Dive Brief:

• Aldi is expanding curbside grocery pickup to nearly 600 stores in 35 states by the end of July, the grocer said in a press release.
• The German food retailer is working with Instacart to provide the service. Aldi already uses the e-commerce platform to provide grocery delivery from its stores nationwide.
• The move follows a successful pilot in several markets that generated strong demand and has seen increasing demand during the past few weeks, Aldi U.S. CEO Jason Hart said in a statement.

Dive Insight:

Aldi is playing catch-up with other supermarket chains as it endeavors to offer pickup services to grocery shoppers. Even as consumer interest in online grocery has surged during the pandemic and many customers have opted to gather their orders curbside, the discounter has focused its e-commerce efforts almost exclusively on delivery.

Aldi has been offering grocery delivery services nationwide since September 2018, also through Instacart. At the time it announced the delivery service, Aldi indicated that it would look to bring pickup service to more stores, but did not provide a timeframe for implementation.

By offering a pickup option to nearly a third of its 1,900 U.S. stores, Aldi should be able to strengthen its ability to attract customers who might otherwise choose value-focused rivals like Walmart, which has been aggressively expanding its pickup service. Walmart had about 3,300 pickup locations among its more than 5,300 U.S. stores as of the end of the first quarter. Kroger has increased pickup slots at stores across the country and waived its fee for the service, while Sprouts Farmers Market recently expanded curbside pickup to all of its nearly 340 stores.

According to Brick Meets Click and Mercatus, online grocery sales in May increased to $6.6 billion, up from $5.3 billion in April, driven by shoppers looking for contactless ways to get food and beverages during the pandemic. But those gains don't appear to be evenly distributed across pickup and delivery. According to a recent Gallup poll, 14% of U.S. shoppers polled in mid-May say they're using grocery delivery more than they were a month ago, compared to 36% who said they're using curbside pickup more.

The introduction of pickup services also promises to broaden Aldi's appeal to shoppers who might not want to enter its compact stores at a time when people are concerned about social distancing. Aldi locations typically have a box size of about 16,000 square feet, much less than stores run by other grocers. The chain has also limited customer capacity to five per 1,000 square feet, enhancing safety for customers but pinching sales volumes.

Aldi has sought to build favor with consumers by emphasizing its commitment to keeping costs to consumers down even as grocery prices across the country feel upward pressure from the pandemic. Earlier in May, CEO Jason Hart published an open letter promising shoppers that the retailer, which has built its reputation as a low-cost leader, would “continue to offer the lowest possible price every time you shop for groceries."