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Peapod Preps for the Online Mainstream

Ahold Delhaize’s stepped-up investment in Peapod this year will not only help the brand catch up to the growth curve in online grocery, but it will also support strategic capabilities that will benefit the entire organization, Peapod SVP of Merchandising Spencer Baird told WGB.

Spencer

“We need to be that small incubator that explodes stuff out to the stores,” Baird said of Peapod. “We need the value exchange to go both ways. The stores have supported Peapod for a long time. What you’re going to see in the next five to 10 years is how our partnership will also be supporting the stores.”

Baird joined Peapod a year ago following four years of merchandising in Ahold’s retail stores and previous stints with Kellogg’s and Danone. Along with Walt Lentz, Peapod’s interim president, Baird said his goal was to help Peapod evolve into a consumer-centric retailer that will differentiate it in the virtual space and prepare it to serve new shoppers as online grocery penetration increases.

“My challenge is to move this from a company that sells things hoping we’ll meet needs to a company that meets needs trusting that we’ll sell a lot of stuff,” Baird said.

Ahold Delhaize late last year said its spending on online initiatives would increase by 50% this year to 150 million euros (about $174 million USD) in 2018. In announcing the investment, officials noted Peapod’s growth rate had slipped amid a massive expansion of competitors into the online grocery space, in which Peapod is a 29-year pioneer.

Baird said the investments would address value, personalization and convenience.

Last week, for example, Peapod revealed price investments in thousands of items including natural and organic items, meat, fresh produce and dairy, along with an array of new deals that allow shoppers to get discounts on multiple items for “stocking up” or “bundled” deals combining items that are frequently bought together.

Baird said this speaks to the changing profile of the online shopper as the practice moves further into the mainstream. Until now, he said, online retailers might not have had to work as hard on price, given the demographic makeup of the format’s early adopters.

The bundled and stock-up deals make use of Peapod’s transaction data in service of larger baskets. He described the stock-up discounts—what Peapod is calling Buy More Save More—as a Chipotle-type offering where shoppers can choose among items “behind the glass,” earning larger discounts as they add items to the cart.

Peapod has also made an effort to better align prices on the site with those at associated stores, said Baird, while admitting it's been a trickier task than it sounds, as Ahold stores tend to utilize multiple pricing zones.

The new value offerings have largely come without associated supplier concessions, he said. 

Peapod is addressing convenience in ways “that make moms feel like heroes,” Baird added. For example, its assortment features items that are convenient but difficult to merchandise in stores, such as a growing line of meal kits.

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