San Francisco-based food delivery service Instacart just inked a deal with German grocery chain Aldi, which has been making moves to disrupt the US supermarket sector. In doing so, Instacart is thumbing its nose at Amazon, which also hopes to upend the US grocery space.
Just last year, Whole Foods signed a five-year deal with Instacart as its exclusive delivery service. Then Amazon acquired Whole Foods Market in June for $13.7 billion, creating an awkward love triangle: Amazon and Instacart are competitors.
Now, by joining forces with fiercely competitive discount chain Aldi, Instacart aligns itself with a Whole Foods competitor. And while chains such as Aldi and Lidl are only just entering the US market, they could wind up causing a great deal of disruption in the supermarket sector, by virtue of their low prices. In other words, a supermarket war is brewing, and delivery services are taking sides.
“Aldi continues to focus on the US, its second largest international market, with strong expansion plans in the works,” says Euromonitor. “The discounters channel in the US is far from being mature at only 2% of modern grocery sales in 2016, but it offers strong potential as consumers become more aware of the model.”
Lidl is planning to open its first 20 stores in the US this year, in Virginia, North Carolina, and South Carolina. It expects to add another 80 locations in 2018. At the same time, Aldi is expected to ramp up its 1,300-store US presence to roughly 2,000 locations.
Instacart is preparing to grow with those discounter stores, and its service will be in direct competition with Amazon Fresh delivery service. Still, Instacart will have its work cut out for it. Today, Amazon announced it would be selling $16 billion in unsecured bonds to invest in a reimagining of Whole Foods Market, according to Bloomberg. The company has not revealed any clues to its long-term vision for the grocery chain.