Ahold Delhaize is looking to bring pickup orders in-house in the United States, even as it reverses course on direct delivery fulfillment.
The multinational grocery giant shared on a call with analysts Wednesday (Nov. 8) discussing its third-quarter earnings results how it is reconfiguring its U.S. eCommerce business to boost profitability.
“As customers’ shopping preferences evolve in the U.S., one of the concrete outcomes is to orient our online fulfillment capabilities towards more efficient, less asset-intense same-day delivery models such as click and collect,” Ahold Delhaize President and CEO Frans Muller said on the call. “This has already led to the decision earlier this year to close the U.S. Jersey City and Hanover fulfillment centers and focus on pickup from stores and third-party partners.”
Reports of the grocer closing delivery fulfillment centers began circulating over the summer.
The company saw U.S. online sales grow 4% year over year in the quarter and 8% year-to-date. Online traffic in the U.S., meanwhile, increased 19% year over year in the quarter, according to Muller, while “sessions with purchase intent” increased by roughly the same amount, and the number of omnichannel shoppers rose 8%.
The company continues to see benefits from the digital shift seen during the early stages of the pandemic, Muller said.
“Of first-time online shoppers during the peak of COVID in the second quarter of 2020, 66% were still active shoppers online or in-store with us in the third quarter of 2023,” he explained.
Online grocery represents a relatively small share of overall grocery sales, according to PYMNTS Intelligence’s study “Tracking the Digital Payments Takeover: Catching the Coming eCommerce Wave,” created in collaboration with Amazon Web Services (AWS). The report, which drew from an April survey of nearly 2,700 U.S. consumers, revealed that 12% of grocery orders are placed via digital channels. However, 1 in 3 shoppers said they are very or extremely likely to increase their online grocery purchases in the next year.
Moreover, grocery customers are omnichannel shoppers. The study “Consumer Interest in an Everyday App,” a PYMNTS Intelligence and PayPal collaboration, drew from a survey of more than 2,200 U.S. consumers. It found that 45% of grocery shoppers purchased these items both by using connected devices and via more traditional means, and another 16% did so exclusively with connected devices.
As part of the grocer’s review of its omnichannel business in the U.S., Ahold Delhaize decided to sell FreshDirect, an eGrocer operating in the Northeastern United States, to Getir, an ultrafast online grocery delivery firm. The divestment is intended to enable Ahold Delhaize to focus on growth and investments in its broader-based omnichannel businesses, where it has strong market shares and deep customer relationships, rather than pure-play eCommerce.
“We believe Getir, a pioneer in the tech industry and the ultrafast online grocery delivery business, is the right company to carry FreshDirect forward,” Muller said.
Despite the growth in eCommerce, Ahold Delhaize’s overall performance was impacted by higher operating costs and unfavorable foreign exchange rates. The company’s underlying operating margin decreased by 0.6 percentage points to 3.8%.