Jewel-Osco to offer grocery delivery option with new online ordering program
Greg TrotterContact ReporterChicago Tribune
Jewel-Osco, the largest traditional grocery store chain in the Chicago area, plans to launch a delivery service next week — the latest bricks-and-mortar grocery retailer to leap into online sales.
Beginning Tuesday, most Chicago-area residents will have the option of ordering groceries online for delivery through Jewel-Osco’s new e-commerce department, according to the company. Orders will be shopped from 11 stores, covering a large swath of the Chicago area, and delivered for a fee ranging from 95 cents to $9.95 depending on the size of the order, time of day and window of time selected.
Unlike some competitors, such as Mariano’s and Meijer, that partner with third-party services, Jewel is handling order fulfillment and delivery itself — though Jewel shoppers will continue to have the option to use Instacart instead.
“We felt it was important to have our own people doing it,” said Doug Cygan, Jewel-Osco president. “We’re excited about being able to provide what a lot of people want.”
To accomplish this, Jewel hired 100 employees to staff its fledgling e-commerce department, most of whom will fulfill the orders and make the deliveries. The company also bought a fleet of about 60 delivery trucks fitted with compartments of varying temperatures to accommodate fresh food delivery, Cygan said.
The vast majority of U.S. shoppers still buy their groceries in stores. Many still prefer the time-worn rituals of buying fresh food — feeling fruit for ripeness, glimpsing steak behind the meat counter, lifting the egg carton lid to check for broken shells — to the more sterile online experience.
But shoppers also want convenience and increasingly, grocery stores are trying to give them an online option to prevent losing sales to retailers such as Amazon and Jet.com.
By 2025, online grocery shopping is projected to grow to 20 percent of all grocery spending, or $100 billion in annual sales, according to research from the Food Marketing Institute and Nielsen earlier this year.
“Nobody has a crystal ball, but I think that $100 billion could end up being conservative,” said Mark Baum, senior vice president of industry relations for the Food Marketing Institute, noting the projections were made before Amazon bought Whole Foods Market in August.
That $100 billion chunk of grocery spending would be roughly equivalent to almost 4,000 grocery stores, Baum said, meaning at least some of those stores will close as sales shift online.
So far, the models for capturing online sales vary.
Earlier this year, Mariano’s announced the launch of its ClickList service, which allows shoppers to order groceries online for pickup for a flat fee of $4.95. Mariano’s also offers delivery in some locations by partnering with a third-party service.
Meijer launched delivery from its suburban Chicago stores over the summer, partnering with a service called Shipt that allows customers to communicate with their paid shoppers in real time to indicate preferences.
And of course, Amazon is widely expected to ramp up its fresh food delivery after buying Whole Foods Market for $13.7 billion. Whole Foods stores in the Chicago area currently provide online shopping and delivery through Instacart, though some industry insiders have speculated that partnership might be approaching an expiration date given Amazon’s own prowess in online retail.
Jewel-Osco executives believe their model has some advantages.
For a slightly higher fee, shoppers can have groceries delivered within a one-hour window of time, so they’re not waiting for several hours, said Anthony Suggs, vice president of marketing and merchandising. Same-day delivery is available for orders placed before noon.
The fee on most orders will average between $1 and $3, Suggs said. The first delivery is free.
Once the service launches next week, shoppers can place their online orders via the Jewel-Osco website. There’s a minimum of $49 on orders for delivery.
Jewel-Osco parent company Albertsons has rolled out a similar delivery service in other markets in the U.S., Cygan said. The Chicago launch was delayed in part because of the uncertainty over Cook County’s sweetened beverage tax, which is now set to end Dec. 1.
Cygan noted that the shift toward delivery is actually a return to the historic roots of the company, which delivered tea as Jewel Tea Co. in the early 1900s. Today Jewel-Osco has 187 stores.
“We’re so proud to be able to deliver again,” Cygan said.
Jewel-Osco also plans to offer pickup at six stores in the city, but the company wouldn’t provide the specific locations for that option.
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