Instacart to Phase Out 1,800 Employee Pickers

Instacart said this week it would be phasing out positions of in-store shoppers preparing orders for curbside pickup at certain retailers, including The Kroger Co., which will continue with a model that uses its own workers to assemble incoming orders made through Instacart. For certain other retail partners, Instacart will rely on contracted workers rather than employees to assemble pickup orders, including some who will be able to shop only and not deliver.

Instacart said the changes would support more efficient service and better position it to adapt to explosive growth in grocery e-commerce and curbside pickup sales that came amid the pandemic—but would result in more than 1,800 Instacart employee layoffs as it further leverages a larger workforce comprised of nonemployee “gig workers” and/or the employees of its partners.

Among the Instacart workers to be laid off are 366 currently serving Kroger-owned stores nationwide, including 10 at a Mariano’s store in Skokie, Ill., notable for having become the first bargaining unit at Instacart to have won representation by the United Food and Commercial Workers (UFCW) union. Instacart said that fact played no role in its decision, but the UFCW raised strong objections. The move comes only weeks after retailer Albertsons Cos. moved to outsource its own delivery drivers in favor of contracted employees—and as new federal administration perceived to be friendlier to labor takes over.

Details of the Kroger relationship were relayed not in press statements from Instacart but in a letter to UFCW Local 1546 from an attorney representing Instacart that was subsequently shared by the union. The Skokie bargaining unit was established a year ago and contract talks between Instacart and the union were in progress.

“With certain markets or retailers, including Kroger-owned stores, Instacart’s current use of ISSs is significantly more expensive on a cost-per-delivery basis than using a pure FSS model,” the attorney, Joseph Santucci Jr. of Stinson LLP, said in the letter. “The FSS model also offers other significant advantages, such as the ability to fluctuate the number of shoppers in order to meet demand.”

ISS refers to in-store shoppers, or Instacart employees who work scheduled shifts of up to 29 hours per week. Instacart is estimated to employ about 10,000 ISS workers. FSS, or full-service shoppers, refers to a force of nearly a half-million independent contractors whose work for Instacart comes through accepting “gigs” offered on a per-job basis.

Partner Pick

Instacart is calling the revamped arrangement with Kroger a “Partner Pick” model, and would resemble those in place already at certain retailers such as Sprouts Farmers Market. Other retailers, which Instacart did not identify but would presumably include low-labor discounters such as Aldi for whom Instacart also provides online ordering and curbside pickup, would continue using an existing “in-store shopper pick” model, in which contracted gig workers shop stores on behalf of online customers.

The phase-out of in-store shoppers at Kroger is expected to begin no sooner than mid-March, according to the letter. Kroger already employs a substantial team of store-based workers to assemble incoming orders made by customers through its own website. In the meantime, Kroger is preparing to transform how those workers pick orders in stores through a new software from Ocado, the partner behind its forthcoming network of e-commerce fulfillment centers.

Kroger in a statement issued to WGB said the chain played no role in Instacart’s decision to change its pickup strategies. It added however it had “thousands of jobs” available at its retail stores. Kroger declined to address how or if the forthcoming Ocado picking software rollout might affect jobs associated with Instacart.

Instacart works with more than 500 local, regional and national retailers to create a seamless online grocery shopping experience, and insisted in a blog post, “There isn’t a one-size-fits-all solution for retailers.”

“Over the last year in particular, the grocery industry has gone through an accelerated transformation requiring retailers to reimagine the shopping experience for their customers and explore new approaches,” it said.

Pioneering a model that leveraged contract workers on a per-job basis and providing the ability to get retailers to expand online service, Instacart established itself in 2012 a webstore and delivery partner for retailers and launched pickup service in 2018. The company last year doubled the grocery locations for which it also provides pickup service, forming relationships with more than 60 grocery partners, including Food Lion, Publix, Sprouts and Wegmans. Instacart said it serves 3,300 pickup locations today, having added 2,000 stores last year.

Through the Partner Pick model, retail employees will use pickup technology built specifically for them to enable their workers to fulfill Instacart Pickup orders for customers, Instacart said.

Instacart also said it would be piloting a new feature with a number of other retail partners to use its full-service shoppers to pick, page and stage orders—but not necessarily deliver them. For these retailers—which Instacart also did not identify—full-service shoppers will also continue to be available to pick and deliver groceries and goods for delivery customers.

Instacart said it would do “everything we can to support in-store shoppers through this transition,” including transferring impacted shoppers to other retailer locations where it has in-store shopper roles open, and working with retail partners to hire impacted shoppers for roles they’re looking to fill. Instacart also said it would provide impacted shoppers with separation packages—between $250 and $750 based on their tenure with Instacart, according to the Santucci letter.

‘Outrageous’

In a statement, UFCW International President Marc Perrone decried Instacart’s decision, which he said added to ongoing stress on the nation’s workforce amid the pandemic. The union for months has been pressuring employers to raise hazard pay and improve conditions for grocery workers deemed as “essential.”

“All across the country, Instacart grocery workers have been bravely serving on the front lines since the pandemic began, putting their own health at risk to ensure Americans have the food they need during this crisis," said Perrone. "Now, with COVID-19 outbreaks spiraling out of control, it is outrageous that Instacart would fire these courageous and hard-working men and women keeping our food supply secure.”

The union this week also highlighted a recent win by its Local 5 chapter in San Francisco, securing its first union contract for delivery workers employed by Albertsons. That win came amid Albertsons’ move to dismantle its own delivery fleets in some markets in favor a nationwide deal with the gig-powered delivery company DoorDash.

The three-year contract covers 250 drivers and includes guaranteed 32 minimum hours for full-time workers and limits on the use of third-party applications like DoorDash, the union said. The contract also includes an increase in employer contributions for health are benefits, the creation of a driver-led health and safety committee, and raises the salary cap from $19 per hour to $22 per hour.