Aldi, a German-based grocery chain, has revealed that it will be partnering with Instacart with a view to delivering grocery products in three cities in the United States. The pilot project will be launched in Dallas, Texas; Atlanta, Georgia and Los Angeles, California. More cities in the U.S. are likely to be added in the future depending on the success of the pilot.
The partnership between Aldi and Instacart allows the ordering of items from Aldi using the app and website of Instacart. The latter makes its money from the delivery fee. Instacart never holds inventory and picks the orders from the outlet and delivers to the customer in under one hour. Besides Aldi other retailers who have partnered with Instacart include Costco Wholesale, Whole Foods Market and Target.
Aldi is currently on an expansion mode in the United States. Mid this year Aldi acquired about 1,700 stores and intends to spend approximately $3.4 million to open another 2,500 outlets in the next five years. This is with the aim of becoming America’s third largest grocery outlet behind Kroger and Walmart.
“We pioneered a grocery model built around value, convenience, quality and selection, and now Aldi is one of America’s favorite and fastest growing retailers. We’re growing at a time when other retailers are struggling,” said the chief executive officer of Aldi, Jason Hart.
Despite the fact that Aldi is primarily a discounter and thus has an appeal to the class of customers who are interested in saving money, the retailer is confident shoppers will pay extra for services offered by Instacart. At the same time Aldi is increasingly targeting high-end customers by moving into higher-end residential areas.
Amazon.com, Inc. (NASDAQ:AMZN)’s planned acquisition of Whole Foods has put Instacart in a tricky position since Instacart has a contract with Whole Foods to make deliveries. The partnership is likely to be severed once Amazon completes the acquisition of Instacart. Online grocery spending in the United States is expected to reach a figure of over $100 billion by 2025.
On Friday shares of Amazon.com Inc fell by 0.22% to close the day at $958.47.