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Costco highlights grocery delivery options on Q4 call


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Costco highlights grocery delivery options on Q4 call

Costco Wholesale Corp. played up new grocery delivery options, including a same-day service through Instacart, during a conference call with analysts Oct. 5.

Under the same-day service, customers will be able to order from a selection of about 1,700 products, including fresh grocery items. Speaking to analysts, CFO, Executive Vice President and Director Richard Galanti said the service is available at 376 of the company's roughly 740 stores, adding that it plans to add locations before the end of the 2018 calendar year.

The other option, called CostcoGrocery, offers two-day delivery on a selection of about 500 dry grocery products, as well as free shipping on orders over $75 in the continental U.S. Parcel carrier UPS will deliver the orders, according to the company.

Both options will offer lower prices on Costco items than customers have previously been able to find through Instacart, Galanti said.

Though the Issaquah, Wash.-based company reported fiscal fourth-quarter and fiscal year 2017 results that were generally ahead of analyst expectations Oct. 5, Galanti told analysts that Costco is trying to grab its share of the grocery delivery business.

"Whatever it's going to be, we should have a piece of it," he said.

The two new delivery options come just over one month after Inc. closed its purchase of Whole Foods Market Inc. and began cutting prices at the grocer Aug. 28. Since the e-commerce giant announced its plans to purchase the Austin, Texas-based grocer on June 16, analysts have debated the potential impact of the deal on brick-and-mortar grocers.

Although the membership-based chain offers goods ranging from furniture to car tires, a survey published by Barclays analysts in April suggested that buying groceries is the primary reason why as much as 81% of Costco's customers visit the chain.

Speaking about Costco's performance since Amazon cut prices at Whole Foods, Galanti said: "We don't believe we've seen an impact at all."