Ahold Says Grocery Shoppers Will Flock to eCommerce in 2023

As grocery shoppers seek more convenience, Ahold Delhaize sees eCommerce demand rising despite economic headwinds.

In an interview with PYMTNS, Rom Kosla, executive vice president, information technology and chief information officer for Ahold Delhaize USA’s services company, Retail Business Services, discussed these trends. He noted that the company has not seen shoppers trading down to more affordable channels in the face of increasing economic pressures. Rather, demand for digital convenience is on the rise, in spite of the premium customers pay for it.

“[In 2023], we are expecting continued [digital] growth,” Kosla said. “Click-and-collect is still a very strong proposition. The challenge for us is actually demand for that is higher.”

Ahold Delahize’s USA presence includes thousands of stores across brands such as Giant, Food Lion and Stop & Shop, and its digital initiatives include Peapod and FreshDirect.

To meet this growing eCommerce demand while building direct relationships with customers, the grocer is shifting to having orders picked by its own employees, moving away from outsourcing the transaction to third-party aggregators such as Instacart. That said, Kosla notes that the grocer will still have “some” third-party fulfillment, noting that the need for this outside work will “be around for a bit.”

Indeed, research from the latest edition of PYMNTS’ monthly ConnectedEconomy™ study, the “ConnectedEconomy™ Monthly Report: The Gender Divide Edition,” which draws from a survey of more than 2,600 U.S. consumers in October, finds that demand for direct fulfillment from grocery shopper exceeds demand for third-party options.

Specifically, 45% of men and 36% of women reported ordering from grocers for curbside pickup, and 43% and 35% respectively reported placing direct orders for delivery. Meanwhile, only 42% of men and 28% of women reported ordering from same-day delivery sites such as Instacart.

By building out its direct fulfillment capabilities, Ahold Delhaize USA is able to work towards its longer-term goal of building a data-informed omnichannel relationship with its customers, collecting information from transactions across different fulfillment methods and leveraging this to get more targeted with offers and promotions.

“All the engagement that the customer has at the store level gets shared in our eCommerce solutions, [and] tightly integrated solutions help us drive engagement but also help our customers have better savings when they’re buying our products,” Kosla said.

Indeed, targeted offers are a major area of focus for grocers right now and will continue to be into 2023, as rising prices have many consumers seeking deals.

Research from PYMNTS’ study Big Retail’s Innovation Mandate: Convenience And Personalization, created in collaboration with ACI Worldwide, which draws from a survey of 300 major retailers in the U.S. or the U.K., found that 74% of grocers polled think that consumers would be very or extremely likely to switch merchants if digital coupons and rewards were not provided.

Consumers’ self-reports have supported the importance of these initiatives even before prices started skyrocketing. Findings from the October edition of the Consumer Inflation Sentiment study, “Consumer Inflation Sentiment: Consumers Buckle Down on Belt-Tightening,” for which PYMNTS surveyed more than 2,600 consumers in September, revealed that 58% of grocery shoppers reported cutting back on nonessential spending in response to inflation, and 47% traded down to cheaper merchants.

Looking ahead, Kosla predicted shrinking volumes and basket sizes as the economic challenges remain.

“So, we’re trying to [make] it possible for our customers to stay engaged with us online and in-store,” Kosla said. “[Our] understanding on consumer insights is really the key part of our strategy.”