The news: Instacart is phasing out its Caper smart carts after the product failed to gain traction with retailers, the company said. The move will be completed by Q2 2027 and will cost Instacart between $55 million and $80 million, including costs associated with terminating employees and contracts.

Why it matters: The news is a blow to Instacart’s attempts to diversify beyond grocery delivery. While the company continues to offer a full suite of in-store solutions—including its recent acquisition of Arpalus, an AI-powered inventory management tool—Caper Carts were its most visible attempt to penetrate physical retail.

The end of the Caper Cart could also spell the end—at least in the short-term—of Instacart’s in-store advertising capabilities. The company offered brands the ability to run dynamic ads on its carts, including promotions at the beginning of shoppers’ trips and personalized recommendations based on their real-time behaviors, and shared the ad revenues with retailers.

But even the prospect of additional ad revenues wasn’t enough to persuade retailers to sign on, pointing to the significant behavioral shifts required to make consumers comfortable with the idea of using a smart cart. Less than 30% of US grocery shoppers believe that smart carts with the ability to show customers’ unique prices and promos would make grocery shopping easier, according to a July 2025 survey by EMARKETER and Amazon Ads.

Implications for retail media: Instacart’s decision to pull the plug on the Caper Cart could hamper its attempts to expand its retail media business, especially as other retailers—including Walgreens, Albertsons, and Kroger—lean further into in-store advertising. We already expect Instacart’s share of commerce media ad spending to fall over the next three years as its share of grocery ecommerce spending declines.

The demise of the Caper Cart also offers yet another reminder of the difficulties of scaling in-store retail media. Smart carts in theory can enable retailers to expand in-store ad inventory and deliver more personalized ads and promotions, but that requires companies to convince customers that using the technology will improve their shopping experience.