Instacart Focuses on Connected Stores as It Cuts 7% of Workforce


Even as Instacart is undergoing major layoffs to cut costs, the company continues to invest in fully digitizing the physical store to boost omnichannel efficiency.

CEO Fidji Simo said in a Tuesday (Feb. 13) letter to shareholders discussing the company’s fourth-quarter 2023 financial results that Instacart is laying off hundreds of employees in an effort to cut costs and boost margins.

“Today, we made the tough decision to part with approximately 250 of our talented team members,” Simo stated. “This will allow us to reshape the company and flatten the organization so we can focus on our most promising initiatives that we believe will transform our company and industry over the long-term.”

As the grocery aggregator reduces its workforce by around 7%, the company is pushing ahead with its efforts to create connected stores, unifying retailers’ physical presences with their digital channels to provide smarter data insights and more efficient services.

Making the Physical Digital

Simo noted on a call with analysts that the company uses merchants’ planogram data to guide its in-store pickers more efficiently to the products they need and that, at grocers such as Schnucks and Aldi, it uses smart shelf tags that light up to expedite this process. In turn, the company is able to use much of this data to improve the consumer experience.

“Our shoppers … know what’s on the shelves often better than what retailers know themselves, and it has allowed us to really develop great predictive algorithms to understand what’s going to be in stock, what’s not going to be in stock, what’s a suitable replacement that’s going to generate a positive experience. … the combination of deep retailer integration data that we collect every day and predictive analytics model really allows us to deliver [a] superior experience.”

Indeed, these kinds of insights can go a long way toward improving the shopper experience.

“More than a way to deliver an omnichannel experience for grocery stores and Instacart shoppers, it’s an opportunity to create a digital grocery shopping identity that also connects to grocery store loyalty programs that can save consumers time and money while shopping in store,” PYMNTS’ Karen Webster observed in a feature in August.

Certainly, these concerns are top-of-mind for retailers looking to improve their understanding of customers’ behavior in an effort to drive loyalty and sales. PYMNTS Intelligence’s study “Big Retail’s Innovation Mandate: Convenience And Personalization,” created in collaboration with ACI Worldwide, finds that 50% grocers are currently investing in innovating on the ability to track customer purchase history across all channels.

Reaching the Connected Shopper

As Instacart digitizes the store, consumer adoption of the eGrocery platform continues to grow, albeit not very quickly. In 2023, orders rose by 3% year over year, and transaction revenues were up 20%.

The PYMNTS Intelligence report “The Online Features Driving Consumers to Shop With Brands, Retailers or Marketplaces,” which drew from a survey of more than 3,500 U.S. consumers, revealed that grocery-focused marketplaces lag behind other industries in terms of providing a positive customer experience. The results revealed that 77% of grocery shoppers are very or extremely satisfied with their experiences — a considerable majority, but still less than clothing and accessories, home furnishings and appliances and electronics.

Overall, a growing portion of consumers is engaging with eGrocery platforms. According to the PYMNTS Intelligence survey “Consumer Interest in an Everyday App,” which is based on responses from more than 2,200 U.S. consumers, 61% of those who had shopped for groceries in the previous month did so via connected devices at least some of the time.

The PYMNTS Provider Ranking of Aggregator Apps, which ranks leading players based on factors including consumer usage, downloads and channel coverage, ranks Instacart in the top 5 among grocery and restaurant aggregators, tied at No. 4 with Zomato and scoring 70 out of a 100 total possible points.

In the midst of significant workforce restructuring, Instacart remains steadfast in its goal of transforming the grocery industry through digital advances. By leveraging data analytics and innovative technologies such as smart shelf tags, Instacart not only optimizes in-store operations but also enhances the overall consumer experience. As consumers embrace eGrocery platforms, Instacart’s continued investment in omnichannel capabilities positions it as a frontrunner in meeting evolving consumer expectations.