Can Peapod's expansion in New York keep it competitive?
- In partnership with Stop & Shop, Peapod has announced the opening of its fifth wareroom on Long Island in East Northport, New York, according to a company press release. The wareroom will serve as an e-commerce fulfillment center for Stop & Shop and will increase order delivery capabilities by 10% in the New York region.
- The 10,000 square foot wareroom will be adjacent to the East Northport Stop & Shop store, and will offer both grocery delivery and pickup. The facility will also create 125 local jobs.
- "With this expansion, we can reach more homes and also offer even more capacity to serve both new and existing customers. Expanding our delivery and pick-up service is just one more way that Peapod is making the lives of our customers easier," said Walt Lentz, interim president of Peapod, in a press release.
Peapod currently serves 24 metro areas across the Midwest and East Coast, with more than 200 pickup sites in addition to home and business delivery. This is a relatively large footprint, and Peapod has a strong hold in the regions it serves, with customers reporting a 93% satisfaction rating, according to a survey from Kantar Consulting. Peapod shoppers cite convenience and customer service as major benefits, and it’s likely that increased e-commerce service out of East Northport will be welcome among shoppers in the region.
While Peapod has kept its customers happy and has the longest operating history of any grocery delivery company, Ahold Delhaize has been relatively slow to expand it. Last year, reports of lagging growth showed that Peapod was beginning to feel the pressure of other grocery delivery companies, and Ahold Delhaize committed to investing more in online capabilities and making e-commerce a higher priority. In addition to the new wareroom on Long Island, Peapod opened a new headquarters in Chicago earlier this year but hasn’t announced any additional growth plans.
Competition is getting stronger as brick-and-mortar retailers strengthen their online offerings in many of Peapod’s service areas. The rapid expansion of e-commerce and delivery companies such as Instacart, Shipt and Postmates could pose a major threat to Peapod. Despite Peapod’s loyal users, those customers who don’t share the same loyalty to Ahold Delhaize stores could easily choose any other service or retailer.
Additionally, Ahold Delhaize stores are popular, but they are not immune to the threat of expansion of grocers such as Aldi or Sprouts, nor are they safe against e-commerce evolution. Harris Teeter, for example, just expanded grocery delivery with Shipt in the Mid-Atlantic, which could challenge Peapod’s operations for Stop & Shops and Giants in that region.
The new Peapod wareroom is being unveiled in conjunction with a remodeled Stop & Shop store, in line with Ahold Delhaize's drive to more fully integrate the e-commerce provider with its stores. The co-location of the wareroom with a grocery store will likely result in easier logistics and quicker fulfillment, and will also be an opportunity for Stop & Shop to raise awareness of Peapod for shoppers at this particular location.
Ahold Delhaize has high hopes for Peapod. The company recently revised incentives for its store and Peapod managers to get both sides working together better. That should boost productivity, but the service will need to keeping growing and evolving beyond Ahold Delhaize's store base if it hopes to stay competitive.
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