Will same-day delivery pay off for dollar stores?
Family Dollar has partnered with Instacart to bring same-day delivery from over 6,000 locations in as quick as an hour. The partnership marks the first by a national dollar store chain and a same-day delivery platform.
Family Dollar, which is owned by Dollar Tree, has seen strong sales during the pandemic as households stock up on pantry items. Same-store sales for Family Dollar climbed 6.4 percent in the third quarter.
“Providing same-day delivery is another example of our efforts to better meet the evolving needs of our Family Dollar shoppers,” Dollar Tree president and CEO Mike Witynski said in a statement.
The partnership builds on a 275-store pilot launched last October. The test also involved Shipt and came alongside a test of in-store pickup.
On its third-quarter conference call in late November, Mr. Witynski said about the same-store test, “We really like the basket size. We like the product that they are buying inside the basket, and we’re excited about offering that opportunity to our customers as they shift in some of their behaviors.”
Mr. Witynski also said the company is planning omnichannel investments for Dollar Tree, as well. “The beautiful thing is, we are a 15,000-store chain, and we’re conveniently located in their neighborhoods. And should they want to buy online and pick up in-store or get it delivered at home, we’re going to have that capability as well. But it’s really early for us.”
Instacart’s roots remain in grocery but it has scored partnerships with a number of non-grocery retailers over the last year as online delivery has become critical during the pandemic. Newer partners include 7-Eleven, Best Buy, The Vitamin Shoppe, Sephora, Bed Bath & Beyond, Staples, Dick’s Sporting Goods and Five Below. With Family Dollar, Instacart now delivers from more than 45,000 stores, up from more than 25,000 in January 2020.
Reports arrived in late December that retailers were growing frustrated with Instacart’s high commission charges (often more than 10 percent of every transaction) as well as their control over customer interactions. Larger grocers like Kroger, Albertsons, Aldi, plus the grocery divisions of Walmart and Target, have also reportedly been shifting to using their own employees to pick and package groceries for online orders.
- Instacart and Family Dollar Partner to Launch National Same-day Delivery – Instacart/Family Dollar/PRNewswire
- Dollar Tree’s Family Dollar taps Instacart to make same-day deliveries – CNBC
- Family Dollar taps Instacart for same-day delivery – Supermarket News
- Dollar Tree Inc (DLTR) Q3 2020 Earnings Call Transcript – The Motley Fool
- Is it time for retailers to reconsider Instacart? – RetailWire
DISCUSSION QUESTION: Does same-day delivery make sense for Family Dollar and other dollar store operators? How do you see same-day delivery evolving in 2021?