Retailer will focus omnichannel efforts on East Coast

QUINCY, Mass. – Ahold Delhaize USA plans to discontinue its Peapod online grocery business in the Midwest, eliminating the delivery service in Illinois, Wisconsin and Indiana. The retailer, which acquired Peapod in 2000, will focus instead on expanding its omnichannel capabilities in the East Coast markets it also serves with brick-and-mortar stores.

“This was a difficult decision given Peapod’s rich history in the Midwest,” Ahold Delhaize USA chief executive officer Kevin Holt said in a statement. “We know changes such as these are never easy for consumers and communities. We appreciate the loyalty of associates and customers in the Midwest sales business over the past three decades. We have been and will continue to leverage the learnings from our 30-year legacy of online grocery to enable each of the brands to grow its omnichannel business on the East Coast.”

The Midwest business, which will be discontinued effective February 18, accounts for just $97 million of Ahold Delhaize’s $1.1 billion in total online revenue in the United States, the company said. Chicago will remain the main home of Peapod Digital Labs, will remain dedicated to helping Ahold Delhaize USA’s local brands deliver industry-leading omnichannel experiences for their customers. At the heart of that effort will be a new proprietary e-commerce platform that was created in the Chicago office.

“Chicago will remain the headquarters for our Peapod Digital Labs team, and we will continue to draw from the valuable pool of digital and e-commerce talent in the market,” said JJ Fleeman, president of Peapod Digital Labs and chief e-commerce officer at Ahold Delhaize USA. “Through Peapod Digital Labs, we will continue to build upon Peapod’s technology legacy. Peapod began here, and we will remain here, in the heart of Chicago. We look forward to honoring and leveraging Peapod’s longstanding legacy of expertise in online grocery and fully focusing our team’s energy and talent on supporting the growth of each of the East Coast brands.”

As a result of the move, Ahold Delhaize will close a distribution center and food preparation facility in Lake Zurich, Ill.; distribution facilities in Chicago, Milwaukee and Indianapolis, Ind.; and a pick-up point in Palatine, Ill. The company said the approximately 500 associates in the Midwest whose jobs will be eliminated will be eligible to apply for other roles within Ahold Delhaize USA companies. And eligible associates will be offered severance and transition support services.

Ahold Delhaize said it expects no significant impact from the move to its reported operating profits or free cash flow. And it will not change the company’s commitment to its previously stated goal of posting 30% growth in its e-commerce sales this year.

“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,” Holt said. “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.”