A grocer that debuted in the Charlotte market only months ago is already making expansion plans based on growing customer demand.
Farmstead, an online-only grocer based in San Francisco, said Friday it is expanding services starting this weekend to offer free delivery to homes within an hour’s drive of its distribution hub in west Charlotte. The expanded service area in Charlotte does not yet include South Carolina.
The e-grocer opened in mid-November in a 32,000-square-foot warehouse on Westwood Forest, north of the airport, offering free same-day grocery delivery within Charlotte city limits.
Farmstead is not only extending its reach, but expanding its hours from five to seven days, and delivery times to 12 hours a day from 8 a.m. to 8 p.m.
It’s also launching one-hour delivery service for $4.99 and a referral incentive program.
“Customer growth has grown faster than we expected,” co-founder and CEO Pradeep Elankumaran said in an interview with the Observer.
Elankumaran said Farmstead has delivered to over 5,000 households in Charlotte and the average shopper’s basket has increased 35% since the first month of opening. Farmstead has so far delivered to the majority of neighborhoods inside Interstate 485, he said.
“So we’re doing a good job adding products Charlotte residents like,” Elankumaran said.
Different than a typical brick-and-mortar grocery store opening, Elankumaran said the price point, product line and service need to deliver to convert new customers to shop the store online.
As the company’s first expansion market, Elankumaran said they’ve learned from Charlotte shoppers.
“Fresh and local is the new organic. I’s a discovery you’re going to hear more and more,” he said. The company will be working with more Charlotte-based produce farmers this summer.
Since expanding into Charlotte, Farmstead also opened in the Raleigh-Durham area last month. It plans to expand to Nashville, Tenn., and Miami, and at least 13 other markets this year, according to Farmstead.
Farmstead’s markets in San Francisco and Charlotte cover 19 million households, and its broader expansion plan will give it access to 75% of the $1 trillion U.S. grocery market, Supermarket News reported.
The e-commerce grocer uses artificial intelligence software and a “dark store” model. Such stores resemble supermarkets but are not open to the public and fulfills online orders as they focus on efficiency and to keep costs low. Customer data lets the company know what and how much of a product to stock.
The concept helps reduce waste and eliminate food deserts by offering “uniform access”, Elankumaran said, while also selling local products and national brands.
BrightFarms also offers a free weekly subscription program so a customer can pick a time every week to receive staples.
Last week, the e-grocer announced it is partnering with DoorDash to provide one-hour delivery on DoorDash’s app and websites. That service is not yet available.
Farmstead, serving a primarily mid-market audience, can support about 2,500 orders a day, The Observer previously reported. Farmstead has hired more than 30 people in Charlotte but expects to hire hundreds more as local demand continues to grow.
“We learned a lot in Charlotte in the first couple of months that there’s a lot of pent up demand for cost-effective online groceries,” Elankumaran said, “and it is very competitive.”
Heated grocery competition
Other grocery stores have expansion plans in Charlotte, too.
Food Lion opened a store Wednesday at 1620 Ashley Road with 75 workers. It’s not part of the 62 Bi-Lo and Harveys Supermarkets in the Carolinas and Georgia that Food Lion already acquired in the fall and has begun reopening stores including in York and Chester, S.C.
Discount German grocer Lidl also opened a store this month at 11225 S. Tryon St. in Steele Creek, with plans to open at least three others this year on South Boulevard, Carmel Commons and Mallard Creek Church Road, which is expected to open this summer.
Specialty grocer Earth Fare, based in Asheville, has returned to the area opening stores in Concord, SouthPark, Ballantyne, Fort Mill and Rock Hill. Another store will open in Davidson.
Florida-based Publix is planning to open at least three more Charlotte stores at 11525 Carmel Commons, 10Tryon building in uptown and at the corner of Sharon and Colony roads in South Park. Carmel Commons site construction begins in late spring.
Matthews-based Harris Teeter is opening a 64-000-square-foot store at Fort Mill Parkway in Fort Mill, S.C., The Herald in Rock Hill previously reported.
Walmart remains No. 1 in market share in the Charlotte region, followed by Harris Teeter and then Food Lion, according to the latest report released by Chain Store Guide, a sales tracking firm.