Kroger expands DoorDash delivery partnership
Kroger has broadened its grocery delivery service through DoorDash to cover over 2,200 stores nationwide. Analysts view this move as negative for rival Instacart, whose shares declined following the announcement. The expansion intensifies competition in the online grocery sector.
Kroger Co. announced on Thursday an expansion of its delivery partnership with DoorDash Inc., enabling customers to order groceries from more than 2,200 stores across various U.S. markets. This builds on a pilot program launched in select areas last year, now extending to a wider footprint including brands like Ralphs, Fred Meyer, and Harris Teeter.
The move allows DoorDash users to access Kroger's full assortment of fresh produce, household essentials, and more, with delivery as soon as one hour in many locations. Kroger's CEO, Rodney McMullen, stated in a press release, 'We're making it easier than ever for customers to get what they need from Kroger, when they need it.' This partnership leverages DoorDash's logistics network to enhance Kroger's e-commerce capabilities amid rising demand for convenient shopping.
Analysts have quickly pointed to the implications for Instacart, a key player in grocery delivery. Jefferies analyst Brent Thill downgraded Instacart to 'underperform' from 'hold,' slashing the price target to $18 from $25. Thill noted, 'Kroger's expansion with DoorDash represents a significant competitive threat to Instacart's core marketplace model.' Shares of Instacart (CART) fell about 5% in premarket trading on Friday, reflecting investor concerns over eroding market share.
Kroger, the second-largest U.S. supermarket chain, has been investing heavily in digital sales, which now account for a growing portion of its revenue. The DoorDash tie-up comes as grocers face pressure from Amazon and Walmart in the delivery space. For Instacart, which relies on partnerships with retailers for its platform, losing ground with a major player like Kroger could hinder growth. However, Instacart maintains strong ties with other chains and continues to innovate with features like AI-powered shopping lists.
This development underscores the evolving dynamics of grocery e-commerce, where seamless integration between retailers and delivery apps is becoming essential for competitiveness.