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Aug 11, 2023

The Friday Checkout: Instacart faces growing pushback from retailers

The announcement by Heinen’s this week that it will stop working with the

The announcement by Heinen's this week that it will stop working with the e-commerce company highlights the moves grocers are making to take control over their online operations.

The Friday Checkout is a weekly column providing more insight on the news, rounding up the announcements you may have missed and sharing what's to come.

Grocers have been pushing back on Instacart for a while now.

The popular e-commerce company rose to prominence after retailers handed over the keys to their online businesses following Amazon's purchase of Whole Foods in 2017 — many of them panicked over their lack of progress amid what felt like a sudden need for digital storefronts. But as online sales have grown, grocers have figured out they need to be controlling more of the fulfillment, customer management and — perhaps most importantly — revenue flow in e-commerce.

Still, many have declined to shut out Instacart entirely. The company controls a very popular marketplace that, like a digital mall, can funnel shoppers onto retailers’ doorsteps. It also has an army of gig workers that can handle the very expensive task of delivering orders to shoppers’ doors, even if they haven't picked those orders themselves.

This all explains why the news that regional grocer Heinen's is ending its relationship with Instacart entirely is so notable. In a brief note on its website, Heinen's explained that it will launch an updated online shopping platform and app next week, and that its own workers will handle order fulfillment. It did not explain why it's breaking up with Instacart, and representatives from the grocer did not respond to our inquiries.

Heinen's is an innovative grocer known for offering a high level of customer service, and its decision raises the possibility that other grocers may follow suit. As e-commerce sales growth has slowed over the past year or so, retailers have had to focus more on making those orders as profitable as possible.

Instacart, meanwhile, has prepared for all of this pushback by diversifying its business. In addition to its bread-and-butter e-commerce services, it now offers a variety of services aimed at modernizing physical grocery stores, including smart carts, electronic shelf labels, a scan-and-go service and customer analytics. It has also continued to fortify its digital advertising business, having just named a new head of global ad sales.

And there could be more coming as the company approaches a long-awaited IPO. The Information reported earlier this week that Instacart is planning to launch a service aimed at small businesses that will supply office products, cleaning supplies and more. An Instacart spokesperson declined to comment on the news when contacted by Grocery Dive.

California city acts to make the checkout aisle a healthier place

Lawmakers in Perris, California, have approved a law that requires grocery stores to offer shoppers healthier snack choices in check-out aisles. Once the ordinance goes into effect on July 1, food retailers operating in the city will need to stock those areas with items like fruit, nuts and low- or no-calorie beverages instead of chips, cookies and soda, according to the Center for Science in the Public Interest, which backed the measure.

Perris is the second municipality in the United States to issue an edict governing what grocers can sell at checkout counters. The city is following in the steps of Berkeley, California, which in September 2020 passed an ordinance banning grocery stores that occupy more than 2,500 square feet from making products such as candy, salty snacks available to customers when they pay, USA Today reported.

Heritage Grocers Group names Sprouts and The Fresh Market veteran to store development role

Heritage Grocers Group has hired retail real estate specialist Ted Frumkin to be senior vice president of store development for the ethnic grocery company, owner of the Cardenas Markets, Tony's Fresh Market and Los Altos Ranch Market chains. Frumkin previously served as group vice president of real estate and construction for The Fresh Market, and has also held real estate-related roles for retailers including Sprouts Farmers Market, Walmart, Staples and Office Depot, according to an emailed press release from Heritage Grocers Group.

The Giant Company wants shoppers to scan before they drink

The Giant Company plans to add shelf-mounted QR codes from advertising company A3 Media that let shoppers use their phones to get information about adult beverages to all of its stores that sell the products, according to a Tuesday press release sent by email.

Shoppers will be able to scan the tags to access details about alcoholic drinks in written, video and audio forms. The move follows a test of the system, known as Social Shelf, that Giant and A3 Media ran in a subset of the grocery chain's locations in 2022.

That's the number of personalized offers Ahold Delhaize's customer relationship management campaigns deliver annually in the U.S., according to the company's fourth quarter results, released Wednesday. The campaigns reach approximately 30 million households across the country, the grocer reported.

Walmart Q4 earnings

The retailer will be releasing its results for the fourth quarter and fiscal 2022 on Tuesday. In the third quarter, the retailer's grocery sales showed significant growth after a slight dip in Q2, as the company gained grocery market share among higher-income households.

Presidents’ Day holiday

Grocery Dive will taking a break from publishing Monday on account of the holiday, but will be back in your inboxes on Tuesday.