Sprouts signs on with Instacart as U.S. grocers experiment with delivery

A billboard advertisement for Sprouts Farmers Market, a health food chain store, is shown in Encinitas, California September 9, 2014. REUTERS/Mike Blake

LOS ANGELES (Reuters) - U.S. healthy food supermarket chain Sprouts Farmers Market SFM.O on Tuesday said it will offer home delivery through Instacart, becoming the latest grocer to partner with the startup since AMZN.O revived its push into food sales.

Amazon, the nation’s largest online retailer, shook up the industry with its $13.7 billion acquisition of Whole Foods last year, prompting traditional grocery sellers to look for ways to profitably deliver fresh food and shelf-stable pantry items.

Sprouts, which delivers to homes in eight U.S. cities through a partnership with Amazon Prime Now, said it will add Instacart service to other U.S. markets, beginning with select zip codes in Phoenix and Tucson, Arizona on Tuesday.

Wal-Mart Stores Inc WMT.N, which sells more groceries than any other retailer, bought same-day New York City delivery company Parcel in October. It offers grocery delivery in five markets via Uber [UBER.UL] or Deliv and is testing delivery with its own trucks in Denver.

Kroger Co KR.N, the largest traditional supermarket operator, offers its own HomeShop delivery service in Denver. It also partners with third parties including Instacart, Uber and Roadie.

Amazon has amassed an 18 percent share of the $12.6 billion U.S. online grocery market, mainly through the sale of packaged goods such as pasta and diapers. It is the largest player in a sector that is expected to grow to $41.7 billion by 2022, according to market research firm Packaged Facts.

Wal-Mart comes in at No. 2 with 9 percent, followed by Ahold USA's AD.AS Peapod at 7 percent, FreshDirect with 6 percent and Instacart at 5 percent, Packaged Facts said.

Reporting by Lisa Baertlein in Los Angeles, Editing by Rosalba O’Brien