Instacart’s mass layoffs reflect shifting operations in grocery pickup

Diving letter:

  • Instacart plans to lay off around 1,877 employees who pick and pack food orders as the number of shoppers classified as employees is further reduced January 19th letter Sent by an attorney representing the e-commerce provider to Local 1546 of the United Food and Commercial Workers International Union (UFCW) representing food workers in Chicago.
  • The layoffs, first reported by BloombergThis includes Instacart’s only unionized worker who works as buyers at a Mariano store in the Chicago suburb of Skokie, Illinois.
  • Instacart is changing its approach to handling the online grocery services it provides to consumers and is pushing retailers more to make e-commerce services more efficient.

Dive Insight:

Instacart’s decision to reduce the use of staff to fulfill online grocery orders, known as “in-store shoppers”, is because more and more retailers are choosing to use their own staff to fulfill pick-up orders while continuing to rely on Instacart’s click-and-collect technology.

The e-commerce provider said this service model, which it calls “Partner Pick”, reflects the evolving needs of retailers at a time when online sales have been growing rapidly. In-store pickup has proven particularly popular with shoppers during the pandemic, and retailers are looking to improve order margins.

Instacart, which provides pickup services from more than 3,300 stores in 30 states, is The company is currently testing a program that will allow contract buyers, who normally process delivery orders, to pick, pack, and stage orders for pickup, the company said in a blog post explaining the changes made.

“For all of these retailers, Instacart full-service customers will still be available to pick and deliver groceries and merchandise for delivery customers,” the company wrote.

With regards to its laid-off workforce, Instacart plans to move some of these customers to other locations where those positions are still available and encourage retailers to hire customers when they have roles to fill. The company will provide severance payments to the laid-off workers in the range of $ 250 to $ 750. The amount depends on the amount of time the employee has worked for Instacart, as indicated in his attorney’s letter.

The UFCW opposed Instacart’s move to reduce its dependency on labor in what it termed a “ruthless attempt to eliminate jobs for essential workers” during the pandemic, and urged the company to reverse its decision.

“Instacart, which is laying off the only unionized workers in the company and destroying the jobs of nearly 2,000 dedicated frontline workers amid this public health crisis, is just wrong,” Marc Perrone, president of UFCW International, said in a statement.

The cuts include about 366 in-store buyers working at Mariano’s, where Instacart has 10 UFCW-represented buyers, as well as other Kroger-owned grocery stores. Instacart also cuts off around 1,500 buyers in other grocery chains that the company refused to identify. Instacart plans to exit the positions between mid-March and late June, according to the letter sent to the UFCW.

“Kroger was made aware of Instacart’s plan and is consistent with this transition,” the letter said. A Kroger spokesperson did not respond to a request for comment prior to the publication of this article.

Instacart has concluded that using in-store shoppers makes delivery more expensive in some cases than relying solely on contractors to provide these services. The use of contractors is also more efficient, as they can be deployed in different locations depending on the client’s needs, the lawyer said in the letter. Instacart has more than 500,000 of these contractors, so-called full-service shoppers, who, in addition to picking orders in stores, also handle deliveries.

The company’s attorney said Instacart has reduced the number of clients in the business since 2018 when it began shedding positions in areas like Los Angeles, Seattle, Minneapolis, San Diego, and parts of Texas. Instacart currently has fewer than 10,000 customers in the store, according to the letter.

Instacart’s announcement to reduce the number of employees on the payroll follows California voters’ approval in November of an election measure exempting third-party delivery platforms from a state law requiring companies to designate and designate workers Must offer advantages. Instacart supported the measure called Proposition 22.

Instacart’s disclosure that it is adapting its working model follows a decision by Albertsons Stop using store staff Process deliveries to a number of locations starting February. The grocer plans to outsource this work, though an industry source familiar with the changes Albertsons is making states it was unrelated to the Proposition 22 passing.

Comments are closed.