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Grocery delivery service Instacart appears imminent to go public, possibly as early as next week. The impending IPO comes amid turbulent economic skies throughout the grocery sector, with headwinds driven by ongoing inflation and rising gas prices. Upon first glance, the opening ride on the market for Instacart could be a bumpy one as the company has once again dramatically sliced its valuation down from $24 billion in May 2022. Bad omen or strategy? Here’s a look at how consumers are feeling about Instacart ahead of its Nasdaq debut, with the latest insights from CivicScience’s InsightStore.
According to fresh CivicScience polling data, the percentage of U.S. adults reporting experience using Instacart has held steady around 18% since May 2022 (when Instacart filed for an IPO), while those interested has ticked down a hair. Grocery delivery usage as a whole has gone up a touch over the same time frame to 35% (up from 33%) of consumers reporting as having experience using grocery delivery (compared to 47% who aren’t interested).
A possible red flag for Instacart? Nearly half of Americans now say they have no interest in trying out the service – marking a three percentage point increase YoY. That said, awareness of Instacart, on the other hand, has gone up by two points over the same time frame.
Non-grocery Shopping Stands Out
A deeper examination into ordering trends finds a plurality of Instacart users (33%) report ordering groceries about once a month, while 24% use it at least weekly, and 22% several times per month. While Instacart has established a frequent user base for its grocery delivery service, it encounters robust competition from grocery retailers stores venturing into their own delivery platforms. Moreover, apps like DoorDash are making inroads into the grocery sector, intensifying the competitive landscape. Instacart has countered by expanding to retail partners beyond just groceries (like Lowe’s, for example) and working to speed up delivery times. The data show its users are more interested in ordering non-grocery items, with 51% ordering something other than groceries at least several times per month (compared to 46% among Instacart’s grocery shoppers).
Causes for Concern
In the immediate future, inflation, gas prices, and the return of student loan payments all loom large as challenges for Instacart usage. Data show in the last 30 days nearly 8-in-10 Americans have refrained from at least one purchase at the grocery store due to its price (n=2,367) – unsurprising given the aforementioned trifecta. Cost is of particular concern for Instacart adopters who say they don’t use grocery delivery services regularly, as 43% cite it as their main reason for not using grocery delivery more frequently, more than double that among the Gen Pop (19%). Distrusting the shopper to properly fulfill orders also stands out as a top concern for people with experience using Instacart.
But that’s not all: As grocery retailers lean into offering services of their own, consumers seem to prefer using them more than third-party services like Instacart. Forty-five percent of grocery delivery users say they turn to a store’s own delivery service most often, compared to 25% who are using a third party.
An additional hindrance to increasing adoption that Instcart (and any other delivery service) will likely have trouble combating: consumers enjoy doing their own grocery shopping in-store. A plurality of those who don’t typically use grocery delivery (35%) prefer the in-store grocery shopping experience, and that figure only jumps higher among those uninterested in using Instacart specifically (40%).
The height of the pandemic meant a greater reliance on delivery out of necessity. Even amid a recent surge in cases, CivicScience recently found 41% believe COVID-19 is ‘about as severe’ as the flu or the common cold, so comfort levels in grocery shopping could certainly pose a major obstacle for grocery delivery providers. Even still, the data show Instcart’s base of users is continuing to utilize its service, making retention of their clientele a key focus amid the tough economic conditions.
Three Insights To Know About Instacart Users & Intenders:
- Instacart experience looks to be a proxy for age, as 42% of Gen Z adults aware of the company say they’ve used its service, with another 29% interested in trying it. Thirty-one percent of Millennials have also used it, compared to 15% among Baby Boomers.
- One-third of users and intenders primarily shop for groceries at major regional grocery chains like Safeway, while more intenders shop at supercenters like Walmart (31% to 27% among users).
- Looking ahead to holiday shopping, 23% of Instacart intenders plan to do between 75%-100% of their shopping online – eight points higher than current users (15%) and six points higher than those uninterested in Instacart (17%). A sizable portion of these intenders remain up for grabs as 60% of intenders say they haven’t started holiday shopping yet (compared to 53% of users).
The road to sustained success for Instacart could be winding and bumpy, but grocery delivery hasn’t gone away despite inflation and an overall improved pandemic situation. Can the company leverage its non-grocery delivery service for the upcoming holiday shopping season and differentiate itself from its grocery retail competition?
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