Coborn’s Inc. announced Thursday that it is discontinuing grocery delivery in the Twin Cities.
The St. Cloud-based supermarket chain will transition its home delivery services to Cub via Instacart starting Aug. 15. At that point, deliveries from a Coborn’s warehouse in New Hope will cease and Coborn’s online customers in the metro will be redirected to Cub’s Shop.cub.com website.
The company wants to focus its delivery and curbside pickup model only in areas where it has stores. Its closest stores to the metro are in Delano, Elk River, Ramsey and Albertville with a total of 62 grocery locations in Minnesota, the Dakotas and Wisconsin.
“CobornsDelivers has been the grocery delivery gold standard in the Twin Cities metro for more than a decade, with our warehouse hub and dedicated driver service,” Emily Coborn, vice president of operations for Coborn’s, said in a statement. “We are incredibly proud to have helped a generation of Twin Cities shoppers get their grocery run totally done online.”
The company will continue home delivery in Elk River and St. Cloud, as well as Cash Wise Delivers in Owatonna and Fargo and Bismarck, N.D. Curbside pickup will remain for all of its Coborn’s, Cash Wise and Marketplace Foods stores.
With only the New Hope warehouse to supply all of its Twin Cities delivery customers, it made delivery much more difficult.
“Many other competitors are picking orders and delivering from multiple locations to cover the broad geography of the seven-county metro area,” Coborn said. “The CobornsDelivers model runs from a single warehouse location, which did create challenges for us as consumers today are desiring faster delivery in shorter windows.”
Coborn’s and Cub did not disclose the exact number of customers affected but said it is in the thousands.
Coborn’s was an early adopter of grocery delivery. In 2008, it purchased and renamed SimonDelivers. The popularity of having groceries delivered has grown to about one in four U.S. households, according to a 2019 survey of 1,000 U.S. adult consumers by JDA enterprise software providers, but it doesn’t generate big profits.
“The added investments to accommodate e-commerce orders and delivery logistics do make it very difficult to make money in this part of our business. And, with the arrival of new competitors, it has become even more difficult,” Coborn said.
Cub said it has seen substantial double-digit growth for multiple years in its delivery and store pickup models. As for the profitability of grocery delivery, Cub said it’s all about driving volume numbers.
“An increase in volume and convenience will help profitability,” said Darren Caudill, senior vice president of sales, merchandising and marketing at Cub.
Cub plans to market its potential new customers with direct e-mail and special offers, including free delivery and $20 off the first order with a $35 minimum using the code SAVE7646 at Shop.cub.com. Compared to Coborn’s, Cub offers a wider breadth of store products and delivery within an hour to most customers, Caudill said.
Cub was a logical candidate to take over Coborn’s Twin Cities deliveries. Cub’s parent Supervalu, now a unit of United Natural Foods Inc., has been the wholesaler for Coborn’s for more than 20 years. Last year, Coborn’s acquired eight Hornbacher’s supermarkets from UNFI.
Coborn’s is a 98 year-old employee-owned company with more than 9,000 employees. Its store banners include Coborn’s, Cash Wise Foods, Marketplace Foods and Hornbacher’s. It also owns more than 60 stand-alone convenience, liquor and pharmacy locations, including Holiday Stationstores and Little Duke’s.
More than 180 employees work at the New Hope facility, but Coborn said not all will be impacted by the shutdown. Many will be able to transfer to other jobs within the company.