Circle K partnership with online grocer includes investment
Circle K is taking a financial stake in online grocer Farmstead as the two companies partner to explore distribution and fulfillment opportunities.
Farmstead, which currently operates in the San Francisco, Chicago, Miami, and Charlotte and Raleigh-Durham, N.C. markets, offers a mix of fresh produce, national brands, and local brands for online delivery in each market it serves. Farmstead offers no-fee delivery and enables customers to choose a same-day delivery slot (a two-to-four-hour guaranteed delivery window) for one-off, everyday ordering, or sign up for free once-a-week delivery.
Operated by Alimentation Couche-Tard, Circle K has close to 14,500 stores in the U.S., Canada and 23 other countries. By partnering, the two companies hope to open up new formats for e-commerce fulfillment in U.S. suburbs using Farmstead’s Grocery OS tech stack and Circle K’s retail footprint.
Circle K has made an equity investment in Farmstead via its Circle K Venture Fund, which invests in companies developing forward-looking e-commerce solutions. The companies also intend to improve Farmstead’s national supply chain for non-perishables and convenience items, collaborate on distribution, and launch co-marketing initiatives.
Farmstead deliveries are batched together with other orders in the same neighborhood, to reduce carbon emissions. The company leverages proprietary artificial intelligence (AI) technology and a dark store model with delivery-centric warehouses that generally serve a 50-mile radius, in an effort to maximize efficiency and reduce costs.
The company uses AI-powered predictive models to improve efficiency and reduce costs in its supply chain. Farmstead has previously announced it plans to expand nationwide to a primarily suburban, mid-market audience. In April 2021, Farmstead launched a partnership with DoorDash to make its service available through the DoorDash app and website for one-hour delivery.
As part of its DoorDash agreement, Farmstead is also integrating Grocery OS with DoorDash, so that any retailer licensing Grocery OS has immediate access to DoorDash’s platform and delivery network via the DoorDash Drive white-label fulfillment platform.
Meanwhile, by partnering with Farmstead, Circle K may be able to launch an on-demand convenience delivery storefront to compete with similar offerings such as DoorDash DashMart and Instacart Convenience Hub.
“The convenience landscape is changing dramatically,” said Kevin Lewis, chief marketing officer at Alimentation Couche-Tard, parent company of Circle K. “At Circle K, we are constantly innovating and exploring new technology that helps us deliver on our mission to make our customers’ lives a little easier every day. When we met the Farmstead team, we saw an opportunity to partner with them, exploring and learning about the new behavior of our U.S. suburban consumers using e-commerce and last-mile systems that lead to actual long-term profitability.”
“We’re also proud to have invested in Farmstead, as part of our effort to cultivate and support retail innovation that transforms the customer experience in our stores and beyond,” Lewis continued. “Getting in on the ground floor on industry-leading new technology is a key element of Circle K’s innovation strategy as we continue to grow.”
“We are in the early innings of significant change in the U.S. food system, which requires new supply and technological alliances,” said Pradeep Elankumaran, co-founder and CEO at Farmstead. “We’re thrilled to be partnering with Circle K on that journey, with its scale and decades of multinational experience in the convenience industry, and to be advancing with Circle K as an investor.”