels.

Kroger - Ahold merger rumors have started

Last week the Cincinnati Business Courier reported that an analyst report out of Europe speculated that Kroger was pursuing a merger with Ahold Delhaize (Giant, Food Lion, Stop & Shop, Peapod, among others). On Wednesday of last week, Supermarket News reported that it was not able to verify the substance of the claim.

Analysts have talked about such a merger before, suggesting that the two powerful food retailers could gain additional scale and more effectively fight competitors like Walmart, Aldi and Amazon-Whole Foods. A merger would also provide Kroger with access to Peapod and its e-commerce platform.

As reported in Supermarket News, Ahold and Kroger have similar operating strategies in the U.S., both have invested in lower prices and have developed distinct private brands. Although the two companies compete in the Southeast, Ahold's Northeast store base would compliment Kroger's existing footprint.

Whole Foods price reductions hit competitors hard

Thasos Group, a New York-based research firm, issued a report based on mobile phone location data that showed that Amazon's lower prices at Whole Foods contributed to a 17 percent rise in foot traffic for Whole Foods stores the week of August 28, and that traffic remained modestly higher by mid-September. Amazon officially merged with Whole Foods on August 28.

According to the report, the data also indicated that the largest percentages of new customers for Whole Foods during the first week of price reductions were regular customers of Walmart (24%), Kroger (16%) and Costco (15%). When adjusted for the size of the customer base, Trader Joe's (10%), Sprouts (8%) and Target (3%) saw the highest percentage of shoppers defect to Whole Foods during that period.

Thasos Group reported that by September 16, Whole Foods traffic was up 4 percent on a year-over-year basis.

"We all know that Amazon's acquisition of Whole Foods has the potential to be a game-changer in the grocery space, and in the bricks-and-mortar versus online battle more broadly," said Thasos Group CEO Greg Skibiski. "It will be extremely interesting to watch the winners and losers emerge from the data over the coming months."

Costco announces new online grocery program

Last week Costco announced an expanded relationship with Instacart, and a new online shopping service called CostcoGrocery.

Instacart, which is currently offered at 376 U.S. Costco stores, will gradually expand to additional locations over the next year. CostcoGrocery is a service that includes about 500 nonperishable dry grocery items and provides free delivery on orders over $75.

Despite the new and expanded offerings, Costco CEO Richard Galanti admitted in a conference call with analysts that the company still prefers when shoppers visit the store, since baskets are typically much larger. 

Net sales for the 17-week fourth quarter, which ended on September 3, were $41.4 billion, a 15.8% increase over the 16-week fourth quarter from fiscal 2016. 

Monday, October 2, 2017

Albertsons to purchase meal-kit company Plated

Albertsons announced recently that it plans to acquire New York-based meal-kit company Plated, which has annual sales of over $100 million, according to a story in Supermarket News.

The deal will allow Plated, which will operate as a wholly-owned subsidiary of Albertsons, to operate well beyond its subscription model with new distribution points, including Albertsons locations. Albertsons claims to have 35 million customers per week at its stores, which include 19 banners across 35 states (including Acme in the Greater Philadelphia Region).

Albertsons CEO Bob Miller said Plated would provide the company with a more personalized and versatile shopping experience.

Plated offers customers pre-portioned ingredient packages that can be used to prepare easy meals at home. The company was founded in 2012 and was featured on the television show "Shark Tank" a few years later, where it gained investment funding from one of the "sharks."

Lidl CEO reportedly concerned with U.S. performance

A German newspaper reported last week that the former CEO of Lidl Spain, Michael Arnada, would be appointed to a Lidl divisional board with oversight of the United States. According to the report, Arnada's appointment is to address Lidl CEO Klaus Gehrig's concern that the performance of Lid's 37 operating stores has been weaker than expected.

Arnada, a "systematic thinker who grew up within the Lidl system," is expected to carry out the "paramilitary" style of management that has helped Lidl grow rapidly in Europe, according to Matthias Queck, a research director at LZ Retailytics.

"Lidl wants to force success, achieving in maybe 10 years what Aldi did in more than 40," said Queck.

Lidl Spokesperson Will Harwood didn't address the executive change directly, but stated that Lidl was "delighted" with its U.S. performance so far, saying that performance has exceeded expectations.