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Blue Apron halts retail program with Costco

Meal kit company restructuring business, announces job cuts

Back in May, Blue Apron made news with its first foray into retail store distribution in a highly publicized partnership with Costco. Now, six months later, the meal kit company is putting the brakes on the relationship — at least temporarily.

During its earnings report last week, Blue Apron announced that its pilot program with Costco will shut down indefinitely as the holidays approach. Costco needs shelf space for holiday offerings, and Blue Apron customers are typically less engaged during the holiday season, Blue Apron CEO Brad Dickerson said on the earnings call.

“As the holiday period approaches, our presence in Costco locations has paused due to the seasonal cadence of their business,” said Dickerson. “As we enter 2019, we are targeting to resume in Costco as well as expand into new retailers leveraging lessons learned from our pilot and evolving our product offerings to complement this environment.”

Dickerson went on to discuss some of the challenges faced by Blue Apron in the in-store retail environment, saying, “Some of the interesting things we learned is that regional taste preference [varies] pretty widely across the country, so we saw some great successes in certain regions, and with the same recipes, maybe not as great successes in other regions. So the ability to be more tailored and specific on a regional taste preference is something that we need to keep looking at going forward.

“The other thing I’d say is, not unlike other items in kind of the grocery brick-and-mortar channel, shelf life and shrink and waste are something that we have to keep focusing on,” he added. “We’re talking to some of the folks also in addition to Costco because we still think there’s a lot to learn with that. I think coming out of this pilot, probably the most important thing that we’ve recognized is we believe there needs to be some pretty decent product innovation specifically focused on how can we put products out there to leverage the strength of our brand that have a better way to manage shelf life and shrink and waste going forward.”

In addition to the Costco news, Blue Apron announced in the call  plans to restructure the business that will lead to job cuts impacting about 100 jobs, or 4% of its workforce. The corporate revamp aims to sharpen the company’s focus on its direct-to-consumer business while also seeking to expand the reach of its brand through partnerships and other strategies.

While Blue Apron’s in-store ambitions have been put on pause, the company did recently sign on with Walmart’s, offering meals on the e-commerce site’s online and mobile platforms for same-day or next-day delivery, as well as Weight Watchers, offering meal kits to its members beginning in 2019.

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