The retail grocery industry in the United States faces a precarious economic environment. Due primarily to competition from warehouse clubs, supercenters, and e-commerce, retail grocery sales have underperformed the US retail sector and the overall US economy, and employment growth in the industry has been stagnant. Yet, a large proportion of consumers maintain a strong preference for shopping at retail grocery stores, and total grocery industry sales and employment still exceed sales and employment at warehouse clubs, supercenters, and e-commerce retailers. To compete in this setting, many retail grocers are turning to third-party online grocery delivery services offering online shopping and same-day grocery delivery. The largest of these third-party delivery services is Instacart. 

Instacart retained NERA to prepare a study that evaluates how Instacart adoption affects the retail grocery industry. NERA Associate Director Dr. Robert Kulick applies a broad array of rigorous statistical methods using data from California, Illinois, New York, and Washington to test the hypothesis that Instacart increases grocery employment by creating incremental demand for the retail grocery industry and quantifies Instacart’s effect on incremental grocery sales.

Dr. Kulick’s analysis indicates that Instacart’s entry and expansion in these four states has significantly increased retail grocery employment and revenue. Specifically:

• The results from the primary statistical model indicate that Instacart’s entry into a local market is associated with a 4% increase in retail grocery employment.
• The statistical estimates imply that across the four states, Instacart adoption increased retail grocery employment in 2019 by over 23,000 jobs, supporting over 11,500 grocery jobs in California, 3,400 in Illinois, 6,600 in New York, and 1,900 in Washington.
• Across the four states, Instacart increased retail grocery revenue by over $620 million in 2019, with impacts of over $337 million in California, $75 million in Illinois, $154 million in New York, and $55 million in Washington.