Why Instacart Is Laying Off Workers as Deliveries Soar
January 29, 2021
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by admin

Noelle Marian started working for Instacart in May 2019. She’s an in-store shopper, one of fewer than 10,000 part-time Instacart employees assigned to a specific store—in her case, a Mariano’s in Skokie, Illinois—plucking groceries from shelves, packaging them, and readying them for pickup.

Last year, she and her 15 fellow in-store Instacart shoppers became the only unionized Instacart workers when they voted to affiliate with the United Food and Commercial Workers International Union, which represents 835,000 grocery store workers across the US and Canada. Since the pandemic closed her fitness business last spring, Marian has been working close to 30 hours a week.

Last week, Marian learned she would lose her job. Instacart said it was firing 1,900 part-time, in-store shoppers, including the unionized workers at the Mariano’s. The move was widely condemned as union busting by an app-based company that takes advantage of its workers.

But the changes in Skokie and elsewhere reflect a wider upheaval in the grocery business, as the pandemic upends how people shop and eat. Large grocery chains like Kroger, Albertsons, Aldi, plus the grocery divisions of big-box stores like Walmart and Target, increasingly rely on their own employees to fulfill a firehose of online orders. That has created friction with erstwhile partners—including Instacart.

Have you worked packing or delivering groceries? Email Aarian Marshall at aarian_marshall@wired.com. WIRED protects the confidentiality of its sources.

“Retailers that have historically had a laissez-faire attitude when it came to grocery ecommerce have realized that this is potentially a sustainable business, and that they surrendered too much to the app-based marketplaces,” says Sylvain Perrier, CEO and president of Mercatus Technologies, which builds software for grocery retailers. “Now they’re trying to claw back their strategy.”

Instacart denies it’s union-busting. In a statement, a company spokesperson said that the layoffs are the result of some grocers choosing to use their own employees to pick groceries. Instacart’s far larger army of independent contractors will continue to work in many of the stores affected, the spokesperson says. It’s unclear how that contractor workforce has changed during the pandemic. The company said in April it had 500,000 contract shoppers and planned to add 250,000 more in the following two months. Today, the company says it still has 500,000 contractors.

A spokesperson for Kroger, which owns Mariano’s, said, “The Kroger family of companies was not involved in Instacart’s decision to suspend its in-store operations model.”

For years, grocery delivery was the provenance of busy households in highly urbanized areas. Now, a Mercatus analysis finds US online grocery sales have more than doubled since February 2020, to 10.2 percent of all grocery sales. Thirty percent of all US households ordered a grocery item online for pickup or delivery in November, compared with 12.5 percent in August 2019, according to the retail analytics firm Brick Meets Click. Retailers report that the stream of online orders is down a touch since its summer high, but they expect eaters’ new behavior patterns to stick around well after the pandemic.

When Covid hit the US last winter, grocers scrambled to keep pace with this surging demand for deliveries. Companies like Instacart stepped into the breach. Now grocers are reordering priorities, pouring money into tech for online ordering, smartphone apps, and getting food across customers’ doorsteps.

It’s expensive and intense work. The CEO and president of Albertsons, the second-largest US grocery chain, said this month that 30 percent of the company’s capital spending now goes towards technology. Kroger saw its digital sales almost double in each quarter of 2020, compared with the previous quarter, and it is spending on its “drive up and go” pickup options.

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