Dive Brief:

• Supervalu has entered into an agreement that will allow it to offer Instacart’s e-commerce services, including home delivery, to the more than 3,000 independent stores and other retailers it supplies, according to a release.
• Supervalu says the agreement will complement its other e-commerce services, including digital marketing and consulting on mobile, website and loyalty programs.
• Publix, which announced last year it would offer Instacart delivery from all of its stores by 2020, said it’s adding the service to several communities in Central Florida, including its hometown of Lakeland. Publix first contracted with Instacart in 2016, and currently offers home delivery from 92% of its operating area.

Dive Insight:

Instacart continues to expand its footprint as other third-party e-commerce providers gain ground and as retailers begin looking to automated fulfillment.

With the Supervalu agreement, the company, which saw its retail deals accelerate last year thanks to the Amazon-Whole Foods tie-up, is now available in 240 markets and has extended its services to independent stores. Typically, Instacart works with larger chains, but smaller, community-based grocers are gradually shifting online and represent an opportunity for service providers.  

For Supervalu, this partnership offers an added value for its retail customer. It has fully shifted its focus to the wholesaling side of the business in recent years, and now offers various services aimed at generating revenue and strengthening ties with customers. Independents that typically don’t have a wealth of technology expertise can now get home delivery, website and mobile consulting — among other offerings — from the wholesaler.

E-commerce remains vexing for many independent retailers, which don’t have the resources to match national players on price and innovation but still need to retain their customers as they move online. Partnering with a third-party service — or with their distributor, in this case — doesn’t solve the cost factor, but it does give them access to expertise and resources that can help them compete.

Publix, meanwhile, forged a major deal with Instacart last summer but needs to quickly extend coverage as competitors like Walmart and Sprouts Farmer’s Market move in on its turf. The grocer has worked tirelessly to make its stores a destination, and it has some of the best customer service in the business. But it needs to have extensive e-commerce coverage in order to prevent customers from defecting.

The key for these companies is to effectively promote online shopping in their stores through circulars and on their websites. Extensive press coverage of Amazon and Walmart gives those chains a leg-up on shopper awareness — something competitors need to effectively counter.

Instacart remains the top e-commerce service provider for grocers, though competitors are hot on its heels. This includes Shipt as well as on-demand delivery companies like Postmates and DoorDash, which are helping fuel Walmart’s nationwide delivery push. Kroger is also a growing rival thanks to the grocer's recent deal with Ocao, which signals increasing interest in automated fulfillment. During Kroger's earnings call yesterday, CEO Rodney McMullen said the current store-focused model could come under strain eventually, and that Ocado's warehouses could take the pressure off.

In a recent interview with Food Dive, Instacart’s chief business officer, Nilam Ganenthiran, said the company is assessing new models and working closely with retailers, noting "the store of the future is going to have to change." He also said the company is focused on deepening its relationships with retailers — though as these recent announcements show, it’s still also very focused on growth.