Dive Brief:
- Wegmans is investing $175 million to construct a full-service regional distribution center in Ashland, Virginia, according to a press release emailed to Grocery Dive. The facility will create 700 jobs.
- President and CEO Colleen Wegman said in a statement the location features everything the retailer is looking for in terms of proximity to other stores and workforce, and will help it reach its southern-most stores faster and with fresher food.
- Wegmans will be eligible for a tax credit from the state for creating full-time jobs. Virginia competed against North Carolina for the project, the press release said.
Dive Insight:
Wegman’s new distribution center is a significant step in supporting the brand’s southern expansion, which has recently brought stores to Raleigh, North Carolina, and Virginia Beach, Virginia. Currently, the brand maintains a distribution center in Pottsville, Pennsylvania. Its headquarters in Rochester, New York, also serves as a distribution and manufacturing center.
The grocer, which originally focused its growth in the Northeast, has turned its attention southward this year. In addition to its new stores in Raleigh and Virginia Beach, it has plans for five more locations in North Carolina and four more in Virginia in 2020 and beyond.
Competition in these states is heating up as rivals like Publix, Aldi, Harris Teeter, Sprouts Farmers Market, Food Lion and Whole Foods expand. Having a nearby distribution center will help Wegmans maintain the quality and freshness of its products.
Site choice for distribution centers is integral to retailers' success. Placing stores too far from them can challenge a brand’s operations. Sprouts' CEO Jack Sinclair, for example, has said the company needs to improve its strategy to build stores that are more synched up with distribution to minimize inefficiencies. Lidl has also struggled with expansion due to poor site selection for stores and proximity to distribution centers.
Correction: A previous headline for this story misidentified the number of distribution centers. This will be Wegmans' third distribution center.
