Sam's Club announced the start of same-day grocery delivery earlier this week, making it the latest warehouse club to join in the retail trend. In partnership with Instacart, consumers in Austin, Dallas-Fort Worth and St. Louis will be able to order grocery items and have them delivered to their home or available for pick-up, without the need for a Sam's Club membership.
JoAnn Martin, VP of retail industry strategy, North America at JDA Software, believes this was a great move for Sam's Club for several reasons.
First, the demands for speed, convenience and proximity are coming directly from the consumers themselves.
"Retailers are having to adapt not only their localized assortments to keep pace with the changing landscape and demands of customers but also their supply chains," Martin told FierceRetail.
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While she stresses that the final mile is not a new concept, the purchase of Whole Foods by Amazon has increased the speed of which the digital component to grocery has become a priority for retailers.
"Grocery margins are lean and companies are trying to manage the emerging desire for groceries in a multichannel cost-effective execution," she added.
Second, many retailers are trying to manage the delivery demand to customers and have turned to third-party alliances with companies like Instacart or Deliv to accomplish this task in the most effective way. And other companies like Target are addressing their last-mile needs through acquisitions like Shipt. Martin says regardless of company, last-mile delivery will only intensify in demand over the next several years and developing strategic cost-effective partnerships will be critical for retailers to keep pace with competitors.
Finally, same-day delivery has become a customer expectation. And as Amazon and Target are showing, aligning with partners can be a strong delineator for many retailers, while providing customers with frictionless experiences.
"It is almost a price of admission in the customers' eyes," Martin said.
So will Sam's Club entering the delivery channel affect what competitors are doing? Martin says no, as several of their competitors, like Costco and BJs, are already leveraging Instacart for their final-mile delivery.
"I believe this is a strategic move for them to try to keep pace with their competition, not to set the pace," she added.