Kroger's delivery expansion with DoorDash is bad news for Instacart, analysts say

By Bill Peters

'DoorDash's extended partnership with Kroger directly challenges Instacart's position among intermediaries,' Wedbush analysts say as stock tumbles

Wedbush analysts in August downgraded Instacart's stock on competition concerns.

Shares of grocery-delivery app Instacart slid Monday after rival DoorDash Inc. and supermarket giant Kroger Co. said they were expanding an existing partnership to deliver a lot more groceries to consumers' homes starting next month.

The announcement added to Wall Street's concerns about Instacart's ability to compete against an industry backdrop where grocery delivery has become more common. The stock of Instacart parent Maplebear Inc. (CART) tumbled 10.4% on Monday.

"DoorDash's extended partnership with Kroger directly challenges Instacart's position among intermediaries," Wedbush analysts said in a research note on Monday.

Kroger and DoorDash on Monday said that nearly 2,700 Kroger stores would offer delivery through DoorDash starting on Oct. 1. That service will make Kroger's full selection of groceries and other basics available for delivery, and it will be available across chains Kroger owns, like Ralphs, Fred Meyer and Mariano's. Shoppers could receive their deliveries within "as little as an hour," the companies said.

Monday's announcement deepens a collaboration between Kroger and DoorDash (DASH), after Kroger (KR) in 2022 began using DoorDash's marketplace to deliver things like flowers and sushi. DoorDash began offering on-demand grocery delivery in 2020 and has tried to offer the service in more stores.

According to Monday's announcement, Kroger and DoorDash will also collaborate on so-called retail media - that is, advertising that other brands can buy within a retailer's online ecosystem - and "new delivery models that leverage Kroger's store network and DoorDash's technology."

Grocery delivery is an increasingly large business for U.S. retail chains. Uber Technologies Inc. (UBER) also delivers products from multiple grocery stores.

The Wedbush analysts said the move by Kroger and DoorDash marked the latest threat to Instacart.

"In our view, Instacart is at risk of losing incremental market share to other leading intermediaries and grocers that can leverage their scale and success in adjacent categories to capture demand for online grocery and convenience," they said.

The analysts estimated that Kroger made up more than 10% of Instacart's gross transaction value, or the value of items sold on the app. They said that while Instacart would still power Kroger's same-day delivery service, the announcement between Kroger and DoorDash underscored their belief that "Instacart may be losing its perceived position as Kroger's preferred partner for same-day delivery."

In August, the analysts downgraded Instacart's stock on competition concerns. Citing data from eMarketer, they said that among third-party services in 2022, Instacart made up around 70% of grocery-delivery sales volume. By last year, they said, Instacart's market share had fallen to around 58%.

"The company's share losses have been attributable to increased scale and investments in logistics and grocery initiatives led by Uber and DoorDash," the analysts said.

Shares of Instacart are down 8.5% so far this year.

-Bill Peters

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(END) Dow Jones Newswires

09-29-25 1840ET