Is there an ‘Instacart Effect?’

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Is there an ‘Instacart Effect?’

By Dan Berthiaume - 02/12/2020

A new study suggests Instacart has a broad positive impact on the U.S. grocery sector.

Research by Dr. Robert Kulick of NERA Economic Consulting finds that by creating additional customer demand for grocery stores, Instacart has driven an increase of more than $620 million in revenue and over 23,000 jobs in the grocery sector in California, New York, Illinois, and Washington.

Data indicates the entry and expansion of Instacart into local markets acts as an economic complement to grocery store employment, which the study refers to as “The Instacart Effect.” This brings incremental business to the store while creating an e-commerce footprint for retailers. 

On average, Instacart's entry into a metropolitan statistical area (MSA), is associated with a 4% increase in retail grocery employment there, as grocers add employees to support the increased business at their store. These roles are direct employees of grocery stores and include jobs such as cashiers, stocking associates, and deli counter clerks, among others. 

The results indicate that the magnitude of "The Instacart Effect" is statistically equivalent for each state. Thus, the findings suggest that "The Instacart Effect" is a national phenomenon. 

At the state level, the study finds: 
•    In California, "The Instacart Effect" created over 11,500 additional jobs and $337 million in incremental revenue.
•    In Illinois, "The Instacart Effect" created over 3,400 jobs and $75 million in incremental revenue. 
•    In New York, "The Instacart Effect" created over 6,600 jobs and $154 million in incremental revenue.
•    In Washington, "The Instacart Effect" created over 1,900 jobs and $56 million in incremental revenue. 

"Today in the U.S., grocery is almost a $1 trillion industry — but it's only now going through its first big wave of tech innovation," said Nilam Ganenthiran, president of Instacart. "While we've long seen in our own internal data that Instacart can incrementally boost retail partner sales between 50% to 80%, this study shows that when Instacart enters a market the tides turn and 'The Instacart Effect' drives meaningful job creation and increased revenue for the grocery industry."

The study, conducted by Dr. Robert Kulick of NERA Economic Consulting, is based on the results of three distinct statistical models, with multiple statistical techniques applied to each model to rule out alternative explanations for the relationship. Seven falsification — or "placebo" — tests were applied to the results of each model.