SAN FRANCISCO, CA - Grocery delivery is perhaps one of those innovations that is likely to stay. But how much of an effect does it have on everyday lives that attributes to almost $27 billion in spending? Dr. Robert Kulick of NERA Economic Consulting was curious about that himself, and he sought to measure the impact of what he dubs “The Instacart Effect” in his new study.
“Instacart is changing the way customers engage with grocery stores by creating a complementary online service that would be prohibitively expensive for traditional retailers to offer on their own. The result is increased grocery demand, which translates into higher grocery store employment and revenue. The data indicates that in 2019, ‘The Instacart Effect’ was responsible for an increase of more than $620 million in revenue and over 23,000 jobs in the grocery sector in California, New York, Illinois, and Washington. These findings demonstrate that Instacart has played an important role in helping the grocery industry compete in a challenging economic environment,” said Dr. Kulick. “It is often assumed that disruptive innovations necessarily displace traditional modes of commerce and employment. However, with Instacart the opposite is true. While Instacart is changing the way customers interact with grocery stores, it is an example of how innovation can benefit industries and their workers.”
According to the press release, the study demonstrates a robust relationship between Instacart adoption in local markets and employment and revenue in the grocery industry. Some key findings of the study include:
- Grocery Employment Increases When Instacart Enters a Market - On average, Instacart's entry is associated with a 4 percent increase in retail grocery employment. These roles are direct employees of grocery stores and include jobs such as cashiers, stocking associates, and deli counter clerks, among others
- Instacart Creates Net Grocery Jobs - In 2019 specifically, Instacart's adoption was directly responsible for more than 23,000 jobs across the metropolitan statistical area in the four states studied
- Instacart Drives Significant Incremental Grocery Revenue - Instacart increased incremental grocery revenue by over $620 million in 2019 alone
- "The Instacart Effect" is a National Phenomenon - The results indicate that the magnitude of "The Instacart Effect" is statistically equivalent for each state
As for “The Instacart Effect,” the study finds:
- In California, over 11,500 additional jobs were created and $337 million in incremental revenue
- In Illinois, over 3,400 jobs were created and $75 million in incremental revenue
- In New York, over 6,600 jobs were created and $154 million in incremental revenue
- In Washington, over 1,900 jobs were created and $56 million in incremental revenue
“Today in the U.S., grocery is almost a $1 trillion industry—but it’s only now going through its first big wave of tech innovation. Change in a business sector often comes at the detriment of incumbents, and we've seen this play out again and again across industries. But, it doesn't have to be that way. Since day one, our goal at Instacart has been to lift up our brick-and-mortar grocery partners and give retailers of all sizes an edge in an increasingly competitive industry,” said Nilam Ganenthiran, President of Instacart. “While we’ve long seen in our own internal data that Instacart can incrementally boost retail partner sales between 50 percent to 80 percent, this study shows that when Instacart enters a market the tides turn and ‘The Instacart Effect’ drives meaningful job creation and increased revenue for the grocery industry.”
Online food delivery is worth billions and is growing at an astronomical rate, according to PaymentsSource. Based on a study done by NPD Group, the site claims that restaurant digital orders (defined as meals or snacks ordered via mobile app, internet, or text message) have grown by 23 percent over the past four years and now represent 3.1 billion visits and $26.8 billion in spending. NPD is forecasting that digital orders will continue to grow by double-digits through 2020.
“Investing in an online retail experience is critical to the success of grocers competing for consumer attention today. The technology and fulfillment needs are complex, and the cost is prohibitive for many. But, with Instacart's support, more than 75 California retailers across 3,500 stores are now online, offering delivery and pickup services that meet the growing needs of their customers,” said Ron Fong, California Grocers Association President and CEO. “What Instacart is bringing to the state of California and the rest of the U.S. is a growth runway for brick-and-mortar grocers that deserve the opportunity to continue to serve their local communities for many generations to come.”
Instacart today partners with more than 350 popular national, regional, and local retailers to offer delivery from more than 25,000 stores across more than 5,500 cities in the U.S. and Canada. Instacart delivery is currently available to more than 85 percent of households in the U.S. and more than 70 percent of households in Canada.
With a reach like this, what will Instacart accomplish next? To read the full study, click here. Keep reading ANUK as we bring you more industry news.
