It was but a few moments after I clicked "SEND" on Today in Food that the buzz around the office started: Target was buying Shipt for $550 million. So let's dive on in to this news.
The deal will allow Target to offer same-day delivery at approximately half of its stores by early 2018, and the majority of Target locations by the 2018 holiday season. Groceries will be among the products available for same-day delivery at launch, along with home, electronics and other essential products. Shipt will continue expanding its partnerships with other retailers.
“We laid out an ambitious strategic agenda in early 2017, which included a focus on giving our guests a number of convenient ways to shop with Target, whether it’s ordering online and picking up in one of our stores, driving up to pick up an order, or taking advantage of services like our new Restock program. With Shipt’s network of local shoppers and their current market penetration, we will move from days to hours, dramatically accelerating our ability to bring affordable same-day delivery to guests across the country,” said John Mulligan, executive vice president and COO for Target. “By the 2018 holiday season, we will be servicing every major market across the country with same-day delivery, and Shipt’s service-oriented approach aligns well with Target’s commitment to delivering an exceptional shopping experience for our guests.”
A few weeks ago, I opined on Instacart and the headway the company was making in the digital grocery world. In that piece, I argued that Instacart's increasing popularity was somewhat reactionary: with Amazon's acquisition of Whole Foods, traditional grocers across the nation were left scrambling to find ways to compete with both Whole Foods' reputation for high-quality products and Amazon's penchant for convenience and supply chain optimacy.
In my opinion, this acquisition is a major win for Shipt. Yes, Target will be able to leverage the service across its footprint, but Shipt will be allowed to continue its partnerships with other retailers. Indeed, it will even be allowed to expand, and will continue to operate as a wholly-owned subsidiary. The company can look at the deal as a $550 million infusion of cash to help expand its service.
The move also provides Instacart and Amazon/Whole Foods with another major competitor in the grocery delivery sphere. Shipt can compete with both retailers in its own unique ways. It will be allowed to expand its partnerships with other companies, which will be useful as Instacart continues to expand its service. At the same time, its massive partnership with Target should help it scale as it competes with Amazon and Whole Foods.
We will be keeping an eye on the deal and its implications as time goes on, but for the moment, it certainly appears grocery delivery will be an interesting topic in 2018.
Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at email@example.com to talk about anything food-related.
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