Competition in the grocery delivery market is heating up as Walmart, Target, and Kroger all vie for a larger share of the market. These retail giants are focusing on same-day deliveries as a way to outmatch each other on convenience and leverage their physical store locations. This strategy sets them apart from e-commerce players like Amazon, as they can use their brick-and-mortar stores to quickly deliver groceries to customers’ homes.
Walmart, the largest grocer in the US, has expanded its same-day delivery offering to include early morning drop-offs for online purchases. Kroger, the second-largest grocer, has seen significant growth in digital and delivery sales due to its home delivery service. Target, the ninth-largest grocer, recently announced a new paid membership program, Target Circle 360, which offers free same-day home deliveries as a perk.
These retailers are all offering paid membership programs with home deliveries as one of the benefits. The programs have similar price points and minimum spending requirements, with customers needing to spend at least $35 to qualify for free deliveries. Walmart’s program, Walmart+, costs $98 per year or $12.95 per month and offers additional perks like gas discounts. Kroger’s program, Boost, has two pricing options: $59 per year and $99 per year, with the higher-priced plan including free two-hour delivery on orders of $35 or more. Target Circle 360 will cost $99 per year, with a promotional offer of $49 for customers who sign up during the program’s launch.
While the exact number of subscribers for Walmart and Kroger is unknown, Target claims to have over 100 million members in its free loyalty program, Target Circle. These membership programs not only help offset delivery costs but also allow retailers to collect valuable customer data for personalized offers and advertising purposes.
For Walmart, these services are a way to compete beyond just price. The company’s CFO has highlighted how convenience, such as curbside pickup and home delivery, plays a significant role in attracting customers. Target, on the other hand, hopes that same-day deliveries will help boost sales as the company has seen declines in comparable sales and year-over-year digital sales. By focusing on selling food and household essentials, Target aims to cater to customers’ frequent replenishment needs.
Kroger has used online delivery to expand into new regions without opening physical stores. The company has invested in large fulfillment centers powered by automation and robotics from Ocado. Kroger’s CEO sees digital as an important growth accelerator and expects another year of double-digit sales growth driven by its digital platform.
While these retailers face competition from other grocers like Costco and Amazon, they all share the challenge of winning over value-focused consumers who are not spending as freely. Despite this challenge, Walmart and Target have reported better-than-expected sales for the holiday quarter.
In conclusion, the grocery delivery race is intensifying as Walmart, Target, and Kroger compete for customers’ attention. Same-day deliveries are a key strategy for these retailers to provide convenience and leverage their physical store locations. Paid membership programs with home deliveries as a benefit are being offered by all three retailers. These programs not only offset delivery costs but also allow for personalized offers and data collection. As the market becomes increasingly competitive, these retailers will need to continue innovating and adapting to meet customers’ changing shopping preferences.
