Lunds & Byerlys groceries to be delivered by Target-owned Shipt

In a move that Lunds & Byerlys said will double its delivery order capacity, the upscale grocer is partnering with the Shipt delivery business of grocery competitor Target Corp.

Lunds & Byerlys sent an e-mail to customers this week alerting them that the transition to the new delivery model will begin May 10 and be completed June 7.

As a result, Lunds & Byerlys will no longer have its own delivery drivers or trucks. The current delivery drivers will be provided the opportunity to work in other roles at Lunds & Byerlys or continue to be a driver by joining Shipt. Vehicles will be sold or used in other departments.

The grocer said its staff will continue to shop and fulfill all orders placed through Lunds & Byerlys online shopping, but the delivery of each order will be handled by Shipt.

"The benefit of partnering with Shipt is they have a large network of drivers because of Target," said Jenny Pearson, director of e-commerce for Lunds & Byerlys.

She said the retailer will also be able to deliver groceries to a wider area, expand its same-day order rate and narrow its delivery time slots to a one-hour window from two hours currently. Deliveries will be made from 18 stores vs. only six currently, Pearson said.

The arrangement represents an expansion of Lunds & Byerlys' relationship with Shipt. Shoppers already had been able to order its groceries via Shipt as well as Instacart. Meanwhile, online sales have quadrupled at Lunds & Byerlys since before the pandemic, she said.

But as online shopping and delivery continue to rise, it was becoming costly for the grocer to absorb the labor and vehicle costs. "We're finding efficiencies in that sense" by relying on Shipt, Pearson said.

Shipt has been steadily growing its reach over the last two years. Last fall, Shipt executives announced plans to add nearly 1,000 more store locations to its coverage area. More recently, Shipt sharply increased its same-day delivery service by adding Walgreens and 7-Eleven stores across the country.

Target has been increasing share in the Twin Cities grocery market in recent years and competes most closely with Walmart and Cub Foods for top position.

Lunds & Byerlys has a much smaller share of customers. Pearson said that only a minimal level of competitive data would be shared with Shipt. "The data we share is where to drop off groceries," she said.