It may seem hard to believe, but FreshDirect, the Northeast’s leading pure-play online grocer, is celebrating its 20th anniversary. To mark this milestone occasion, Progressive Grocer Managing Editor Bridget Goldschmidt spoke with FreshDirect Managing Director Dave Bass on how the Bronx, N.Y.-based company, acquired last year by Ahold Delhaize, began back in 2002 and where it’s headed, along with the future of e-grocery in general.
Bridget Goldschmidt: Talking about the 20th anniversary, I thought it might be interesting to go back to the start, recount the beginnings of FreshDirect and how the business actually got started. First of all, were you there at the beginning? And even if you weren’t, how did the company get off the ground?
Dave Bass: It’s easy to forget how far we’ve come in 20 years. I was not there at the very start, but I’ve heard lots of stories. Sometimes I feel, with some of those stories, like I had been there. I guess the easy way to think about it is that this was truly a startup approach in how we could build a business in a new and different way. [We] were originally located in Long Island City, which is within the greater New York City area. But [it was] very much a manual process, figuring things out as [we] went, and not really the higher-tech, more digitally enabled version of FreshDirect that we have today. However, that manual process allowed folks to really figure out what was important for customers. We really had to make sure that [we] were creating a business that would really satisfy those needs, both today and then in the future.
So, if you think about what that base created, the interest in culinary innovation, restaurant-quality foods and meals, and really high quality, which is what our consumers in this market expect from us, became foundations for us that have continued forward into our, I’ll still call it a newer facility here, that we moved into in The Bronx in 2018. So those are some of the reflections I know this team has whenever we chat about some of the original days back 20 years ago.
BG: Speaking of that, getting to know the shoppers and their likes and dislikes, what type of shoppers did you target at the beginning, as opposed to now? And tying into that, what types of grocery products do shoppers tend to buy via FreshDirect compared with now? And why do you think this is?
DB: I think the original view of who the core shopper [was] going to be for FreshDirect was more of a restaurant replacement visit. What evolved was the realization that customers saw an ability to do a fuller shop with FreshDirect. What’s evolved since those initial customers is that, certainly, the restaurant-quality ready-to-eat meal is still a very strong part of our business. It’s amazing how good it is. We have, frankly, fantastic product that our customers have come to love. At the same time, our customers, and some of it’s just been the evolution of the American shopper as well, but particularly strong in this market, we’ve seen people much more interested in organic. Much more interest in consistent high quality. That’s the key: not just high quality, but to do that every single day. And also health and wellness. That’s really been an evolution we’ve seen.
Also … FreshDirect, from the very beginning, has been very focused on innovative and new products, niche products that have become national over time. That’s another area that has continued to be strong for us. If I look today at the FreshDirect business versus a broader, more mainline grocer, we do actually more than 60% of our business on the fresh side. About 40% is on the center store packaged good side. So, very much a flip from what you would expect from a mainline grocer, and very representative of who and what our customer is. Frankly, what FreshDirect is [comes from] our desire to fulfill our customers’ needs every day.
BG: What kind of growth has the company experienced since its inception? We know it’s spread out to all these different markets now [the New York metro area and Washington, D.C., as well as areas of Pennsylvania and Delaware], but if you could talk about that in as much detail as you care to.
DB: We certainly, as did many of our competitors, saw just an incredible spike during the core of the COVID pandemic, ’20 and ’21. Not just incredible growth, but I’ll say almost instantaneous incredible growth. It wasn’t like the growth rate accelerated; it was really almost a straight line up. That created a lot of needs here to make sure that we could satisfy that demand, support our customers, support new customers who wanted to shop with us. We also actually did some outreach to the city with donations and support when food was really at a premium for folks who didn’t have the ability to get what they needed.
That COVID spike really further accelerated our business. What’s exciting for me is that this year, we expect further growth, which, when you think about what’s going on with COVID and people starting to return back to a little bit of their more typical life pre-COVID, we’re really pleased there’s been some stickiness there with our consumers, our new consumers, who truly understand our approach to fresh, our approach to restaurant-quality meals, and just the consistency with which we do all that. That’s really what we’ve seen over the past few years and a little bit of what we’re seeing this year, too.