Ahold Delhaize USA announced plans to transform and expand its supply chain operations on the East Coast over the next three years by investing $480 million. The investment supports a strategy to transition the supply chain network into a fully-integrated, self-distribution model.
The move includes the acquisition of three warehouse assets from C&S Wholesale Grocers and new leases on another two facilities. In addition, Ahold Delhaize USA will partner with various companies to build two fully-automated frozen facilities. The initiative will provide the infrastructure needed to support aggressive omnichannel growth plans.
C&S will continue to serve as the third-party labor provider at three locations Ahold Delhaize USA is acquiring, including two locations in York, Penn., and one in Chester, N.Y.
Through the three-year strategy, Ahold Delhaize USA and its companies will:
- Increase distribution presence with seven new and acquired warehouses, including two fully-automated frozen facilities in the Northeast and Mid-Atlantic;
- Pursue optimal facility locations near the local brands of Ahold Delhaize USA and their customers, enabling local product expansion, increased product freshness and speed of delivery;
- Innovate in warehouse design, including transforming facilities to enhance automation and leverage technology advancements, such as an integrated transportation management system and end-to-end forecasting and replenishment technology, designed to support the omnichannel experience and multi-channel growth;
- Continue to build upon relationships with vendors and suppliers, and through the integration, further deepen partnerships to enhance service, quality, innovation, and efficiencies;
- Expand Ahold Delhaize USA companies’ presence in local markets and reaffirm local community connections through the expected creation of hundreds of jobs in local communities, including positions in support offices.
“Today’s announcement is another example of how Ahold Delhaize USA is transforming our infrastructure to support the next generation of grocery retail,” said Kevin Holt, Chief Executive Officer, Ahold Delhaize USA, and Ahold Delhaize Management Board Member. “Through this initiative, we will modernize our supply chain distribution, transportation and procurement through a fully-integrated, self-distribution model, that will be managed by our companies directly and locally. This will result in efficiencies and most importantly product availability and freshness for customers of our local brands, now and in the future, whenever, wherever however they choose to shop.”
Ahold Delhaize USA companies’ distribution networks include 15 traditional and e-commerce distribution centers, which serve the local brands of Ahold Delhaize USA, including Food Lion, Giant Food, GIANT/MARTIN’S, Hannaford, Peapod and Stop & Shop. The network will grow to 22 facilities by 2023.
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With respect to the two fully-automated frozen facilities, one will serve the Mid-Atlantic market and the other will serve the Northeast. In addition, the company will also pursue two new leases. One lease will be on a newly renovated warehouse in Manchester, Conn., and another will include the lease of a C&S facility in Bethlehem, Penn.
“Part of our strategy is leveraging the best of automation and technology,” added Lewis. “Each facility will also maintain a significant workforce. We recognize the future of work is changing and we’re taking active steps to help our workforce adapt by enabling them to work more efficiently.”
This enhanced distribution network will provide coverage for Ahold Delhaize USA’s local brands from Maine to Georgia.
Annual cost savings are expected to be $60 million in 2022. The ongoing annual benefit on underlying operating income will be more than $100 million.