Target has just announced a partnership with Instacart in order to take part in one of the fastest growing areas of the food business: online groceries. According to Fortune, the second-largest general merchandise retailer in the U.S. will be teaming up with the startup to test the waters of grocery delivery in a pilot in its hometown of Minneapolis, MN. Customers in certain areas of the city will be able to order personal care items, pet products, food, and a range of other grocery products online and have them delivered in as little as an hour’s time using Instacart.
With this deal, as well as other moves, Target hopes to capitalize on the growing online grocery market, which is estimated to reach $18 billion in value by the end of 2018. The partnership with Instacart signifies increased competition between itself, Amazon, and Walmart for the very same market. Additionally, this news comes at a time when Target’s CEO, Brian Cornell, has stated that grocery is now a key priority for the company and its future. The announcement of the pilot also follows the expansion of Target’s click-and-collect program, Curbside, to a number of stores in New York and New Jersey after starting in San Francisco.
What does this partnership mean for Instacart? The delivery service gains a powerful ally and has added yet another metropolitan area to its list. This deal brings its grocery delivery service to an 18th territory with the strong possibility of further expansion via supplementary Target locations. Instacart has proven its service’s worth since its inception in 2012, earning more than $100 million in revenue during the 2014 fiscal year. The success of the startup stems from its use by grocers looking to respond to services like Amazon Fresh in addition to increasing sales volume.
This collaboration between Instacart and Target proves that delivery is more vital to grocers’ growth now more than ever.