MINNEAPOLIS — Albertsons, one of the first chains to test home-delivery and online ordering, said last week it is out of the home-delivery business.
However, although it is eliminating all online ordering programs in Boise, Idaho, and Portland, Ore., it plans to maintain an online service for in-store pickups in other Albertsons divisions, a company spokeswoman told SN last week, including Southern California (encompassing Los Angeles, San Diego and Palm Desert), Las Vegas, Seattle, Salt Lake City and Philadelphia.
The primary beneficiary of Albertsons' decision could be Safeway, which offers online shopping with home delivery in Southern California and Las Vegas (under the Vons name); Seattle (under the Safeway name); and Philadelphia (under the Genuardi's banner). Other than Albertsons, no one offers home delivery or online shopping in Salt Lake.
The decision to eliminate home delivery was based on “the opportunity to realign our resources and better address our customers' needs, both on the Web and in-store,” said Haley Meyer, director of public relations for Supervalu.
“Following a hard look at current online industry trends and careful analysis related to delivering the best value and customer experience, we have decided to cease the delivery portion of our online model and move to pick-up service only,” she told SN. “Our customers gave us feedback regarding their online shopping experience, and while delivery is perceived as an extra convenience for some, more than 60% of customers told us in-store pickup would help make their lives more convenient.”
“The economics of home delivery are so hard to manage that only really exceptional operators have been able to be marginally profitable doing it,” explained Bill Bishop, chairman of Willard Bishop, Barrington, Ill.
“But after [the creation of] Webvan and the brouhaha that followed, there was a real rush to get into online ordering and home delivery because that looked like the way the world was going, and several supermarket companies made real commitments to get there,” he said.
However, he said, food retailers discovered two things about online shopping: First, few customers actually want to shop online for groceries and have those orders delivered — “maybe 5% or less,” he said; and second, “it is extremely difficult to do profitably.”
“So when you see Albertsons cutting out home delivery, they're just beginning to accept what has been inevitable — that you just can't make any money doing it,” he said.
Albertsons launched its online ordering program in 1998 in Fort Worth, Texas, with a dedicated DC.