The news: Kroger and Uber are joining forces to expand their audiences and attract more incremental spending.

• Kroger customers will be able to order restaurant delivery—fulfilled by Uber—from the grocer’s website and app.
• Starting next year, Uber Eats users will be able to order groceries from Kroger’s 2,600-plus stores.

This means that Kroger now has direct relationships with the three largest delivery intermediaries—Instacart, DoorDash, and Uber—and an indirect association with Grubhub via its recent partnership with Instacart.

Why it matters: Partnering with third-party delivery platforms offers pure-play grocers such as Kroger an opportunity to level the playing field with mass competitors like Walmart and Amazon.

• Rather than spending billions to build the infrastructure needed to compete with Amazon on speed, Kroger can tap Instacart, DoorDash, and Uber to deliver orders quickly.
• Being present across multiple delivery apps also allows Kroger to tap into soaring demand for groceries on those platforms. We expect grocery delivery intermediary sales to increase 15% this year, faster than overall grocery ecommerce growth, driven by strong momentum at Uber and DoorDash.
• Kroger’s deal with Uber could also benefit the grocer’s loyalty offering. Uber One members will receive an extended free trial of Kroger’s paid Boost membership, while Kroger Boost subscribers will enjoy reduced service fees and free delivery on restaurant orders placed via the retailer’s app.

Our take: Delivery platforms are becoming increasingly valuable partners for retailers of all stripes. Not only are DoorDash and Uber attracting more customers and boosting order frequency, they are also rapidly expanding their influence into areas beyond restaurants and even grocery.

• Uber expects non-restaurant gross bookings to reach an annual run rate of $12.5 billion by the end of 2025, which is 25% higher than its previous forecast in May.
• DoorDash executives said in August that new verticals—including grocery—are growing much faster than the company’s core restaurant business, attracting new customers as well as increasing engagement from existing users.

Deals like the one between Kroger and Uber will likely become more common as retailers look to reach high-intent shoppers and delivery platforms race to keep their competitors at bay.