Justine Griffin/Tampa Bay Times – It has been nearly a year since Shipt began delivering groceries from Publix Super Markets to customers’ homes in the Tampa Bay area.
Since then, competition for grocery delivery has really started to heat up.
Safeway opened three stores in Florida last month, including one in Largo, with fleets of refrigerated cargo trucks ready to deliver groceries to customers’ homes within a 30-mile radius of the store. In April, Amazon launched Prime Now, a one- to two-hour delivery service for thousands of Amazon items, including some grocery, frozen and perishable goods, exclusively for Prime members in some neighborhoods around Tampa Bay.
And now Publix is collaborating with Instacart, a San Francisco-based tech company that lets customers order and have groceries delivered through a smartphone app, to pilot a new home-delivery program in Miami.
Maybe it’s the convenience factor. Or maybe it’s the new normal thanks to the smartphone generation. Either way, it looks like grocery delivery apps are here to stay.
“It’s not that Publix wants to get into this, it’s that they have to get into this,” said Jeff Green, a retail analyst from Phoenix. “Grocery delivery will become a competitive necessity eventually.”
On Tuesday, Publix customers in some Miami neighborhoods will be the first to order groceries online or through the Instacart smartphone app and have their groceries delivered to their home. The service will be available in ZIP codes from Hallandale Beach to South Miami. Publix declined to elaborate on the details of the pilot program, but a spokesman said Instacart employees will pick out and deliver orders from participating stores. It’s unclear when and if the service will expand into new markets.
This isn’t the first time Publix has tried grocery delivery. The Lakeland-based grocer lost millions on Publix Direct, an online ordering and delivery service it tested in South Florida and ultimately abandoned in 2003. Publix also experimented with online ordering over the years but never found a platform that worked. The grocer ended a short-lived online ordering and curbside pickup service at a Citrus Park location in 2012 because there wasn’t enough business to justify the service after 18 months.
“There’s no question that grocery delivery is hot, but no one is making money at it yet,” said Phil Lempert, editor of SupermarketGuru.com. “But they will. Companies are battling it out right now.”
Sprouts Farmers Market, a Phoenix-based organic grocer that will open a store in Palm Harbor and is rumored to be scouting sites for more stores in South Tampa, Brandon and Sarasota, is already working with Amazon on grocery delivery in some markets. Whole Foods Market, Winn-Dixie, Costco Wholesale, Total Wine & More and Petco, among other retail brand names, already work with Instacart in metro areas across 19 states, including Miami.
“Food has been the only retail category that hasn’t been well used in the e-commerce sense,” Green said. “It’s the last horizon in that regard. But there are a lot of questions with the food segment that we didn’t have with consumer electronics and other commodities.”
That includes customer preferences. Can you trust someone else to pick out the perfect peach or head of lettuce? There are some tech barriers for senior citizens who are the most likely to benefit from a service like this in Florida. It also includes costs. Safeway is the only company in Florida handling its own grocery delivery internally.
“Delivery is very labor intensive. Outside of volume, what does it take to make money?” Green said. “Everyone is throwing this idea against a wall to see what sticks, but no one understands how to measure the benefit just yet.”
In Tampa Bay, Shipt employs about 500 “shoppers” or delivery personnel in Hillsborough and Pinellas counties who shop exclusively at Publix stores when orders are placed and then deliver them, though there is no business relationship between Shipt and Publix. Tampa is among the biggest of Shipt’s 24 markets in the Southeast, Arizona and Ohio. The company now offers Publix grocery delivery across Florida.
Shipt has gone up against Instacart and Amazon Prime Now in other markets outside of Florida already, said Bill Smith, Shipt’s CEO.
“I believe there’s plenty of room for multiple players in this space. There’s a lot of grocery retailers out there, and consumers often shop at multiple stores,” Smith said. “We welcome the competition. It helps raise consumer awareness and then everyone’s business starts to grow.”