Target buys grocery delivery service Shipt

Published on
December 14, 2017

U.S. retail giant Target announced on 13 December that has acquired Shipt, an Alabama-based grocery delivery service, for USD 550 million (EUR 465 million).

The purchase will allow Target to offer same-day delivery services at approximately half of its 1,834 stores in the United States by early 2018. The chain is hoping it will also help it compete against Walmart and Amazon on grocery delivery.

Sales of Target’s fresh foods – including seafood – and prepared seafood dishes, such as salmon pinwheels with crabmeat stuffing, are likely to benefit from same-day delivery, as time-starved shoppers seek quick dinner options, Steven Johnson, grocerant guru at consultancy Foodservice Solutions, told SeafoodSource.

“Shipt will allow Target to increase the number of fresh food SKUs that it offers. When combined with delivery, Target will see a positive incremental sales lift,” Johnson said.

Plus, adding more fresh foods will help Target attract more and more millennials, who are “in search of ‘better for you' foods such as seafood,” Johnson added.

Target is attempting to better match up with efforts by rivals Walmart and Amazon to improve their grocery delivery and e-commerce services. Target’s acquisition will help it compete with traditional grocery chains as well, Johnson said.

“The acquisition of Shipt will elevate Target’s fresh food program, providing a platform that will prove a competitive threat to many regional grocery stores,” Johnson said.

Competition on e-commerce and grocery delivery has been hot in the retail sector, which has seen a frenzy of partnerships and acquisitions in the past year.

Walmart’s e-commerce sales jumped 50 percent in its fiscal third quarter, a year after acquiring Jet.com and focusing on two-day shipping. Walmart also announced this fall it will offer an in-home grocery delivery service. Plus, a big push on grocery pickup at its stores has boosted Walmart’s in-store sales.

"We have momentum, and it's encouraging to see customers responding to our store and e-commerce initiatives," Walmart CEO Doug McMillon said. "Existing customers have become advocates for popular initiatives like online grocery and free two-day shipping and, as a result, new customers, suppliers, and partnerships are coming to Walmart.”

For its own part, Amazon has upped the convenience game when it comes to grocery delivery, steadily expanding its AmazonFresh delivery service into cities in the U.S. and into other countries over the past few years. The retail giant recently added London, England; Tokyo, Japan; Berlin, Germany; and Potsdam, Germany, to the list of cities it serves with AmazonFresh. That list already including numerous U.S. cities, including New York and San Francisco.

With AmazonFresh, Amazon Prime members can order fresh meat, fish, fruits, produce, prepared foods, and other groceries, and Amazon will deliver it to their doors. It is likely that Amazon will eventually deliver Whole Foods’ items as well – including the natural food chain’s vast array of fresh, frozen, prepared, and canned seafood.

Contributing Editor

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