H-E-B to Acquire Delivery Service Favor

Texas grocer H-E-B is the latest food retailer to acquire a delivery service, announcing that Austin, Texas-based Favor Delivery will become a wholly owned subsidiary. Terms were not disclosed.

Allowing for customers to choose how they shop, pay for and receive products, the deal helps to grow H-E-B’s online presence, complementing its brick-and-mortar operations to provide a more comprehensive omnichannel solution. Favor will continue operating independently as a separate brand led by its CEO and president, Jag Bath. All Favor employees and its 50,000 “runners” – contract delivery drivers – will continue their roles under Favor’s new position.

“We share similar values, including a commitment to excellence in customer service and to our greatest resource: our people,” said Martin Otto, H-E-B COO. “Over the past two years, we have established a strong working relationship with Favor that has proven to be immensely successful for both companies. We see a unique opportunity with this partnership to support and accelerate each other’s growth through the sharing of experience, insight and resources.”

With Favor, the San Antonio-based grocer now has access to best-in-class consumer-facing technology and the on-demand company’s advanced delivery system. The retailer also will leverage Favor’s data-driven approach to collect valuable insights that will help create better customer experiences.

H-E-B has invested in technology and partnerships to enhance its ecommerce operations: Home delivery already is a key pillar through HEBtoYou; H-E-B already offers customers the convenience of click-and-collect at more than 100 stores; and customers can order and ship products to 48 states and military bases worldwide via HEB.com.

Other food retailers to purchase services to enhance delivery within the past year include Target and Walmart. The Minneapolis-based mass-merchandiser bought Grand Junction, a tech company specializing in solutions for local delivery, last August, followed by third-party delivery service and chief Instacart competitor Shipt in December. Then last September, the Bentonville, Ark.-based giant purchased same-day and last-mile delivery startup Parcel, which specialized in delivery of perishables and nonperishables to customers in New York.

H-E-B’s announcement also follows news that Amazon is beginning to roll out grocery delivery via Whole Foods stores, with plans to expand the service throughout 2018. As the ecommerce giant continues to expand into groceries, other food-retail leaders are seeking not just acquisitions but also potential partnerships with other ecommerce experts around the world: Walmart has formed a strategic alliance with Japan-based ecommerce service Rakuten Inc. to grow consumer reach and enhance how customers are served in Japan and the United States, while the Kroger Co. has been reportedly in talks with China-based retail and technology giant Alibaba Group about speeding up the integration of online and offline sales.