SuperValu Expands Digital Capabilities Through Partnership with Instacart

brought to you by WBR Insights

As one of the United States' largest retailers, SuperValu supplies and distributes its food products to more than 3,000 separate stores which it either owns, licenses, or franchises. This has led the retail giant to search for new ways to make its distribution process smoother and more accessible for its customers.

SuperValu was looking for a way to offer the benefits of consumer online shopping to the huge network of independent retail stores it supplies across the country. Because SuperValu operates under a varied business model and doesn't directly own all the stores which bear its name, it would be difficult to offer an in-house ecommerce solution which would suit its entire network.

And so, the company turned to a third-party provided solution to address this need.


Founded in 2012, Instacart is a digital platform designed to make grocery shopping less of a chore.

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Using Instacart's website or smartphone app, customers choose from a range of products from local participating stores and add them to their cart. Once the sale has been completed, Instacart sends the order to personal shoppers who then handpick the items before delivering them directly to the customer's front door.

Instacart presently operates in more than 240 metropolitan areas.

Now, SuperValu has partnered with Instacart to make online shopping and delivery services available to its customers and expand the company's digital capabilities. "Consumers today want the ability to shop for food and groceries anytime and anywhere," said Vice President of Digital at SuperValu, Tom Kraus. "Instacart allows retailers to meet customers when and where they want to buy with delivery in as little as one hour."

One of the main benefits of the partnership with Instacart is it requires limited capital investment from SuperValu and can be seamlessly integrated with the company's current operations without the need to upgrade POS and other systems, and without an increase in labor costs. Once the system has been incorporated, SuperValu's existing digital marketing services can be combined with contracted pricing, placement on, and Instacart's own marketing expertise and retailer support teams to offer a superior online shopping and delivery service to SuperValu customers.

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A Lifeline for SuperValu

The partnership with Instacart comes at a difficult time for SuperValu, and the company needs something to improve the present performance of its retail business.

The increasing demands placed on stores by customers - combined with increased competition and price wars between rival brands - have led to an overall softening of the retail industry. During the last quarter of fiscal 2018, retail net sales dropped 0.6% to $690 million. Adjusted operating margins in the industry have also declined year-on-year, owing to lower base margins and increased shrink costs. Overall, the industry has declined by 12.2% in the last year.

These downturns have led SuperValu to streamline its retail operations, and the company recently embarked on an initiative designed to restructure itself into a holding company setup. The new structure will make the retail and wholesale sides of the SuperValu operation more distinct and enable the company to separate the liabilities associated with each.

Into this strategy comes the Instacart agreement, designed to further augment the offerings put out by SuperValu, while at the same time doing so with the minimum amount of fuss and expenditure possible. Hopefully, making SuperValu products available online will incentivize customers to return to the brand and prevent any further company shake-ups.

SuperValu already offers a range of ecommerce solutions, including consulting, website, mobile app, and loyalty program services to its network of stores, so the Instacart deal should fit in nicely alongside its present operations.

"Instacart's success is driven by offering communities a same-day grocery delivery experience from the stores they love," said Chief Business Officer at Instacart, Nilam Ganenthiran. "We are proud to offer our services to SUPERVALU's independent retail stores to give customers a convenient, time-saving option to get the products they have come to rely on from their beloved neighborhood brands."

Final Thoughts

It's a difficult time for the retail industry, with brick-and-mortar-focused operations rapidly losing ground to online services. It's only by embracing new technology and making intelligent evidence-based business decisions that these retailers can make sure they are still around to serve their customers in the future.

The challenges of the modern retail environment are set to be a hot topic at Future Stores Miami 2019, taking place in February at the JW Marriot Miami, Florida.

Download the agenda today for more information and insights.

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