Albertsons tests Instacart pickup at 40 stores

Albertsons Cos. has begun piloting an Instacart-powered online grocery pickup service in six major cities.

Instacart said Tuesday that 40 stores — under the Albertsons, Tom Thumb, Randalls, Safeway and Vons  banners — now offer Instacart pickup in Dallas, Houston, Austin, Las Vegas, Phoenix and Denver. The new click-and-collect service will work in tandem with Albertsons Cos.’ Drive Up & Go curbside pickup program, San Francisco-based Instacart noted.

In the first quarter ended June 19, Albertsons added more than 320 new Drive Up & Go sites, ending the period with 1,740 pickup locations overall.

Drive Up & Go (DUG) sales climbed 75% year over year for the quarter, and the service has become the fastest-growing part of Albertsons’ e-commerce business, according to President and CEO Vivek Sankaran.

“We now expect to have DUG in approximately 1,950 locations, representing approximately 98% coverage by the end of the second quarter,” Sankaran told analysts in a conference call on first-quarter results. “As part of our growth plans in digital, we also remain focused on delivering a superior customer experience as well as improving profitability. For example, we continue to achieve on-time tilling and delivery rates in excess of 95%, demonstrating consistent on-time delivery and DUG pickups.”

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Albertsons' Drive Up & Go curbside program will operate in tandem with the Instacart pickup service.

The click-and-collect launch marks the first time that Boise, Idaho-based Albertsons has tapped Instacart for pickup service. Albertsons’ partnership with Instacart dates back to late 2017, when the grocer announced a test of same-day delivery and plans to roll out the service to over 1,800 stores by mid-2018.

Currently, more than 90% of Albertsons Cos.’ nearly 2,300 stores offer on-demand delivery of groceries and/or food through Instacart, Albertsons’ own delivery service and last-mile providers such as DoorDash, Uber Eats and Shipt. Earlier this year, Albertsons said it would shift grocery delivery from its own service to third-party providers in some areas. The company discontinued use of its own home delivery truck fleet in 10 states as of Feb. 27.

Also, in June, Albertsons unveiled plans to provide DoorDash last-mile delivery via nearly 2,000 stores, with more than 40,000 products available for delivery through the DoorDash online marketplace and app. That was followed in July with the announcement that Uber Eats plans to bring last-mile delivery to 1,200 Albertsons Cos. stores this year. Grocery and food delivery service is offered via the Uber and Uber Eats apps.

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Over two years through the end of the first quarter, Albertsons has seen digital sales grow 276%. Sankaran explained in the call that, along with Drive Up & Go, the retailer provides delivery via third parties in two ways.

“There’s a second part of the business where customers are ordering through us, and we are using a third party to do the last mile. That’s purely an efficiency play because it allows for speed. You can get it done in a two-hour delivery. And we believe in the notion of speed in e-commerce,” he said. “Then the third part of the business is where we have a third party who is getting the customer order and picking in the store and delivering it. So we are using multiple partners. Our philosophy there is that we’re going to meet the customer where they want.”

Instacart began offering pickup service in 2015 and now partners with more than 120 retailers. North America’s largest third-party online grocery platform, Instacart partners with more than 600 national, regional and local retailers and delivers from nearly 55,000 stores — about 20,000 added in the past year — across more than 5,500 cities. Its delivery service reaches 85% of U.S. households and 70% of Canadian households.