At ShopTalk last week, Brian Cornell – CEO of Target, highlighted the company’s goal to become America’s easiest place to shop. For Target, Cornell explained, that means blending the best of our physical and digital assets to create new experiences for our guests and reimagining our network of stores into hubs for commerce and community – inspiring showrooms, service centers and neighborhood-based fulfillment centers. Cornell went on to highlight and expanded set of fulfillment options – 2 day free shipping, an expansion of Target Restock, Target Pickup (for everything but grocery), and Target Grocery Delivery. You can read Target’s press release for more info.
The first three offerings are competitive responses to Amazon and Walmart, while the last one is a bolder move by Target to compete in the shift to online grocery. Until last December, Target was a laggard in the online grocery space, being outmaneuvered by Walmart Online Grocery Pickup, Kroger ClickList, and Amazon Fresh (the company was doing pilots in 4 markets with Instacart). That changed quickly with Target’s acquisition of Shipt in December of 2017 for $550M.
Shipt got its start in 2014 in Birmingham and started providing grocery delivery for Publix. It grew throughout 2016 and 2017 by covering more Publix locations throughout the Southeast along with adding support for Meijer and Kroger. Shortly after the acquisition, Shipt announced its roll-out to Texas with HEB – no doubt these plans were developed previously. According to our data, Shipt reached 22% of the US consumers prior to offering support for Target (see map below).
Target’s roll-out on Shipt
A big part of Cornell’s plans for Target includes offering Grocery Delivery via shipped in the majority of Target stores and all major markets by the end of 2018. Target has jumped out to a fast start in pursuit of this goal by adding Target to existing Shipt markets and launching in Minneapolis. As we speak, Shipt is expanding the Target offering into new markets in Louisiana, Washington DC, several areas of New England and New Jersey, with launches happening in early April (see map of Target via Shipt availability below). According to our data, Target Grocery Delivery via Shipt will be available to 33% of the US consumers by mid April (see map below). This quickly makes Target the 4th biggest player in Full Basket grocery behind Walmart Online Grocery Pickup, Instacart, and Kroger ClickList.
Shipt as a marketplace
In addition to discussing plans for Target, Cornell and Smith (Founder & CEO of Shipt) reiterated their commitment to Shipt remaining a market place and providing delivery services for other grocers. Target ended its test partnerships with Instacart with the acquisition of Shipt, but hopes that other retailers don’t follow suit. Shipt’s other major partners – Publix, Meijer, HEB, and Kroger are also partnering with Instacart, which remains independent. Time will tell on whether they stay the course with Shipt, transition to Instacart, or go out on their own. We believe the likelihood of these retailers staying with Shipt is low, both because of Shipt’s rightful focus on Target and because Target is a competitor. What do you think is the future for Shipt?
In case you missed our coverage of the other players in the shift to online grocery, we covered Walmart Online Grocery Pickup, Kroger ClickList and Instacart. We will cover Amazon Fresh in the near future.