Target and Aldi are making moves to shore up their grocery delivery business.
Target said Monday that it would buy delivery logistics company Grand Junction to help it offer same-day delivery service to in-store shoppers. Software made by the San Francisco-based company connects retailers with about 700 delivery companies around the country that pick up items from stores or distribution centers and take them to customers.
Expanding delivery and making it faster have been key areas for retailers trying to attract convenience-seeking shoppers. Target and Walmart have adjusted their shipping programs as they try to lure online shoppers away from Amazon.
Target's move is aimed not at online shoppers, but at making buying an easier decision for in-store shoppers. The company has been working with Grand Junction to test same-day delivery at a New York store. Shoppers there can ask to have heavy bags, a sofa or anything else delivered that day for a fee, that's calculated based on time and location.
Target plans to expand the service to other New York locations this year, and then bring it to other major cities next year. The company said it eventually plans to use the software to offer faster deliveries for online orders.
The Target announcement comes one day after the German grocery chain Aldi Inc said is is partnering with Instacart Inc. to deliver groceries in three U.S. cities, a move that comes amid intense competition and disruption in the industry.
Aldi will launch a pilot starting the end of this month in Los Angeles, Atlanta and Dallas with the potential of expanding to more cities in the future.
The German retailer does not offer customers an option to shop on its own website now and the partnership is a way to test online grocery demand
"Grocery shopping online is a relatively small part of the business but it is continuing to grow," Aldi's Vice President of Corporate Buying, Scott Patton, told Reuters.
The Food Marketing Institute estimates online grocery spending during 2016-2025 will grow from 4.3 percent of the total U.S. food and beverage sales to as much as 20 percent, or more than $100 billion. Last year, online grocery sales were about $20.5 billion.