Where’s the money for Albertsons Cos.’ e-commerce business? Where it has been all along: Drive Up & Go.
Like most grocery chains, Boise, Idaho-based Albertsons has looked to cut last-mile delivery costs where it can, and the company's new partnership with Instacart to introduce a pickup pilot in six Southwestern U.S. cities—Dallas, Las Vegas, Houston, Denver, Phoenix and Austin—is poised to do just that.
Expanding on Instacart’s nationwide delivery partnership with Albertsons, the companies will now offer a pickup pilot across 40 stores in the region. Participating banners will be Albertsons, Tom Thumb, Randalls, Safeway and Vons.
Previously, customers across the U.S. were able to order delivery from Albertsons’ banners via Instacart, but this marks the first time the retailer is piloting a pickup program through Instacart. The pickup pilot with Instacart will operate in tandem with Albertsons’ Drive Up & Go in-house pickup service.
Albertsons continues to prioritize accelerating its digital capabilities—and specifically its curbside pickup program—with CEO Vivek Sankaran calling digital an “important growth driver” for the company.
During a first-quarter earnings call last month, Albertsons CFO Robert Dimond said Drive Up & Go represented the company’s “biggest growth” area—one that is on the move and getting “more and more volume.”
Albertsons added a net 320 new Drive Up & Go locations in first-quarter 2021, bringing its total to 1,740. Drive Up and Go sales grew 75% year over year in the first quarter. The company expects to offer the service in approximately 1,950 locations by the end of the second quarter.
“As far as delivery, I don’t know that we can see that’s ever going to be something that’s going to be as profitable as Drive Up & Go,” Dimond said during the July earnings call. “That last mile—that piece of it is always going to be an incremental cost.”
Pickup has traditionally helped to expand retailers’ online grocery offering, creating great value for customers with the convenience of online grocery alongside reduced fees, San Francisco-based Instacart stated in a release announcing the partnership with Albertsons.
Instacart first began offering pickup in 2015 and now partners with more than 120 retailers nationwide on the service.
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