Dive Brief:

• Giant Food Stores is building a new e-commerce hub in Lancaster County, Pennsylvania that offers curbside order pickup and delivery. The location will co-brand with Peapod, the e-grocer that’s also owned by Ahold Delhaize, and will allow the retailer to serve 40% more customers than the company store that previously occupied the space. This will be the fifth Giant To Go location for the company.
• The e-commerce hub is part of a $22 million investment in the area that also includes four store remodels, price investments and a new fuel center. The remodels include larger meat and seafood departments as well as an updated health and beauty section. One of the locations, located on Columbia Avenue in Lititz, Pennsylvania, will get an expanded deli and prepared foods section while another, also located in Lititz, will see a range of new services, including an Asian hot bar, meal case and produce juicing bar.
• Giant’s price investments will touch thousands of products across the store. Private label savings are a major focus, with 35% reductions on staple items like cereal, ground beef and organic yogurt.

Dive Insight:

Giant’s latest investment, which follows a $70 million store growth initiative earlier this year, highlights the omnichannel future that grocers face. With online sales growing but the vast majority of transactions still happening in stores, retailers need to invest in their physical locations while also building a foundation for e-commerce growth.

The capital outlay for these projects is significant, but they have to be made in order for grocers to remain competitive. In this case, Giant’s store updates, as with other brands like Food Lion, are focused on growth segments like prepared foods and health and beauty care. The retailer’s cutting-edge e-commerce hub, meanwhile, signals just how focused the company is on online sales.

"Grocery shopping is changing and the pace is accelerating,” Nicholas Bertram, Giant’s president said in a news release. “As a customer-centric company, innovation is the cornerstone of our go-to business strategy," added Bertram. 

Giant To Go follows a model pioneered in Europe that focuses on fulfilling online orders away from stores yet still close to the customer. Many analysts see this as a crucial next step for U.S. grocers, which are mainly focused on a store fulfillment model that leverages their current assets, but that could strain to meet growing demand.

Other retailers have introduced similar concepts, including Amazon, which has two Fresh Pickup locations in Seattle and may eventually launch Whole Foods branded locations. Hy-Vee also has a small e-commerce location in the works, while Walmart has tested pickup locations in Arkansas and Colorado.

Kroger’s blockbuster Ocado deal follows the same strategy of diverting fulfillment away from stores, but with some significant differences — namely, automated warehouses that can accommodate a larger volume of orders.

All of these fulfillment models are aimed squarely at a future that is fast approaching. According to the Food Marketing Institute and Nielsen, 70% of U.S. shoppers will do at least some of their shopping online within the next few years.  

At the same time, retailers can’t take their eyes off their stores. Giant sees this, and no doubt hopes its remodels coupled with its online updates meet shoppers needs no matter how they want to shop.