retail news in context, analysis with attitude

In Minnesota, the Star Tribune reports that Kamau Witherspoon, the new CEO of Target-owned delivery business Shipt plans to "expand by diversifying the stores it delivers from including places such as local ethnic grocers. The business unit can build its last-mile delivery service further, including more packages from Target sortation centers."

"There's tremendous amount of room for additional growth in our space not only in our traditional shop-and-deliver model, which is our [Shipt] Marketplace, but also new product lines," he says.

To continue to grow, Witherspoon says "the company is adding smaller, local stores and ethnic grocers. It recently added Lunds & Byerlys in the Twin Cities, for instance.  'We have to make sure we have something for everybody available on our platform so that's why we are so hyper-focused on just diversifying our mix of retailers through ethnic grocers, Black-owned businesses, other diverse-owned businesses, as well as small, local and regional groceries,' Witherspoon said.

The Star Tribune puts the current competitive climate into context:

"Since the start of the pandemic, Shipt tripled its national network of personal shoppers.

But more recently, there are signs that grocery delivery demand may be slowing. Instacart, which dominates the grocery delivery platform market, saw sales decline 4% during the first quarter of 2022. Target doesn't break out Shipt's performance in its quarterly results.

"According to recent data by Coresight Research, 54% of U.S. consumers have bought groceries online in the last 12 months. That's up from 37% in 2019 but down from the around 60% in 2020 at the height of the pandemic."

Witherspoon says that there are "some larger trends working in Shipt's favor."

"Many of our customers are working from home permanently or they're working some sort of hybrid working arrangement," he says. "For those customers, they are even more likely to order groceries online."  He also suggests that "younger shoppers are also more likely to pay a premium for convenience."

To continue to grow, Witherspoon said the company is adding smaller, local stores and ethnic grocers. It recently added Lunds & Byerlys in the Twin Cities, for instance.

"We have to make sure we have something for everybody available on our platform so that's why we are so hyper-focused on just diversifying our mix of retailers through ethnic grocers, Black-owned businesses, other diverse-owned businesses, as well as small, local and regional groceries," Witherspoon said.

KC's View:

I understand all the economic reasons for retailers to do business with a Target-owned delivery company, but I still worry that competing retail brands are giving up something special taking a calculated risk by getting into bed with the enemy.