Peapod focuses on East Coast growth; shuttering Midwest unit

Ahold Delhaize USA’s online grocery delivery service is closing a regional division to expand its position on the East Coast.

Peapod is shuttering its Midwest division, which comprises $97 million of its total $1.1 billion of online revenue in the U.S. Effective Feb. 18, 2020, service for customers placing online grocery delivery orders in Illinois, Indiana and Wisconsin will be discontinued. There will be no changes for customers in any other markets Peapod currently serves.

As a result, Ahold Delhaize will lay off approximately 500 employees in the Chicago, Indianapolis and Milwaukee markets and close a distribution center and food preparation facility in Lake Zurich, Ill., distribution facilities in Chicago, Milwaukee, and Indianapolis, and a pick-up point in Palatine, Ill. Laid-off employees will be able to apply for other roles with Ahold Delhaize USA companies and eligible workers will be offered severance and transition support services. 

Headquarters for the Peapod Digital Labs technology group will remain in Chicago. Ahold Delhaize plans to roll out a new proprietary e-commerce platform for its U.S. brands which was developed by Peapod Digital Labs.

“This was a difficult decision given Peapod’s rich history in the Midwest,” said Kevin Holt, CEO, Ahold Delhaize USA. “As we’ve previously shared, to continue our strong track record of sales growth and market share gains, we are accelerating our growth and expanding the leadership positions of our businesses in our East Coast markets. This move will enable us to fully focus on markets where we have strong store density, leading market share, and a longstanding heritage of customer loyalty.”
  
Ahold Delhaize expects no significant impact to reported operating profits or free cash flow and said this announcement does not impact its commitment to its previously stated goal of 30% U.S. e-commerce growth in 2020.