Whole Foods Partner With Instacart To Rival Low Cost Brands

NEW YORK, United States – Whole Foods have reportedly signed a five-year deal with delivery startup Instacart as part of a broader growth strategy, and in a bid to compete against budget retailers Aldi and Target.

Acting as the exclusive delivery partner for Whole Foods’ perishables business, the grocery giant, which announced the launch of a new low-cost concept ‘365’ last year, hopes the initiative will help to attract more young, budget-conscious shoppers.

Whole Foods continues to struggle with poor sales and the company’s stock has taken a hit, dropping by more than 45% during the last 12 months. With more grocers turning their attention to natural and organic foods, increased competition within the market has forced the brand to rethink its long term strategy.

Aldi, one of the world’s largest retailers, has pledged to expand its natural foods selection as well as replace sugary snacks at the checkout with healthier items, while Target who have begun to invest even more in organic food have acknowledged the change in direction as being a major driver behind the company’s recent food sales growth.

“We’ve been very focused on an assortment of changes and bringing more natural, organic, local items into many of our categories, and we’re seeing the guest react very favourably,” Target CEO Brian Cornell said, regarding the company’s new direction.

Whole Foods have been widely criticised for overpricing, exacerbated by the sale of bottled water infused with asparagus for $6.

Smaller store concept 365, hopes to curb this by offering lower prices and hosting trendy vendors like tattoo parlors and record shops, a move that compliments “the future of where Whole Foods Market will be evolving,” company co-CEO and co-founder John Mackey said during an earnings call last year. The new delivery service will also serve to attract a younger, tech-savvy consumer who are more accustomed to online shopping.

Instacart, who already have a number of partnerships with grocers including Costco and Target, was recently valued at around $2 billion, having enjoyed a surge in interest from big grocery chains looking to compete with the launch of Amazon’s grocery delivery service in the U.S.

Building on the company’s existing relationship with Whole Foods, currently in operation in 16 cities, Instacart hopes to continue offering a seamless and quick delivery option for customers with busy lifestyles.