Ahold Delhaize USA’s (ADUSA) ambitious attempt over the past six years to develop independent online-driven customer fulfillment centers (CFCs) has proven to be an overreach as confirmed by the retailer’s announcement last month that it would close its last six CFCs that were operated by The Giant Company (TGC) and Giant Food in Pennsylvania and Virginia.
Of particular note are the124,000 square foot automated CFC operated by TGC in Southwest Philadelphia that opened in late 2021 and the 82,000 square food depot opened by Giant Food in Manassas, VA in 2023.
Other smaller TGC Pennsylvania fulfillment centers in Willow Grove, Coopersburg, North Coventry and Lancaster will also be shuttered.
Both Giant Food and TGC will continue to operate those facilities early 2026, with most closures occurring by the end of the first quarter. ADUSA said “the difficult decisions to close these facilities were made after carefully considering customer trends and preferences for home delivery, where customers are increasingly expecting fast delivery, more assortment and delivery availability to meet their preferences.” It added that “over the past several years, Ahold Delhaize USA companies have transitioned to a local, store-first fulfillment network to offer greater customer availability at faster speeds. This strategy has been enabled by strong technology improvements and partnerships and team members who execute every day in stores.”
Although this ends (for now) ADUSA’s attempt to operate segregated digital and delivery-driven fulfillment centers, the reductions of CFCs have been ongoing over the last three years.
First to be closed were two Giant Food fulfillment centers in Hanover, MD and Milford, DE in late 2023. Later that year, ADUSA unloaded FreshDirect to ultrafast delivery firm Getir at a significant loss. Parent firm Ahold Delhaize acquired the Bronx, NY-based perishables-driven grocery firm in 2020 for a price reported to be in excess of $325 million. Included in that deal was a 400,000 square foot distribution center that opened in 2018.
In early 2024, ADUSA closed its Jersey City facility that was designed to serve the digital fulfillment needs for Stop & shop customers.
The big merchant, which also features Hannaford and Food Lion in its store-bannered brands portfolio, noted that grocery delivery continues to remain an integral part of its brands’ omnichannel growth strategies, which provide customers with the flexibility to shop both in-store or online, anytime they want.
“In addition to continuing to offer in-store fulfillment of customers’ e-commerce orders for both pick-up and delivery, Ahold Delhaize USA’s companies will continue relationships with third-party fulfillment partners like Instacart and DoorDash for delivery. Using this approach, each of the U.S. brands are best positioned to deliver on customers’ expectations for quick pick-up and delivery options, and, where possible, in as little as 30 minutes. While these decisions are right for the future of our businesses, we also realize they impact people. Each of the brands and support functions with affected associates have plans in place to care for associates during this time. Associates affected by these decisions will be offered other positions within their respective company or have the opportunity to apply for open roles.”
From the balance sheet, the closures will mean that Ahold Delhaize USA will take an estimated non-cash impairment charge of $35 million for the closures of TGC’s five facilities. With the Giant Food decision, Ahold Delhaize USA will take an estimated non-cash impairment charge of $15 million for the closure of the Manassas facility.
