Big Lots adds delivery service from Instacart

Brief:

Big Lots this week started offering same-day delivery from its chain of closeout stores in partnership with Instacart. The delivery service is available at nearly 1,400 Big Lots stores in 47 states, according to a press release.
To order from Big Lots, shoppers can either use the Instacart mobile app or the delivery company's website. The app asks shoppers to select their city and nearby Big Lots store location before letting them add items to a digital shopping cart.
After the order is placed, an Instacart personal shopper picks up the items and packs and delivers them within a specified time frame. Big Lots is offering grocery items along with home goods and decor. Instacart delivery is available to more than 85% of U.S. households and more than 70% of households in Canada, per the announcement.

Insight:

Big Lots' collaboration with Instacart can help expand the brand's customer base among shoppers who either prefer the convenience of delivery or may not feel comfortable visiting stores during the coronavirus pandemic. Attitudes about in-store shopping have been mixed since the public health crisis ramped up in March, but some analysts expect a bigger consumer reliance on e-commerce and click-and-collect offerings will endure even after the pandemic passes.

Seventy percent of U.S. consumers said they still had visited grocery stores rather than ordered online amid the coronavirus, a Harris Interactive and Toluna poll revealed in April. However, 43% of Americans said they planned to shop in public less frequently than they did before the pandemic, according to a study by finance website Bankrate. These varied behaviors underscore the need for retailers to be flexible in providing a mix of services that include in-store shopping, online ordering, curbside pickup and delivery, as Big Lots is providing with Instacart.

While the pandemic has devastated many segments of the retail industry, Big Lots has performed well among consumers seeking value during a period of significant economic uncertainty and rising unemployment. The company reported first quarter net sales rose 11% year over year to $1.4 billion, while its comparable sales increased 10.3%. The strength has continued, though Big Lots management expects to face pressures from competitors that have started to reopen stores, inventory constraints for some products, an ebb in consumer demand driven by government stimulus and the cancelation of a "friends and family" promotion in July, per its latest quarterly earnings report.

For Instacart, the addition of Big Lots to its stable of store chains can help to reach another segment of shoppers. The delivery company is also working to diversify its revenue by selling advertising on its digital properties. Last month, Instacart launched a self-serve ad platform to let marketers promote products in search results. Procter & Gamble, Unilever and PepsiCo are among the major marketers that tested the ad platform before its launch in late May.

Like other delivery-focused companies, Instacart has experienced a windfall as people remain stuck at home and seek goods that can be delivered directly to their door. Instacart reported a 74% surge in customers to 350,000 in early April from 200,000 a year earlier, even as grocery stores remained open to shoppers.