Dive Brief:

• FreshDirect has expanded delivery capacity in New Jersey and Connecticut as well as in the New York suburb of Westchester and on Long Island, the company announced this week. The expansion is in response to a 100% year-over-year growth surge in the suburban areas it serves. 
• The company is also extending delivery to the Hamptons, which it normally offers only seasonally, for the foreseeable future.  
• The online grocer will ramp up production at its 640,000-square-foot automated warehouse in the Bronx to fulfill the additional order capacity, Chief Operating Officer Tim Knoll said. The company plans to hire 350 full-time employees between now and mid-September.

Dive Insight:

After serving New York City for years, Freshdirect has slowly expanded to counties upstate, parts of New Jersey and Long Island, as well as Connecticut and Washington, DC. Knoll said it is now seeing the suburbs outpace urban areas in sales growth and total revenues.

"Our suburban customers have larger families and larger pantries, driving growth in order size," he said in an email. "And they are loyal and frequent customers; they form their habit quickly with us and stick." 

Many of its wealthy urban shoppers have also fled New York City due to COVID-19 to surrounding areas like the Hamptons — an enclave the e-grocer has served seasonally for more than a decade.

The retailer noted in its press release that it found that 76% of customers already in the Hamptons plan to extend their stay beyond summer. It also said that a recent company survey found demand should remain high among customers in this region and in other suburban areas. 

In order to meet this extra demand, Freshdirect will rely on its “hub and spoke” model centered on its 640,000-square-foot automated distribution center in the Bronx, which enables it to serve a broader base of customers and get products to them faster, Knoll said.

He added that its Bronx facility is built for scale and supports multiple spokes throughout the Northeast, enabling it to fulfill next day, same day and on-demand deliveries in the suburban markets it serves. In addition, FreshDirect has doubled its transportation capacity to meet the growing demand. 

Late last year, FreshDirect extended delivery to suburban markets in Connecticut and Washington, D.C. This year, the e-grocer rebranded its same-day service, which it has been expanding in New York City and its northern suburbs since 2016, and in July the company announced it would ramp up same-day delivery in the nation's capitol with help from a 10,000-square-foot micro-fulfillment center built and operated by Fabric.