Grocers said in a new survey that delivery service Instacart is making the right move in its attempt to go public, but even more grocer believe they’ll be able to leverage their own digital strategies to compete with the San Francisco-based tech company.
The monthly State of Digital Grocery Performance Scorecard by Grocery Doppio, data analytics company Incisiv and e-commerce solutions provider Wynshop released Tuesday, shows that 59% of grocers said filing for an IPO is the right strategy, and 72% who use the service agreed. But the company could be vulnerable to challenges from grocers, as 84% said they believe their own digital strategies will be able to compete with such third-party apps.
"Instacart's IPO will be good for the digital grocery ecosystem," said Charlie Kaplan, chief revenue officer at Wynshop, in a statement. "We expect to see grocers and third-party apps alike up their digital game, investing more in personalization, inventory management, fulfillment efficiencies, and loyalty, to grow profitable digital grocery businesses."
An even greater percentage (87%) worry that using third-party apps could cause them to lose touch with their shoppers. Seventy-six percent are concerned about the media revenue competition third-party apps pose to their business, and 61% said they find themselves in competition with third-party apps for digital talent.
Grocers clawed back a remarkable 35% of market share from third-party digital providers year over year in August. And the percentage of those who said they need the third-party apps like Instacart to scale dropped from 66% in August 2021 to 53% in August 2023, the report noted.
"Grocers have developed significant competitive strengths in the digital space since 2021," said Gaurav Pant, chief insights officer of both Incisiv and Grocery Doppio, in a statement. "Although they remain wary of competition with Instacart and other third-party apps, they now have a confidence in their own digital capabilities that did not exist two years ago."