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Ahold Delhaize USA yesterday announced that it plans to close the Midwest division of its Peapod online grocery sales business.  As of next Tuesday, February 18, the company said, "service for Midwest customers placing online grocery delivery orders in Illinois, Wisconsin and Indiana will be discontinued. As a result of this decision, the following facilities will close: a distribution center and food preparation facility in Lake Zurich, Ill., distribution facilities in Chicago, Ill., Milwaukee, Wis., and Indianapolis, Ind., and a pick-up point in Palatine, Ill."

Ahold Delhaize said that peapod's Midwest business represents $97 million of its total annual $1.1 billion revenue.

According to the company, "This decision will enable Ahold Delhaize USA to focus on expanding the leadership position of its brands on the East Coast and execute its strategy of enabling each local brand to be the leading omnichannel grocery retailer in each of their markets utilizing the market-leading capabilities of Peapod Digital Labs. There are no changes for customers in other markets."

“Chicago will remain the headquarters for our Peapod Digital Labs team, and we will continue to draw from the valuable pool of digital and eCommerce talent in the market,” said JJ Fleeman, President, Peapod Digital Labs and Chief eCommerce Officer. “Through Peapod Digital Labs, we will continue to build upon Peapod’s technology legacy. Peapod began here, and we will remain here, in the heart of Chicago. We look forward to honoring and leveraging Peapod’s longstanding legacy of expertise in online grocery and fully focusing our team’s energy and talent on supporting the growth of each of the East Coast brands.”

“This was a difficult decision given Peapod’s rich history in the Midwest,” said Kevin Holt, CEO, Ahold Delhaize USA.  The company noted that Peapod was the first online grocer in the U.S., and was acquired by Ahold USA in 2000."

KC's View:

To be honest, this feels like the first of two shoes.  I'm not sure why Ahold Delhaize would leave Peapod Digital Labs in Chicago when every other one of its operations are on the east coast, hundreds of miles away.  Plus, it could be argued that Boston is more of a tech hub than Chicago is … and Amazon's investments in the Washington, DC, market pretty much assures that there will be a lot of tech talent there as well.  Leaving Peapod all by itself in Chicago wouldn't seem to make any sense.  And so I am guessing that another shoe will drop.  Eventually.

Peapod's presence in the Midwest did seem to be more of a legacy proposition than anything else - it started in Chicago.  But I always thought that, especially at this time in the e-commerce continuum, it would've made a lot more sense for Peapod to position itself as an e-commerce provider to retailers with which it did not compete all over the country.  It had the history and the infrastructure, and with some tweaking and innovative thinking, Peapod could've positioned itself as a competitor to the likes of Instacart, telling retailers that it understood the importance of their brands, and wanted to build on that equity, not subvert and eventually steal it.