Ahold Delhaize Announces $480M Investment in East Coast Supply Chain
ZAANDAM, THE NETHERLANDS - One of the largest retailers on the eastern seaboard announced today that it is planning on investing a whopping $480 million to transform and expand its supply chain operations on the East Coast of the United States. Ahold Delhaize USA’s investment supports the new three-year strategy to move the U.S. supply chain into a fully integrated, self-distribution model. The move also includes the acquisition of three warehouse assets from C&S Wholesale Grocers and new leases on another two facilities.
“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 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.”
According to the press release, Ahold will partner with various companies to build two new fully automated Ahold Delhaize USA frozen facilities to be constructed in the Northeast and Mid-Atlantic of the U.S. The new self-distribution U.S. supply chain will allow operations to run more efficiently, thereby cutting on costs and improving relationships, product availability, and freshness for customers.
“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,” commented Chris Lewis, Executive Vice President, Supply Chain for Retail Business Services, Ahold. “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.”
This enhanced distribution network will provide coverage for Ahold’s local brands from Maine to Georgia as well as positioning itself to easier service its nearly 2,000 retail stores in the country.
“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.”
Ahold’s press release states that this investment will not materially impact 2019 results, and there is no change to the outlook that was provided on November 6, 2019. The company expects $100 million in annual savings following the transition period. Ahold will be hosting a live audiocast on its website at 16:00 CET on Wednesday, December 11, 2019, where Frans Muller, Jeff Carr, and Kevin Holt will review the transaction.
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