Ahold Delhaize takes on Kroger with micro-fulfillment pilot

Dan Berthiaume
Senior Editor, Technology
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A global supermarket conglomerate is backing up a commitment to boost its online capacity in the U.S. while increasing its competition with America’s largest grocer.

Peapod Digital Labs, the digital, e-commerce and commercial platform for Ahold Delhaize USA, will pilot micro-fulfillment technology with Ahold Delhaize banner The Giant Company in the Philadelphia market. The pilot will be part of an e-commerce fulfillment center (EFC) planned for the Philadelphia market to help meet customer demand in the Center City and South Philadelphia areas. 

This location is expected to fulfill approximately 15,000 online orders per week for delivery to customers’ homes. Ahold Delhaize’s EFC model is similar to the customer fulfillment center (CFC) model Kroger and U.K.-based online grocery retailer Ocado is building across the U.S. The CFC model – an automated warehouse facility with digital and robotic capabilities – is designed to provide customers with any product they want, at a time and location of their convenience.

The hive robotic technology for the new EFC will include the Swisslog AutoStore storage and retrieval system, empowered by Swisslog’s SynQ software and pick stations, as well as Peapod Digital Labs’ proprietary manual picking capabilities. By applying the AutoStore grid storage density and goods-to-person productivity gains in tandem with Peapod Digital Labs’ picking system, Ahold Delhaize seeks to create a flexible solution for streamlining grocery e-commerce order fulfillment.

In November 2020, Ahold Delhaize said it would increase its online capacity by nearly 100% in the U.S., as part of a larger initiative to establish its U.S. banners as industry-leading local omnichannel retailers in 2021 and beyond. Ahold Delhaize USA companies will continue other micro-fulfillment tests, such as a multi-shuttle pilot with Stop & Shop and TakeOff Technologies in the Hartford, Conn., market. Additional micro-fulfillment pilots will be announced in the coming months.  

“Over the past year, all Ahold Delhaize USA companies have seen a tremendous increase in online sales growth, and we believe this growth is here to stay,” said J.J. Fleeman, president of Peapod Digital Labs and chief e-commerce officer. “As we think about shifting consumer expectations and the future of omnichannel shopping, we must continue to build and evolve our already strong infrastructure to optimize pick-up and delivery. We’re excited to kick off this pilot with The Giant Company and Swisslog as we continue to build out e-commerce fulfillment capabilities, which we believe will be key in supporting continued omnichannel growth.”

As of March 1, 2021, Ahold Delhaize USA intends its supply chain to include 18 self-managed traditional distribution centers, 28 EFCs and over 1,100 click-and-collect locations. By 2023, this network is slated to increase to more than 27 distribution centers with additional EFC and click-and-collect growth as part of the overall transformation of the omnichannel supply chain.

Ahold Delhaize USA, a division of Netherlands-based Ahold Delhaize, is the parent company for Ahold Delhaize's U.S. companies, including Food Lion, Giant Food, The Giant Company, Hannaford, Stop & Shop, Retail Business Services - a U.S. support services company providing services to the brands, and Peapod Digital Labs. In total, Ahold Delhaize USA operates more than 2,000 stores and distribution centers across more than 20 states.