Hartford Business Journal

14 Hartford Business Journal • September 24, 2018 • www.HartfordBusiness.com By Matt Pilon mpilon@hartfordbusiness.com O n a recent weekday morning in Cromwell, Jeremy Dion checked in to a 7,000-square-foot area of Stop & Shop that customers never see. The second-floor "wareroom" resembles a miniature supermarket, designed so employees of the grocer's Peapod delivery service can more efficiently pick up and pack custom- ers' grocery orders placed online or through a mobile app. Dion, who's been with the company for 10 years, was soon out on the road, delivering orders as far north as Avon and as far south as Connecticut's shoreline. He's one of 200 Peapod delivery drivers that Stop & Shop employs in Connecticut. The company has another 400 Peapod employees spread across its five warerooms here. Odds are you've never ordered groceries online, but a slew of big play- ers are hoping to change that. Lately, Peapod's got company. Same-day or next-day grocery deliv- ery is becoming an increasingly compet- itive business, as grocery chains partner with technology and logistics providers that manage order flow and deliveries. In August, Target and its newly acquired $550 million subsidiary Shipt launched same-day delivery service across much of Connecticut, while Walmart says it plans to offer its own same-day service in 100 U.S. metros by year's end, enabled in part by its logis- tics partner Spark Delivery. The com- pany, which did not respond to a request for comment for this story, has not of- ficially said if Connecticut is among the states where it plans to launch. While those retail giants, like Stop & Shop, are building up networks of drivers and shoppers exclusively for their own stores, a San Francisco company called Instacart — reported late last year to be worth $3.4 billion — offers same-day delivery in select Connecticut zip codes, including Hart- ford, from Costco, Price Chopper, Stew Leonard's, Whole Foods and others, according to its website. The growing roster of same-day offerings fills out a landscape that's largely been dominated by Peapod's next-day delivery service, which launched in Connecticut nearly 20 years ago. Groceries, a major expendi- ture for most households, represent a $648 billion market in the U.S., according to the federal Department of Agriculture. Yet, on- line ordering represents less than 5 percent of that revenue, according to industry estimates. Though delivery services aren't new, companies are still trying to figure out how to reach the vast majority of consumers who have never tried online grocery ordering. A Gallup poll this summer found that 84 percent of Americans had never ordered groceries online. Of those who had, the majority did so twice a month or less. Consumers who order online groceries tended to have higher incomes and children under 18 in their household, Gallup found. "The opportunity is huge and that has drawn a lot of interest and a lot of players," said Carrie Bienkowski, Peapod's chief marketing officer. "But it's really, really hard to do." Bienkowski would know. Peapod has survived several industry downturns and seen competitors come and go. For example, online retail giant Amazon pulled back on its Amazon Fresh delivery service in Connecticut and several other states last year, according to media re- ports, but Bienkowski is far from cocky. Food Fight Online grocery competition heats up in CT Online grocery shopping still rare in U.S. Sixty-nine percent of U.S. adults order delivery or takeout meals at least monthly, but ordering grocer- ies online is far less common. Here's what a recent Gallup poll found on grocery-delivery habits: Order groceries online at least monthly Total U.S. adults 9% Age 18-34 9% Age 35-54 12% Age 55+ 8% Household income $75,000+ 12% $30,000-$74,999 7% <$30,000 7% Source: Gallup poll conducted July 2018 Jeremy Dion, a driver for Stop & Shop's Peapod delivery service in Greater Hartford, makes a recent delivery. Operating in Connecticut for two decades, Peapod is facing new competition in the potentially lucrative grocery delivery market. HBJ PHOTOS | BILL MORGAN

• Cover