Instacart and Dollar General expand access to grocery delivery without markups

A new partnership between Dollar General and Instacart is giving customers at 7,000 locations access to same-day deliveries without a mark-up, with plans to expand across its entire footprint of 20,000 stores this fall.

That means what customers pay in store is what they pay for having the same item delivered.

CEO Chris Rogers recently said the cost is well worth the competitive advantage.

“The data is very clear,” Rogers said at Groceryshop in Las Vegas. “Customers are gravitating towards value, and online, that often means retailers that don’t mark up.

Retailers offering deliveries without a markup on Instacart are growing 10% faster than those that don’t, he added, and while this comes with a cost for retailers, the price of losing market share to rivals may be greater.

In the meantime, Dollar General is spreading the word that delivery is becoming more of a priority for the discount chain.

“Delivery for us has an opportunity to drive traffic overall,” Emily Taylor, COO at Dollar General, said at the Goldman Sachs Global Consumer and Retail Conference earlier this month.

The delivery business contributed 40 basis points to comparable sales growth and brought in more than a million new customers, she added, and these are still “early days” of its delivery expansion.

For its first-party delivery offerings, the company is exploring a subscription model, which it plans to pilot before the end of the year. Target offers no-markup deliveries through a third-party delivery service for Target 360 members.

Dollar General CEO Todd Vasos also highlighted the power of delivery customers in a recent earnings call.

“Our delivery platforms are also becoming a more meaningful sales driver as digitally engaged and delivery customers are more than twice as productive as our nondigitally engaged customer,” he said.