Kroger, Instacart team up on ‘virtual convenience store’

The Kroger Co. has partnered with Instacart to launch Kroger Delivery Now, a new  “virtual convenience store” service offering delivery of fresh groceries and household staples in as soon as 30 minutes.

Kroger and Instacart said Tuesday that 25,000 items are available through Kroger Delivery Now, with orders filled through the supermarket giant’s approximately 2,750 stores in 35 states and the District of Columbia. Including such banners as Kroger, Ralphs, Dillons, Smith’s, King Soopers, Fry’s, QFC, City Market, Owen’s, Jay C, Pay Less, Baker’s, Gerbes, Harris Teeter, Pick ‘n Save, Metro Market, Mariano’s, Fred Meyer, Food 4 Less and Foods Co., Kroger’s retail network puts Kroger Delivery Now within reach of as many as 50 million households.

“Kroger Delivery Now is a differentiated solution in the e-commerce industry, not just the grocery sector. Our new service provides customers with one more way to shop with us and addresses the importance of convenience and immediacy,” Kroger Chairman and CEO Rodney McMullen said in a statement. “Operationally, this service reaches up to 50 million households, and it’s an expansion of our thriving e-commerce model that demonstrates strategic interplay among our assets, expansive store network, supply chain, and dedicated fulfillment centers and fleet, joined by Instacart’s unrivaled fulfillment model and last-mile technology to provide our customers with anything, anytime, anywhere without compromise.”

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Customers access Kroger Delivery Now via the Convenience Hub, a new product experience on the Instacart Marketplace designed to streamline convenience shopping. Instacart and Kroger said that, through the Convenience Hub, consumers in nearly every major U.S. city can shop for essentials 24x7, with Instacart Express members getting free Priority Delivery in as soon as 30 minutes on orders over $10.

Described as a "virtual convenience store," Kroger Delivery Now offers delivery of fresh groceries and household staples in as soon as 30 minutes.

San Francisco-based Instacart noted that convenience remains one of the top  categories on its online marketplace, with orders up more than 150% since May 2021. In addition, the online delivery specialist — North America’s largest third-party delivery platform — is seeing rising demand for express delivery, as almost 20% of customers now choose Priority Delivery at checkout.

The combination of convenience and fast service from Kroger Delivery Now and the Convenience Hub, enable “quick and easy doorstep delivery” for consumers shopping for a meal, a snack, a last-minute ingredient, an over-the-counter medicine or diapers, according to Instacart and Kroger.

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“We’re proud to expand our longtime, strategic partnership with Kroger and together unveil Kroger Delivery Now, an entirely new way for customers to access convenience delivery nationwide. Kroger Delivery Now, available only on Kroger.com and the Instacart Marketplace, reimagines the modern convenience store by leveraging the entire network of iconic Kroger Family of Stores brands to offer 30-minute delivery to customers for the first time nationwide,” stated Fidji Simo, who took the reins as Instacart’s CEO in August. “Instacart has become a powerful retail enablement platform, and today’s expansion of our Kroger partnership is another example of our commitment to develop new solutions that help retailers grow and meet the evolving needs of their businesses and customers.”

Kroger and Instacart said 25,000 items are available through Kroger Delivery Now.

Kroger Delivery Now stands to help Cincinnati-based Kroger double its e-commerce business in the next couple of years. The retailer noted that the new service — accessed at kroger.com/deliverynow, instacart.com/kroger-delivery-now or www.instacart.com/store/hub/convenience — creates a first-of-its-kind virtual convenience experience that makes faster delivery possible from Kroger Co. stores.

“Last year, Kroger achieved more than $10 billion in e-commerce sales, and we’re committed to doubling both our digital sales and profitability rate by the end of 2023 and expect Kroger Delivery Now will help us reach that target,” according to McMullen.

Kroger’s partnership with Instacart began in November 2017 with a same-day grocery delivery pilot at selected Ralphs Grocery Co. locations in Southern California. Then in August 2018, the companies announced a major expansion that made the service available at more than 1,600 of Kroger Co. stores, in turn extending Kroger and Instacart’s household reach by 50%. Today, Kroger offers two-hour grocery delivery — and now 30-minute convenience delivery — nationwide through Instacart. Also, in 2019, the companies expanded their partnership to include alcohol delivery, a service now available via nearly 1,500 Kroger Co. stores in 15 states.

Currently, Kroger offers its own online grocery service through Kroger Delivery (same-day delivery), Kroger Ship (direct-to-consumer delivery) and Kroger Pickup (click-and-collect). In June 2019, the company confirmed that it was quietly testing a 30-minute online grocery delivery service dubbed Kroger Rush in the Cincinnati area. The service, accessed through a dedicated app, was aimed at customers seeking quick delivery for items such as lunch or dinner.

Kroger expects the Kroger Delivery Now partnership with Instacart to help the grocer double its e-commerce business by 2023.

McMullen explained that the partnership with Instacart on Kroger Delivery Now and the Convenience Hub gives Kroger the extra scale needed to provide fast delivery service across the country.

“Instacart is one of our strategic partners, and their industry-leading scale and ingenuity complements Kroger’s best-in-class assets, digital strategy and expanding seamless ecosystem, helping enable us to continue growing our business,” he said. “Kroger Delivery Now reinforces our commitment to leading with fresh and accelerating with digital in an environment of increased and sustained customer expectations for fresh food on demand. This service is truly a game-changer, and we’re eager to continue leading the way by expanding our ecosystem and leveraging our complementary assets to deliver a seamless experience with our total network of assets, including enterprising and innovative last-mile solutions — today’s true competitive horsepower — in the most scalable, sustainable and profitable way to advance our business and create a consistent and rewarding customer experience whether they want groceries now or tomorrow.”

In reporting fiscal 2021 second-quarter results last week, Kroger noted that it has doubled its e-commerce household penetration since 2019, boosting the number of brick-and-mortar customers engaging with its digital solutions. In the quarter alone, the retailer added more than 340,000 new digital customers. The company also finished the period with 2,239 pickup sites and 2,546 delivery locations, covering 98% of the households in its market area.

Kroger, too, continues to build its own e-commerce infrastructure. The company has opened its first two Ocado-powered automated customer fulfillment centers (CFCs) in Monroe, Ohio, and Groveland, Fla. The Florida CFC enables the retailer, through its Kroger Delivery service, to reach consumers via e-commerce in a market where it has no brick-and-mortar stores. So far, Kroger has announced 10 CFCs of up to 20 planned through its partnership with United Kingdom-based Ocado, and McMullen said Kroger expects to open six CFCs in 2022 and 2023.