In February 2021, I wrote about the grocery wars for a second time, this time about prices for grocery delivery as vaccines were just rolling out to the most vulnerable populations. We were nearing the one-year anniversary of the pandemic, and between supply chain disruptions and everything else going on, prices at the grocery store were top-of-mind for many families like mine.
On December 2, 2023, I was shopping for groceries at Target in Northeast Minneapolis and was impressed by the change in prices compared with what we came to expect just three years ago. We all have been living through inflation, but it wasn’t until I saw my cart and my receipt that it again hit me.
I had wanted to write another grocery installment after the November election, so with that inspiration, I fired up my interwebs browser and started comparing prices at the four grocers we looked at last time: Costco, Amazon Fresh, Cub Foods and Target.
Inflation was lowest at Costco (which requires a membership), and that allowed Costco to barely nudge out Target for having the lowest price index in the Minneapolis area. The longer answer is that prices at stores didn’t all move in the same direction, and the price index was highly dependent on what items were in the cart.
Our 2021 grocery delivery index was based on a reader survey of what readers actually bought on their last grocery receipt. But trends change and people are different, so your own basket of essential groceries may fare differently.
Three Factors for Grocery Costs
First, inflation. From February 26, 2021 to December 2, 2023, the price level of grocery delivery in the Minneapolis area went up by around 23%, again dependent on what essential groceries were in your basket of goods. That was a big hit to household pocketbooks. But Costco stands out among the other major grocery delivery services studied in having kept annualized inflation over this period to under 5%, far less than the other three. In February 2021, Target was the low-cost leader, but Costco being able to control costs allowed it to take the lead on grocery affordability.
The annualized inflation rates for delivery groceries at the selected grocers were 4.51% at Costco, 7.79% at Cub, 8.79% at Amazon Fresh and 9.92% at Target.
Second, grocery price index. As mentioned, Costco now has the lowest prices for this basket of any of the four grocers surveyed. But the difference between the most affordable and the least affordable has shrunk in the past thousand days. In February 2021, Amazon Fresh (high cost) had 24.7% higher prices than Target (low cost). In December 2023, Amazon Fresh (high cost) has slightly less higher prices at 20.3% than Costco (the low-cost leader).
Third, delivery fees still make a difference. At the time of this writing on December 3, 2023, the delivery fee policies of the four grocery services still vary.
- Costco and Cub Foods both use Instacart for their fresh grocery delivery. Instacart does charge higher prices in its online store than shoppers would see in a brick-and-mortar store, but the delivery fee is only $3.99 once a shopper has met the $35 minimum basket.
- Amazon Fresh uses its own delivery driver network and offers free delivery on orders over $100. But buying the same $35 of items carries a $9.95 delivery fee. At $50, the Amazon Fresh delivery fee is $6.95. And then the final tier is the free delivery at a $100 basket. These delivery prices are with an Amazon Prime subscription.
- Target appears to charge a $9.99 delivery fee on qualifying orders, but subscribers to its Shipt service get free delivery on orders above $35.