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With staggering growth behind it, Target's Shipt delivery business faces a now-what moment

Nicole Norfleet, Star Tribune on

Published in Business News

After a year of intense growth, Target Corp.'s grocery-delivery business, Shipt, is starting to level off and its pool of competitors keeps expanding.

More shoppers embraced the convenience — and safety, from a health standpoint — of grocery delivery as the pandemic unfolded. But as in-person shopping returned, delivery specialists like Shipt had to come up with new ways to make the momentum count and better serve customers and retail clients.

"As time drove on, what I was particularly proud of was the sustainability of our model and how we were able to keep up with that never-anticipated level of demand, but not only keep up but continue to evolve and improve the experience," Kelly Caruso, chief executive of Shipt, said in a recent interview.

In the last year, Shipt added some key features to its platform. Its users can now enter dietary preferences and indicate their favorite shoppers, options that are designed to personalize their shopping experience and set Shipt apart from other delivery services.

Most Americans had not shopped online for groceries before the pandemic. As of the summer of 2019, 81% of consumers had never bought groceries online for delivery or pick-up before, according to Gallup's annual survey of consumption habits. But as fears about COVID-19 made the weekly grocery trip less appealing, more people turned to ordering groceries online.

For many companies, the question has been just how many of those first-time grocery-delivery customers will stay around when people return to their normal shopping habits.

 

As of this year, Gallup reported the amount of U.S. adults who were surveyed and said they order groceries online at least once a month has doubled, from 11% in 2019 to 23%.

"What started out as that forced behavior, it got really sticky because you saw big companies ... publicly announcing that, 'Hey you can work from home permanently now,'" said Harvey Ma, a senior vice president at Chicago-based consumer data analytics firm NielsenIQ. "Those employees, they are all consumers at home now."

Last year, Shipt tripled its national network of personal shoppers. Shipt in September said the company experienced a 252% increase in year-to-date orders compared to the same period in 2019. And compared to last year, order volume was up 40%.

However, outside numbers point to a leveling off of growth at delivery providers.

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