Another busy week in grocery as it seems the pace kicked up in the race to capture the consumer’s grocery dollar. Instacart saw its valuation double to just over $17 billion, Kroger made its move on the prepared food market, Amazon brought its grocery business into the Prime Day fold while Whole Foods reports struggling to keep up with the post-pandemic boom town in grocery sales.
Another wild week in the checkout lines as it turns out, starting with Instacard’s big double up news.
Instacart’s $200M Pick-Up and New $17.7B Valuation
With its latest funding round, Instacart has doubled up its valuation from the beginning of the year — pushed by the surging demand for grocery delivery services created by the COVID-19 pandemic. The grocery-delivery start-up raised $200 million in the new funding round led by existing investors. Instacart is now valued at $17.7 billion and plans to use the new funds to expand its enterprise businesses and for additional product development.
With the new funds, Instacart is now valued equally to Airbnb in private markets — highlight how very much the pandemic has shifted the fortunes of digital start-ups. Airbnb’s current valuation of roughly $18 billion is about half of what the firm was valued at in 2017 as it weathered the coronavirus’s absolute slashing and burning of the global travel industry. Instacart has seen its business boom and moved to expand its last-mile delivery expertise beyond its traditional core grocery business with partnerships with convenience stores, including 7-Eleven.
Earlier this week, Instacart and Mastercard co-announced a new offer for cardholders of a free two months of Instacart Express when they signed on for an annual membership for $99 with Mastercard as the primary payment method. According to the announcement, the feature is also available for debit, small business and prepaid card users.
“I’m incredibly proud of our team’s work to scale our business this past year and rise to meet the unprecedented consumer demand and growth,” Instacart Founder and CEO Apoorva Mehta said in a press release. “Their tireless efforts have allowed us to expand our marketplace … and move grocery delivery into the mainstream. … While we’re proud of these milestones, we believe we have a lot more work to do to deliver for all the communities we serve.”
Kroger’s Ghost Kitchens
Kroger this week announced a move into the world of prepared food via a newly announced partnership with Indianapolis-based ClusterTruck, a start-up specializing in delivery-only restaurants. Together the two will be launching two “ghost kitchens” in its stores to provide a variety of freshly prepared meals and with “no service or delivery fees,” according to a news release on Thursday (Oct. 8).
The new ghost kitchens will be available in Indianapolis and Columbus, Ohio.
According to the release, “the new concept will repurpose approximately 1,000 square feet at each participating store to create a culinary space for ClusterTruck staff to prepare meals for quick delivery and in-store pickup.” The operation will deliver restaurant-quality food from a menu of 80 meals.
According to Kroger’s Chief Information Officer Yael Cosset — the new offerings will bring restaurant quality foods to customers who may be less than wholly enthused for eating out, but who might like someone else to make their meals for them.
“The way our customers order and receive meals is evolving, and ClusterTruck’s innovative culinary and digital design is cracking the code for the future of profitable meal delivery,” Cosset added.
Whole Foods And The Food Boom
Is Whole Foods falling behind in a world where grocery sales are booming? Such is the recent speculation emerging that while other grocery retailers have seen their sales sizzle during the pandemic, Whole Foods is fizzling.
According to some estimates, Whole Foods trips dropped sharply in September — falling 25 percent year on year. Some of that decline, according to reports, is a natural consequence of consumer drift to digital grocery shopping and more consolidated shopping runs by consumers. But given Whole Foods drops are sharper than those observed elsewhere, pushing experts to speculate Whole Foods has some issues all of its own.
“Everyone is buying more everywhere, but total customers are actually down for Whole Foods,” Michael Maloof, who tracks consumer habits for Earnest Research, told Bloomberg. “Whole Foods is in a uniquely horrible place.”
Or at least that is the speculation. It is important to note that any Whole Foods figures are speculative, since Amazon does not specifically break out those figures. When asked directly by Bloomberg, a Whole Foods spokesperson didn’t offer any specific new information but denied characterization.
“Whole Foods Market continues to grow, and we strongly dispute this portrayal of the health of our business. In addition to offering a safe in-store shopping experience, we’re proud we’ve been able to rapidly expand grocery delivery and pickup to meet the needs of customers.”
And speaking of Amazon’s connected grocery efforts…
The Prime Day Grocery Deals Are Starting
Described as Amazon’s annual everything sale — it should probably not come as much of a surprise that groceries have been added to the line-up. Because, given Amazon’s recent announcements, Prime Day isn’t just happening online but at Whole Foods Market, Amazon Fresh, Amazon Go and Amazon Go Grocery locations nationwide on Oct. 13 and 14.
And it’s starting early. Consumers can already tap into the “Spend $10, Get $10” promotion and earn up to $50 in credits for use during Prime Day on Amazon.com while they buy their fresh food items in Amazon’s many locations. After their purchase(s), Prime members will receive an email with instructions on how to redeem their credit(s) on Amazon.com to better expand their Prime Day budget.
According to Amazon, Whole Foods shoppers will get special deals on grocery items in the lead-up to Prime Day, clearly looking to capture every available dollar of consumer spending possible before their (long-delayed) annual festival of commerce officially gets up and spinning for 2020.
But even as Prime Day pops, we can be confident that the race for grocery dominance will go on, for Prime Day is but one day (OK, technically two days) — whereas the war for grocery dominance? That is every day.
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