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Hard discounter Aldi has announced its intention to partner with Instacart to provide delivery services in Los Angeles, Dallas and Atlanta, beginning at the end of the month.

Fortune writes while grocery delivery once was seen as a service “reserved primarily for high-end food retailers and high-income customers,” this move can be seen as “a sign of how competitive the supermarket landscape has become as food retailers look for every edge possible in a fast-changing marketplace.”

Scott Patton, Aldi’s vice president of corporate buying, tells Fortune, “Aldi follows the digital world and e-commerce just like everyone else in the business. Online grocery retailing will be part of the future.”

Aldi currently is in the process of investing $3.4 billion to increase its store count from 1600 currently to 2500 by 2022. While the company has been seen as primarily attractive to low-income shoppers, the general consensus is its strategy now is to appeal to upper-income shoppers as well with nicer stores and better in-store departments, at least in part to counter the entry of fellow discounter Lidl into the US.
KC's View:
I don’t think I’ve facilitated a panel discussion about e-commerce in the past six months in which the possibility of Aldi or Lidl getting into e-commerce and delivery hasn’t come up; I know we talked about it last week at the MyWebGrocer “Customer Days” event, where we did a session on Lidl and Aldi. Both companies have done limited e-commerce tests in various European markets, so this isn’t the first time to the rodeo.

I have to wonder if this will be the first domino in a series that will fall as a result. Whole Foods has a relationship with Instacart, but it also is about to be acquired by Amazon; public statements to this point have suggested that the Whole Foods-Instacart relationship will remain intact, but I cannot imagine that being likely.

For that matter, there are a bunch of other companies out there doing business with Instacart that should reconsider those relationships … I’ve always felt that it is problematic to outsource the delivery function - the time when customers come into contact with the representative of the store - to an outside entity, which at best has divided loyalties. If they want to do business with Instacart only as a way to give themselves time to develop in-house solutions, that’s fine … but it cannot see Instacart as a long-term answer to the challenges of e-commerce and delivery.

The Instacart deal with Aldi only underlines my feelings about this.

One other thing. I’ve wondered if the Amazon-Whole Foods deal might hasten the decision by some big company - Walmart, Google? - to acquire Instacart. I now am wondering if this deal might reduce the options for such a deal. Then again, the e-commerce business has the option of creating strange bedfellows.