FreshDirect’s New Facility Is Driving Its E-Commerce Growth

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FreshDirect’s New Facility Is Driving Its E-Commerce Growth

By Bridget Goldschmidt - 03/25/2019
FreshDirect CEO David McInerney and Chief Growth Officer P.J. Oleksak.

FreshDirect moved into a new campus last July to help it scale its unique digital experience.

RIS’ sister brand Progressive Grocer was invited to FreshDirect’s new Bronx, NY, campus to check out the pure-play e-grocer’s new home. After a tour of the extensive state-of-the-art facility, CEO David McInerney and chief growth officer P.J. Oleksak sat down with Progressive Grocer to discuss the company’s current plans and future direction.

The full interview is available here, below is an abridged version of the conversation.

Your move to the Bronx campus was a very big milestone in the company. What exactly has the move to the Bronx campus meant for FreshDirect?

David McInerney: If you think about it, as FreshDirect, we’ve had 16-plus years of trial and error and learnings. And this, in essence, is the culmination of those 16-plus years of learnings, where efficiency is a piece, but most importantly, what we built and what we strive to do is really just get the highest-quality food directly to [shoppers].

P.J. Oleksak:  We have significantly more space to build out all of that great food product, which we know is super-important to our customer base. And just expanding the assortment overall – there’s more space, so that we can do that. From a service side, it’s enabled us to really change the game in how we service our customers. Not only even better quality and execution, but doing things like launching same-day [delivery] with FreshDirect.

In the time that FreshDirect has been in business, how would you say that the whole e-grocery proposition has evolved?

DM: The obvious is the acceptance from 15 years ago to today. The acceptance is there, the evolution to today, and where we see the evolution over the next few years is even more significant.

PJO: Consumers’ lifestyles, and their relationship with food and what they’re interested in, are changing. When you think about the Millennial – we call it Millennial mindset because it extends beyond even an age. People are much more comfortable buying almost anything online. There’s also the fact [that] people care more about the quality of the food they’re eating. Having a really great high-quality product, and the acceptance, and getting more comfortable shopping online, it’s just a very big macro trend that we think is going to open up that market to just a much larger set of consumers, which we think is exciting because we also want to help them have great access to high-quality food.

As a pure-play ecommerce operation, how are you competing against all of these supermarkets who now have jumped into e-commerce? In many cases, they’ve been in their communities for years and years, and shoppers are familiar with them. So how does FreshDirect, as a pure-play operator, compete with that?

DM: The first point is, it’s an enormous market. There’s a lot of room for people to play [in] it. Secondly, our thoughts of differentiation, and our competitive advantage, were always around the quality.

We’ve recently expanded our thinking past just quality. Quality is sort of the table stakes. And how do you enhance the experience even more? And we think about it through the promises that we make to customers. Some are obvious to the consumer, and some are not. But we have to have the right food available for sale. The food that you’re looking for, we have to give you good accessibility, meaning we have to be able to get it to you when you want it. We have to deliver it on time, and you have to be able to count on us that it will consistently be there when we say it will.

How does FreshDirect decide where it’s going to go next? What goes into when you decide to go into a new market, and do you have any plans that you can actually disclose about future expansion plans?

PJO: We are really methodical. We know who our target customer is, and we are constantly looking at where is there opportunity. There’s still massive opportunity in our existing [Northeast] footprint, and especially with the trends of online grocery, and we’re going to push harder now that we’re settled into our new home.

What do you think is the reason for that particular success in the suburbs?

PJO: I think it’s a combination of two things. One, I think there’s a different competitive landscape. But then also, just bigger families and their need for that convenience in their lifestyle, as well as the opportunity to really win in fresh. Because I think there’s even a broader differentiation [of] our high-quality product.

DM: There’s a high level of appreciation from consumers within the suburbs, particularly around the fresh side, because … there may be less access to very, very high-quality food in all of the suburbs. And us being able to provide that affords almost a new luxury to folks there