Grocery Roundup: Ahold Delhaize Takes Over US Supply Chain As Industry-Wide Sales Dip

Netherlands-based global grocery giant Ahold Delhaize is taking control of its United States distribution. Its group of U.S. supply chain companies, ADUSA Supply Chain, announced Wednesday (June 23) that 85 percent of the chain will be self-distributed by the end of 2022.

“This is one of the largest supply chain transformations ever undertaken in our industry,” Chris Lewis, president of ADUSA Supply Chain, said in a statement. “Because of the commitment of our teams and a strong ecosystem of partners, we are on track to create not only one of the biggest supply chains on the East Coast, but the most efficient and effective.”

This end-of-2022 milestone will mark the culmination of a three-year initiative undertaken in December 2019, bringing the company’s number of facilities up from 17 to 25. Changes include opening two fully automated cold-storage facilities, creating new distribution centers, converting existing facilities to ADUSA Supply Chain’s network, and using artificial intelligence (AI) for inventory predictions and restocking, among other changes.

Ahold Delhaize’s U.S. brands include FreshDirect, Food Lion, Giant Food, and Stop & Shop, among others. As the company works on its distribution center capabilities, it is also building out its consumer order fulfillment network, looking to micro-fulfillment centers (MFCs) to drive digital growth.

As FreshDirect Chief Operating Officer Timothy Knoll told PYMNTS in an interview in March, “Micro-fulfillment is central to our expansion strategy and underscores our industry innovation. The technology allows us to turn our existing regional facilities into high-velocity automated distribution centers, speeding our expansion and growth into in our existing service footprint.”

Giant Food Launches CSA-Style Local Produce Boxes

Also in Ahold Delhaize U.S. news, subsidiary Giant Food, which operates supermarkets in Virginia, Maryland, Delaware, and Washington, D.C., is taking its fruits and vegetables local. The company announced Tuesday (June 22) the debut of its new delivery-only Local Produce Boxes, which will feature an assortment of six or more items from area farmers that changes each week.

Unlike many community-supported agriculture (CSA) boxes, which offer a similar product but are typically purchased via subscription, Giant’s boxes are sold individually. The boxes are available only through Giant Delivers, the chain’s in-house delivery service, and feature foods from more than 20 farms in Virginia, Maryland and Delaware. This limitation presents an opportunity for Giant to guide its customers toward its digital channels in this moment of changing behaviors, when newly vaccinated consumers might otherwise drop their eCommerce behaviors and return to in-store shopping.

Data from PYMNTS’ May report, After Vaccines: What Mass Vaccinations Mean for Main Street Merchants, find 71 percent of grocery shoppers who have shifted their behavior online since the start of the pandemic plan to maintain at least some of their changed behaviors, but that leaves 29 percent — a sizable chunk — looking to revert to pre-pandemic behavior completely. However, only 12 percent of vaccinated consumers who have shifted their behavior online during the pandemic report that they are shopping more often at physical grocery stores, though a third of these consumers who are unvaccinated want to do their grocery shopping in stores more often.

Grocery Sales Took A Serious Hit In May

Grocery sales are taking a serious hit as consumers return to restaurants. The results of the Brick Meets Click/Mercatus Grocery Shopping Survey released Monday (June 21) find that grocery sales in May totaled $7.0 billion, down 16 percent from the year before and down 17 percent from April 2021’s $8.4 billion. In fact, sales plunged a shocking 25 percent in just two months, down from $9.3 billion in March.

However, Brick Meets Click partner and research lead David Bishop said in a statement, “May’s results show the market retains 70% of the incremental gains generated versus the record COVID high of $9.3 billion, illustrating that much of the gain propelled by the pandemic has stuck around.”

Still, as consumers return to restaurants, grocers are being challenged to find ways to find ways to retain the spending they have gained since March 2020.

“There’s a whole series of social benefits and economic benefits to cooking at home that we hope will sustain,” John Ross, president and CEO of the Independent Grocers Alliance (IGA) told Karen Webster in an interview earlier this year. “But as grocers, we now have to make sure that we earn that continued loyalty. We can’t just merchandise the same way we did before and expect them to continue to do it once all the restaurants are back.”

UK Supermarket Chain Morrisons Turns Down $7.7 Billion Takeover Deal

Morrisons, the fourth largest supermarket chain in the United Kingdom with almost 500 stores, turned down a £5.5 billion takeover proposal from private equity firm Clayton, Dubilier & Rice (CD&R) last Thursday (June 17), The Guardian reported.

“The board of Morrisons evaluated the conditional proposal together with its financial adviser, Rothschild & Co, and unanimously concluded that the conditional proposal significantly undervalued Morrisons and its future prospects,” said Morrisons’ statement regarding the decision.

With experts expecting negotiations to continue, the country’s Labour Party is calling on the government to protect the supermarket chain and its shoppers.

“There are really worrying examples of companies including private equity firms loading businesses with debt, stripping them for parts and leaving with the rewards,” Seema Malhotra, the party’s spokesperson on business, told Reuters. “The government cannot just stand by and let that happen to Britain’s supermarkets, which are at the heart of our communities and provide an essential national service as we have seen during the pandemic.”