Retailers

FreshDirect Expands Suburban Footprint

Responds to 100% growth surge in Northeast, readies to open new micro-fulfillment center
FreshDirect
Photograph courtesy of FreshDirect

Prompted by a 100% growth surge in its suburban footprint, online food grocer FreshDirect has expanded its delivery capacity in Westchester and Long Island, N.Y.; New Jersey; and Connecticut. The Bronx-based company is also extending its Hamptons delivery for the foreseeable future.

When it comes to grocery delivery, speed is of the essence. “Our ‘hub and spoke’ model enables us to serve a broader base of customers and get to them faster,” FreshDirect COO Tim Knoll told WGB. He says the company’s main hub—its 640,000-square-foot Bronx facility—is built for scale and enables next day, same day and on-demand delivery throughout the markets its serves. 

While FreshDirect has seen substantial growth in urban areas, since the pandemic, the suburbs are the heart of the action. The company has responded by doubling its transportation capacity to serve the suburban market, which has doubled in revenue vs. last year, Knoll added.

“We have seen strong double-digit growth in urban areas such as Manhattan, and we are seeing even faster growth in the suburbs, [which are] outpacing urban areas in growth and total revenues,” said Knoll. “Our suburban customers have larger families and larger pantries, driving growth in order size. And they are loyal and frequent customers; they form their habit quickly with us and stick [to it].

“Suburban customers have experienced what residents of urban markets have known for a long time—convenience doesn’t mean you have to sacrifice quality—you can access the best food in the country without a trip to the store,” said David McInerney, co-founder and CEO of FreshDirect, in a statement. “And as more people relocate to the suburbs as a result of the pandemic, they are taking FreshDirect with them or trying us for the first time and never looking back.”

A recent customer survey revealed that suburban and Hamptons demand will continue unabated, said FreshDirect, which found that 76% of its customers already in the Hamptons plan to extend their stay beyond the summer.

“The decision to extend our service to the Hamptons is a direct response to the many customers who have decided to stay in that area for the foreseeable future due to the pandemic,” McInerney said. “We wanted to extend the opportunity for them to have a safe grocery buying alternative for the rest of the year.”

“The pandemic accelerated online grocery trial by years,” affirmed Knoll, who anticipates continued demand. FreshDirect has seen growth with both its core customer and new shoppers, and reports that new customer retention is up 150% year over year.

What’s next for FreshDirect in today’s increasingly competitive marketplace? “The FreshDirect model is replicable in any major metropolitan area in the United States,” said Knoll. However, the company is taking a measured approach to further expansion.

“We are first laser-focused on the markets we serve and will soon launch a new micro-fulfillment center in Washington, D.C., which combines automation with our expertise in fresh. Facilities like this one will enable expansion across the Eastern seaboard, as well as other markets across the country,” he said.

In an effort to continue delivering fresh food to customers’ doorsteps when they want it, the company also plans to hire 350 full-time employees from now through mid-September.

Online fresh food grocer FreshDirect delivers directly to customers throughout seven states, including the New York City and Philadelphia metropolitan areas, and the District of Columbia. Launched in 2002, FreshDirect is a privately held company. Earlier this year it announced a partnership with the robotic microfulfillment technology company Fabric to modernize service in the greater Washington, D.C., area.

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