Home / Sector / Consumer Staples & Discretionary Shares / Could this acquisition give Woolworths shares an edge over Coles?

Could this acquisition give Woolworths shares an edge over Coles?

The supermarket giant has now added a speedy grocery delivery service to its stable.

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Monica O'Shea
Monica is a journalist with experience working for Daily Mail Australia in Sydney and the Port Pirie Recorder and the Flinders News in South Australia. Monica completed a journalism cadetship in 2013. She also hold a B.Science (Biotechnology) with Honours from the University of Adelaide. Monica has worked in government at the local, state and federal level. Monica has a keen interest in finance and the share market and enjoys exploring the highs and lows. When not writing for Motley Fool Australia, Monica enjoys travel, sport, music, and likes to play the violin in her spare time.
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Key points
  • Woolworths has acquired fast delivery provider Milkrun 
  • Woolworths and Coles both outperformed the ASX 200 today 
  • Woolworths' new delivery service says it can provide groceries to customers in an average of 33 minutes 

Supermarket giant Woolworths Group Ltd (ASX: WOW) hit the headlines today after it confirmed it will acquire fast delivery startup Milkrun.

Woolworths shares and Coles shares both closed higher than the benchmark ASX 200 Index on Thursday.

At market close, Woolworths shares finished up 0.1% while Coles Group Ltd (ASX: COL) shares closed 0.22% higher. In contrast, the S&P/ASX 200 Index (ASX: XJO) lost 1.05% today.

Let's take a look at this Woolworths acquisition in more detail.

a grocery delivery worker stands at a front door with a large box of products while an older woman holds the door open to him.

Image source: Getty Images

What is going on?

Woolworths has acquired fast grocery delivery service MilkRun, nearly two months after it collapsed.

Milkrun launched in Sydney's CBD during COVID-19 lockdowns but closed in April amid challenging market conditions.

The Woolworths Metro60 and Milkrun websites are now both named "Milkrun, powered by Metro". They promise groceries can be "delivered in minutes" for a $5 delivery fee.

The service will fulfil orders via Woolworths' current Metro60 model using third-party couriers. It touts achieving an average delivery time of 33 minutes.  

Milkrun powered by Metro will be available in more than 500 suburbs across Sydney, Melbourne, Brisbane, Canberra, and the Gold Coast.

Commenting on the acquisition, Woolworths CEO Brad Banducci said, "We've long admired Milkrun's innovative brand, dedication to customers, and ambition to shake up the grocery delivery model."

In a statement provided to Motley Fool, he added:

We are thrilled that the Milkrun story will continue to live on and thrive with Metro60 relaunching as Milkrun now powered by Metro.

Orders will be fulfilled from our network of Metro stores which will give customers the choice of over 10,000 product lines including hot roast chickens, fresh sushi and much more.

Milkrun founder Dany Milham said: "Milkrun pioneered rapid grocery delivery in Australia, and I'm pleased to see the brand continue in Woolworths' hands."

The deal is said to be worth about $10 million, the Australian Financial Review reported.

Coles also has a rapid delivery service that provides groceries within two hours or less. As well, Coles and Woolworths both have delivery partnerships with Uber Eats via the Uber app

Share price snapshot

The Woolworths share price has returned 8.9% in the last year.

Meanwhile, the Coles share price has climbed 1.4% in the last 12 months.

Motley Fool contributor Monica O'Shea has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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