Loblaw Gives In to Home Delivery With Instacart Partnership

(Bloomberg) -- Loblaw Cos. will start offering home delivery in a partnership with startup Instacart Inc. as Amazon.com Inc. heightens competition among groceries retailers.

Canada’s largest grocer will start the services in Toronto next month and in Vancouver in January, before expanding to other markets throughout the year, Loblaw Chief Executive Officer Galen Weston told analysts on an earnings call Wednesday. Customers on the grocer’s website will be directed to Instacart, which will handle the order and delivery, he said.

The announcement reflects the industry’s fast-changing landscape after Amazon’s purchase of Whole Foods earlier this year, with competitors including Metro Inc. beefing up their e-commerce offerings. The U.S. behemoth has been reported to have plans to roll out its Prime Now delivery service for groceries and other items in Canada this year. Until now, Loblaw had focused exclusively on its “click-and-collect” pickup service.

“Ultimately, our goal is to serve customers how and where they want,” Weston said. Delivery “is the perfect complement to our existing e-commerce service.”

For San Francisco-based Instacart, the deal represents its first opportunity to branch out beyond U.S. borders.

Loblaw said it will continue to broaden the number of stores that offer click-and-collect. They currently cover 30 percent of the population.

“We believe very strongly in click-and-collect,” Weston said. “But we recognize that a home delivery service is also part of the future, and a partnership allows us to deliver that proposition to the consumer without having to take on the incremental capital investment of building it ourselves.”

©2017 Bloomberg L.P.