Target Buys Food-Delivery Service for $550 Million

By William Vogeler, Esq. on December 14, 2017 | Last updated on March 21, 2019

You just can't find a local grocery anymore, and it's going to get even harder to find one soon.

With mergers and acquisitions, small grocers and even chains have been losing ground to mega stores for years. But a new kind of acquisition is threatening now: the super stores are buying food-delivery businesses.

In an all-cash deal, Target is purchasing a grocery-delivery startup for $550 million. It probably won't get done before Christmas, but soon you'll be able to get their groceries the same day you order.

Already Delivered

Actually, Target already rolled out same-day delivery in New York City. But the company is making a big investment in the service to keep up with the competition on a larger stage.

Amazon, which offers same-day delivery, recently acquired Whole Foods Market for $13.7 billion. The Federal Trade Commission signed off on the proposed merger, and that sent shivers through other food markets.

"Amazon's proposed purchase of Whole Foods could impact neighborhood grocery stores and hardworking consumers across America," said Rep. David Cicilline, a ranking member of the House Judiciary Antitrust Subcommittee.

Ya think? Bloomberg called the Target deal a "challenge to Amazon," but there are other competitors -- two.

Walmart and Kroger

After Walmart and Kroger, Amazon owns about two percent of the grocery market. Target is staking a claim -- and its future -- on food delivery.

Lee McKnight, a professor at Syracuse University's school of information studies, says every other grocer should be concerned. There is a "new breed of cyber physical retailers," he said.

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