Ahold Delhaize plans to acquire three warehouses, lease two more facilities and build two others as part of a three-year strategy to strengthen the company’s supply chain in the U.S.
The investment will be $480 million, including capital expenditures of $300 million in 2020, $50 million in 2021 and $60 million in 2022, according to a document Ahold Delhaize provided along with a news release. In 2022, cost savings from the changes are expected to be $60 million, and in future years the savings should be more than $100 million annually.
By 2023, the U.S. network of Ahold Delhaize will include 22 traditional and e-commerce distribution centers, up from 15 today.
“Today’s announcement is another example of how Ahold Delhaize USA is transforming our infrastructure to support the next generation of grocery retail,” Kevin Holt, CEO of Ahold Delhaize USA, said in the release. “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.”
The company’s facilities serve stores under the Food Lion, Giant Food, Hannaford, Stop & Shop, Peapod and Giant/Martin’s brands. Ahold Delhaize affiliate Retail Business Services also works with those banners.
“Moving to a self-managed supply chain will enable Retail Business Services to reduce costs for the local brands it serves, improve speed to shelf, deepen relationships with vendors and better position our companies’ distribution centers in the communities they serve,” Chris Lewis, executive vice president of supply chain for Retail Business Services, said in the release. “These changes will enable us to take advantage of financial and strategic value within procurement, logistics and warehousing to provide the freshest product through the most advanced, efficient delivery network in the grocery industry. We will continue to partner with key providers for distribution center management services, including third-party labor services, such as our longstanding partner C&S.”
Where the changes are happening
The three facilities Ahold Delhaize has acquired from Keene, N.H.-based C&S Wholesale Grocers are in York, Penn., and Chester, N.Y. Two distribution centers in York that handle grocery and frozen products service Giant/Martin’s and Giant Food stores, while the perishables distribution center in Chester services Stop & Shop stores.
Ahold Delhaize has also leased a C&S grocery facility in Bethlehem, Penn., that serves Giant Food, Giant/Martin’s and Stop & Shop. Ahold Delhaize leased that facility to transition to its own systems and control, according to the document provided with the news release. The company also leased a new grocery warehouse in Manchester, Conn., to service Stop & Shop. Ahold Delhaize will transition operations to that facility from two unacquired C&S facilities in Newburg, N.Y., and Suffield, Conn.
Lastly, Ahold Delhaize is building two automated frozen facilities to service Stop & Shop in the Northeast and Giant Food and Giant/Martin’s in the Mid-Atlantic.
The company already owned 15 other distribution centers, including three facilities dedicated to e-commerce.