Dive Brief:
- Giant Food Stores is opening an e-commerce pickup and fulfillment facility in Lancaster, Pennsylvania on Feb. 12. The 38,000-square foot online grocery pickup facility is being marketed under a new brand: Giant Direct, Powered by Peapod.
- Ahold Delhaize, which owns Giant as well as e-grocer Peapod, closed the Giant store in 2017 and announced in June 2018 it would reopen it as part of a $22 million investment in the area that also included four store remodels, price investments and a new fuel center.
- The Giant Direct, Powered by Peapod facility will offer a pickup option where online orders are delivered directly to customer vehicles that have pulled up outside. Customers also can visit a walk-up vestibule featuring tablets where they can place their order. In addition, the hub also will allow Giant to serve more local residents by delivering groceries directly to shoppers.
Dive Insight:
The new online grocery pickup outlet would check off a lot of boxes for Ahold Delhaize and its Giant Foods banner. For one, the strategy opens up a new way to repurpose underperforming stores in key regions. It also puts fulfillment closer to where consumers live, which is crucial for the speedy service that so many shoppers demand these days.
The location will allow Giant to serve 40% more customers than the company store that previously occupied the space, according to the company release.
Unlike traditional grocery stores that use a brick-and-mortar location to also fulfill online orders — a practice that can be inefficient and result in workers getting in the way of shoppers — an e-commerce-focused location promises to make online fulfillment faster and more efficient. The nearly 40,000-square foot facility could eventually include some of the technology that Ahold Delhaize is testing at its automated micro-fulfillment center attached to a Stop & Shop store in Connecticut.
This also marks the latest step by Ahold Delhaize to expand the reach of its Peapod brand. In addition to using the e-grocer to deliver products to consumers, Ahold Delhaize also has started using the name for local branding under the “Powered by Peapod” logo at its stores. Peapod has jumped into voice ordering, as well, including an integration with Amazon's Alexa device. Last year, it launched an e-commerce division dedicated to innovation in the rapidly evolving channel. The new venture, Peapod Digital Labs, will oversee online development across all of the company’s retail brands, including Peapod.
Frans Muller, CEO of Ahold Delhaize, told reporters in November that the company moved too slow in the past, and that 10% to 12% growth in e-commerce is "not satisfactory ... and that's why we've stepped up."
"Twenty, 30% is an ambitious target," he told reporters. "That is the right ambition for the moment, and the moment we can dial this up when we feel safe then we will do so."
By 2020, Ahold Delhaize expects about 65% of its customers to have access to same-day delivery and store pickup. Last year, it announced plans to double online net sales to $7.8 billion during the next three years. Peapod will be a central part of that growth strategy.
If the Lancaster facility is successful, Ahold Delhaize will likely try to repurpose shuttered or under-productive locations across its five grocery store banners. The model follows a practice used in Europe where online orders are fulfilled away from stores but still close to customers.
Other U.S. retailers have introduced similar concepts including Amazon's Fresh Pickup locations, a Hy-Vee e-commerce outlet facility and Walmart's dedicated pickup locations, announced last year. With competition ramping up and more than $100 billion flowing online by 2022, Ahold Delhaize needs to move quickly to keep up with deep-pocketed, tech-savvy competitors.
