Here's why the departure of Instacart CEO Fidji Simo is a sympton of deeper tensions in grocery retail technology

Last week, we reported that Instacart CEO Fidji Simo is departing the grocery technology company to join OpenAI as its Chief of Applications.

In an email to employees, she said: “Let me start by saying this was an incredibly hard decision because I love this company. We are operating incredibly well as our last earnings results have shown. Our strategy is working and this team is top notch, which makes it very hard to leave.”

“At the same time, you all know my passion for AI generally and in particular for the potential it has to cure diseases - the ability to lead such an important part of our collective future was a hard opportunity to pass up. I only feel comfortable doing this because Instacart is on an excellent track and in great hands with a stellar management team.”

The departure is a symptom of deeper tensions in grocery technology, says David Croushore, Director - Retail at AlixPartners. Despite strong growth in e-commerce across the sector, Instacart faces a crossroads, he argues.

In a LinkedIn post, he said: "Instacart's business model might be its greatest limitation. It acts as a middleman, yet grocery chains increasingly view it as competition for customer loyalty and data. This friction challenges long-term partnerships. At some point, Instacart may decide to become a retailer itself. Why should partners take the risk?"

He added: "With tight grocery margins, scaling delivery without eroding profitability is a high wire act. The frequency and aggressiveness of promotions keeps ramping up as Instacart and its rivals chase growth at the expense of unit economics. As consumer confidence wanes, expect even more pressure on margins in this vertical."

"Instacart's core business is grocery delivery, but they've lately expanded into areas spanning in-store tech to retail media. As competitors like DoorDash and Uber capture share of their core market, Instacart must decide what it wants to be when it grows up."

He concluded: "A shakeup at the top suggests the company needs to pivot, fast. But which direction should the new leadership go? Instacart’s future will hinge on answering one question: Can it remain a tech enabler for grocers while competing for the same end customer?"

2025 RTIH INNOVATION AWARDS

Grocery technology will be a key focus area at the 2025 RTIH Innovation Awards.

The awards, which are now open for entries, celebrate global tech innovation in a fast moving omnichannel world.

Our 2024 hall of fame entrants were revealed during an event which took place at RIBA’s 66 Portland Place HQ in Central London on 21st November, and consisted of a drinks reception, three course meal, and awards ceremony presided over by comedian Lucy Porter.

In his welcome speech, Scott Thompson, Founder and Editor, RTIH, said: “The event is now into its sixth year and what a journey it has been. The awards started life as an online only affair during the Covid outbreak, before launching as a small scale in real life event and growing year on year to the point where we’re now selling out this fine, historic venue.”

He added: “Congratulations to all of our finalists. Many submissions did not make it through to the final stage, and getting to this point is no mean feat. Checkout-free stores, automated supply chains, immersive experiences, on-demand delivery, next generation loyalty offerings, inclusive retail, green technology. We’ve got all the cool stuff covered this evening.”

“But just importantly we’ve got lots of great examples of companies taking innovative tech and making it usable in everyday operations - resulting in more efficiency and profitability in all areas.”

Congratulations to our 2024 winners, and a big thank you to our sponsors, judging panel, the legend that is Lucy Porter, and all those who attended November's gathering. 

For further information on the 2025 RTIH Innovation Awards, please fill in the below form and we will get back to you asap.