With grocery delivery and curbside pickup booming, some grocers are rethinking how they work with Instacart, the grocery delivery startup that has served as a lifeline for many as the public health crisis kept people at home.
By late April, Instacart said it had hired 300,000 independent contractor "full-service shoppers" to meet the surge in customer demand, and the company said it plans to add another 200,000 over the next couple of months. However, some of its in-store shoppers, who are part-time employees of Instacart, are losing their jobs, CNN Business has learned.
The job cuts are the result of at least two of Instacart's store partners, Aldi and Sprouts, opting to replace Instacart's in-store shoppers, as necessary, with their own employees.
Instacart's service works a few ways: Customers can place orders for delivery and workers for Instacart — either its in-store shoppers or its contract workers — will shop for the items; then, the contract workers will deliver. Or, customers can purchase items for pickup at select locations. In this case, an Instacart in-store shopper, employed by Instacart, or an employee of the retail store will shop for items and package them for pickup. As part-time employees, in-store workers are paid an hourly wage; they're also eligible for benefits such as unemployment, social security and Medicare, and more recently accrued sick pay. It is some of these in-store shoppers that have been impacted by cuts.
"At Instacart, we work closely with more than 400 retail partners to create a seamless grocery delivery and pickup experience for customers across North America. As part of this effort, we regularly explore new solutions with our partners to find the best model for them and their customers," said an Instacart spokesperson in a statement to CNN Business. "Moving forward, employees at some of our retail partner locations will now utilize Instacart technology to fulfill Instacart Pickup orders for customers. As a result, Instacart in-store shoppers will no longer be picking at these stores and we will be winding down our in-store operations at ALDI and Sprouts locations."
The shift comes at a time when more customers are turning to pickup options due to the pandemic. And by using just Instacart's technology, an option Instacart said has been available to retailers since 2014, the grocers are able to assert more control over the workers who are inside their stores.
Since the stores will continue to use Instacart's technology to fulfill orders to be picked up by customers, Instacart customers won't see a difference in their experience. They can still purchase items from Aldi or Sprouts via the app and have it delivered by a full-service shopper, or head to the store to pick up the order.
Instacart's success during the pandemic gave some workers a sense of security. Demand for grocery pickup and deliveries soared and investors poured $325 million into the service, valuing it at nearly $14 billion.
But companies across industries have revisited their strategies as the pandemic rages on and new consumer behaviors take hold, leaving already vulnerable workers exposed to more change and job loss.
Five Instacart in-store shoppers from Aldi and Sprouts grocery stores in California, Illinois and Texas who spoke to CNN Business recalled a similar story: They received an email in late June or early July from the company notifying them that the store locations they work at will no longer be "an in-store shopping partner location moving forward."
Through emails, two of which were reviewed by CNN Business and were largely similar, impacted in-store shoppers were given three options: apply to transfer to another retail partner in the area; apply to be hired directly by the grocery store, which will staff employees to pick orders using Instacart's technology; or accept a separation package (the amount varies by tenure) in exchange for "signing a separation agreement, including a general release of claims."
While workers were given options of how to proceed, the emails indicated that there were no job guarantees when selecting to transfer locations or apply to a grocery store job.
One part-time shopper in the Chicago area, whose job is being eliminated at an Aldi location, questioned how obtainable the options presented really were. The worker told CNN Business they did not apply to transfer given the other locations were inconvenient and said the Aldi location does not currently offer pickup.
The worker told CNN Business that it had been "really tough" to work during the pandemic. "All of us had that fear of getting sick or a family member dying," said the person, who spoke on the condition of anonymity for fear of retribution.
Now, the worker is entering a tough job market. "I feel it should have been done differently," the person said. "Somebody should have talked to us in advance, maybe given us three months advance notice. We're all in a pandemic. It is hard enough."
(Instacart said it provided up to six weeks of notice about the changes.)
According to Instacart, it has offered transfers to the majority of in-store shoppers impacted but does not yet know how many will stay or depart as a result of the changes.
"We've offered transfers to impacted in-store shoppers to nearby retailer locations when possible, and we're also working closely with our retail partners to identify potential hiring opportunities based on open roles," the Instacart spokesperson said in the statement.
According to Instacart, about 120 stores between the two grocers are impacted by the changes, but it would not say how many workers are employed at those stores. The company said it has about 1,000 stores with in-store shopper operations.
Prior to the pandemic, Instacart had roughly 12,000 in-store shoppers who are part-time employees. The company said it now has nearly 10,000 of these shoppers, noting that the number fluctuates due to factors including retailer needs and worker attrition.
A Sprouts spokesperson told CNN Business that it had Instacart's in-store shoppers in about 50 of its stores. At the beginning of summer, it expanded grocery pickup to its remaining locations, about 300, using Sprouts workers to fulfill orders. The change will provide uniformity across its stores. The spokesperson declined to say how many workers it would hire at the stores that will no longer use Instacart workers.
Aldi did not respond to multiple requests for comment.
The severance pay ranges from $250 to $750 depending on tenure, according to Instacart. Three workers CNN Business spoke to were unclear what they would have to agree to in exchange for the money.
"My signature is worth more than that," said Hanniball Hill, an in-store Aldi shopper in Texas who was impacted by the changes and was eligible for $250. Some of his colleagues who are college students have "no choice" but to accept the money, he said. "They have rent to pay."