🔒Online grocery competition heats up in CT

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On 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 customers' 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 players are hoping to change that. Lately, Peapod's got company.

Same-day or next-day grocery delivery is becoming an increasingly competitive 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 logistics partner Spark Delivery. The company, which did not respond to a request for comment for this story, has not officially 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 Hartford, 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 expenditure for most households, represent a $648 billion market in the U.S., according to the federal Department of Agriculture. Yet, online 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 reports, but Bienkowski is far from cocky.

“We are very mindful of the competition,” she said. “You don't survive in this industry without being a little bit paranoid.”

In the face of rising competition, Stop & Shop has not launched same-day delivery service, but nothing is set in stone. It offers customers next-day delivery.

“We are constantly testing innovations, new products and services,” Bienkowski said.

Drivers wanted

Investments in online grocery delivery have created demand for order fillers and drivers.

Peapod has 600 workers in Connecticut, while Shipt said it intended to hire more than 200 personal shoppers for its Target rollout this year.

Walmart has said it has more than 18,000 delivery shoppers across the country.

It can be hard to fill driver positions, said Sarah Baird, Peapod's vice president of operations.

Though delivery trucks are small enough to not require a commercial driver's license, the job involves lifting 40-pound packages many times a day, and there's a background check, drug screen and physical exam.

The starting wage is $12 an hour, but Peapod tells applicants they can clear more than $20 an hour including customer tips.

“We haven't lost a lot of drivers [to churn],” Baird said. 'We have trouble getting them in the door.”

The growing demand for grocery delivery may mean some Peapod drivers get poached, but the company hopes its jobs will stand out from competitors.

At Peapod, all workers are Stop & Shop employees, and they drive company trucks, Baird said. They're also unionized.

That's an exception, as other delivery services, such as Shipt and Instacart, hire drivers as independent contractors using their own vehicles.

Instacart, which last year paid $3.4 million to settle a class-action lawsuit alleging that it misclassified employees as independent contractors and improperly pooled tips, has said it offers workers the option of being part-time employees rather than independent contractors.

Instacart did not respond to an interview request for this story.