Target announced this week that it has agreed to buy Alabama-based Shipt Inc., a grocery delivery startup company, for $550 million.
The deal will be in all cash and will allow Target customers to buy groceries and other goods online and have the items delivered to their local Target store.
With the deal, the retailer will now have same-day delivery at around half of its stores by summer of 2018. Target has 1,834 stores so this means roughly 900 stores.
Target COO John Mulligan said, “With Shipt’s network of local shoppers and their current market penetration, we will move from days to hours, dramatically accelerating our ability to bring affordable same-day delivery to guests across the country.”
According to Robin Sherk, a retail analyst at Kantar Retail, “One-stop shopping was convenient in the 1990s but for today’s families you have to be able to do instant food delivery as well. It’s also a realization that Amazon, this big technology disruptor, has entered the consumer landscape.”
A Moody’s Corp. analyst, Charlie O’Shea said, “While it will not affect Target’s capability this holiday season, the fact that Target will have this service in place during 2018 will significantly improve its online competitive position.”
According to Mulligan, talks with Shipt began midsummer and moved quickly down a path toward an acquisition rather than a partnership.
Disclaimer: We have no position in Target Corporation (NYSE: TGT) and have not been compensated for this article.