Three years after a new warehouse for Stop & Shop supermarkets prompted the closure of another in Connecticut, the grocery giant is absorbing a delay in its newest refrigerated facility ramping up to full operation outside Hartford, which will be among the most advanced in the grocery industry.
Warehouse operator Americold confirmed this week it has begun operations at a massive new distribution center in Plainville which will be used by ADUSA Supply Chain. ADUSA's parent company Ahold Delhaize owns Stop & Shop, as well as four other major chains in Hannaford, The Giant Co., Giant and Food Lion.
Last week, however, Americold executives said they do not expect the Plainville warehouse to hit full throughput until the back half of 2025, as they work to iron out unspecified technical hiccups with the automated facility and another in Lancaster, Pa. Combined, the two facilities will distribute to 750 Ahold Delhaize stores in the Northeast and Mid-Atlantic regions.
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"The work being done inside these facilities is individual, case-pick selection, which is being completed by our automation systems," said Rob Chambers, Americold president, speaking last Thursday on a conference call. "This is a high level of complexity which is taking some additional time to achieve our desired service level."
More time is needed as well to properly integrate the new warehouse into the operations of ADUSA, Chambers added, without delving into details. Americold did not offer further details in response to CT Insider queries on the Plainville facility.
An ADUSA spokesperson responded Wednesday morning, describing the facility as still "in development" in an email to CT Insider.
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"ADUSA Distribution uses a combination of self-distributed and third-party warehouses to serve Stop & Shop stores in the Connecticut market," stated ADUSA spokesperson Dewaters. "When appropriate, the Plainville site will be added to the distribution network, bringing increased capacity. Where needed, there will be a seamless transition of services between warehouses, and we do not expect any disruption to service levels for Stop & Shop."
Americold has reported investing $325 million in development capital across the two facilities, and that ADUSA has committed to using the warehouses for an initial term of 20 years. Americold assigned a $155 million value to the Plainville warehouse in a 2023 filing with the U.S. Securities & Exchange Commission, with the state of Connecticut approving $4.5 million in tax credits associated with the project under a pair of incentive programs.
Robotic 'waterfalls'
Located a few miles north of Interstate 84, the Plainville location is the first newly constructed warehouse in New England announced by Americold since 2018. The company opened a facility that year in Middleborough, Mass., designed to flash freeze nearly 40,000 tons of cranberries at a time that end up in Ocean Spray Craisins.
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The Americold building in Plainville stands 130 feet tall and spans more than 230,000 square feet, powered by fuel cells from Bloom Energy that produce electricity through a chemical process rather than drawing on the grid.
The facility has more than 30,000 pallet slots on two levels according to Primus, a Georgia company which helped design some of the sophisticated automation systems inside. Those include robotics that grab orders and steer them through "waterfall" and conveyor systems, and ultimately onto trailers for delivery to retail stores.
Dewaters did not address any specific impact on other warehouses used by Stop & Shop for perishable products, stating only that the company expects the new facility to add inventory capacity.
After ADUSA opened a modern new distribution center for non-perishable goods in Manchester in 2021, C&S Wholesale Grocers closed one in Suffield that had supplied area Stop & Shop supermarkets. While that came at a cost of 175 C&S jobs, Ahold Delhaize projected at the time that the new Manchester warehouse would support about 500 jobs.
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C&S sold the Suffield property the following year for $45 million to a warehouse real estate investment firm that has big distribution centers throughout the Northeast.
C&S has another major warehouse adjacent to Bradley International Airport in Windsor Locks, and a refrigerated warehouse about 45 minutes north of there in Westfield, Mass. A C&S spokesperson could not be reached immediately on whether it anticipates any impact of the new Americold facility on its South Windsor or Westfield facilities, or any others in the Northeast.
Last summer, Stop & Shop listed more than two-dozen Connecticut supermarkets from Greenwich to New Haven that were impacted by a C&S recall of chilled salad dressings and other products, blamed on a refrigeration system in which temperatures had exceeded minimum levels. Dozens more stores in New York and New Jersey were also affected by the recall.
The Plainville facility arrives as Ahold Delhaize continues to overhaul its Stop & Shop footprint, from retail stores to online sales and back-end distribution. Stop & Shop is the largest supermarket operator in Connecticut, averaging nearly 1,200 shoppers daily in December at each of its nearly 90 supermarkets in Connecticut, according to a CT Insider review of Placer.ai data based on mobile phone movements.
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In its annual results for 2023 reported earlier this month, an Ahold Delhaize executive said the company has as one major priority "a more deliberate and holistic reset of Stop & Shop" as it continues store renovations.
In January, Stop & Shop closed a store in Bridgeport which is being replaced by a Food Bazaar, while relocating another in Waterbury to a different plaza. Stop & Shop shuttered a store in Greenwich last year, one of multiple closures last year including stores in New York City and Highland Park, N.J.
In December, Ahold Delhaize sold to Getir its FreshDirect delivery service that offers service in lower Fairfield County, including a massive distribution facility in New York City. Ahold Delhaize acquired FreshDirect in 2021.
And Ahold Delhaize closed a fulfillment center last year in Jersey City, N.J., shifting order fulfillment to supermarkets and external partners. In an open letter issued Wednesday, Ahold Delhaize CEO Frans Muller said the company is shifting to "less asset-intense" operating models that offer the promise of boosting same-day delivery capabilities.
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"In the U.S., the completion of the self-distribution network is putting our brands fully in control of their own operations, so they can keep costs down and partner more closely with suppliers to improve product availability and freshness," Muller stated in a letter accompanying the company's annual report.
At the same time, supermarkets nationally have been reserving extra pallet space at Americold warehouses, as they work to be better positioned for any spikes in shopper demand four years after the COVID-19 pandemic. Just 16 percent of Americold's pallet slots are available today, a record low.
CEO George Chappelle Jr. told investment analysts last week that the company expects "throughput" in its warehouses to shrink in the first six months of this year as consumers limit spending and packaged food customers work through inventories, before rebounding in the back half of the year.
"We’re clearly stealing market share across the network," Chappelle said. "We do believe that when throughput comes back, we’ll see a lot of demand."
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Includes prior reporting by Richard Chumney and Brian Lockhart.