Peapod Slashes Prices and Adds Cheaper Subscription Option

Prices on thousands of items to be cut.

The Chicago-based online grocer Peapod is trying to improve customer retention and loyalty by offering new ways to save on groceries. On Wednesday, the company, which is owned by Ahold Delhaize USA, announced a suite of price reductions and special offers, along with a discounted subscription program called PodPass Midweek. Peapod, which has been in business for nearly 30 years, operates in 24 metro markets including New York, New Jersey, Illinois, Wisconsin, Indiana and the District of Columbia.

‘When planning the (price) reductions, we began with one important question: what do our customers care about the most? It sounds simple but we wanted to ensure we are giving our customers exactly what they want at the value they expect,’ said Spencer Baird, Peapod's SVP of Merchandising, adding, ‘Initial feedback has shown shoppers are very happy with the new value Peapod is delivering.’

The pricing changes and discount offers include the following:

• 

  Lower prices on thousands of products, including natural and organic items, meat, fresh produce and dairy. To reflect the changes, each item will show the old price and the new, lower price
• Bundles of savings will offer discounts on groups of products often purchased together. Bundles that are already popular with customers include Taco Tuesday, Spaghetti Thursday, Morning Coffee-on-the-Go and Salad Fixings.
• Buy More Save More discounts allow customers to stock up on popular items like berries, eggs and frozen vegetables. When customers buy two, three or four products within a category, they save more more.
• PodPass MidWeek is a discounted version of Peapod’s free-delivery subscription service, PodPass. Priced at less than half the price of the regular subscription, PodPass MidWeek offers free deliveries on Tuesdays, Wednesdays or Thursdays for a year for just $55. The subscription is available for three months for $25 and six months for $35.

Though the offers were just announced this week, Peapod has already been rolling out these new programs in different markets. According to a news release, customers are ‘excited and motivated by the value enhancements.’

‘This is just the beginning for us,’ said Baird. ‘We'll be lowering prices and offering additional special promotions throughout 2018 based on seasonal purchasing and priority products. We want to keep delighting our customers every time they shop. Customers should know our commitment to value is permanent.’

Yesterday Peapod announced it is expanding its meal kit line in a collaboration with Lettuce Entertain You Enterprises restaurants. It is adding three new meal kits, inspired by its Wildfire and Big Bowl restaurants. The new meal kits, which serve two to four, include:

• Wildfire beef tenderloin with couscous
• Wildfire BBQ bison meatloaf, mashed potatoes and caramelized onions
• Big Bowl sweet and sour chicken

The meal kits are pre-washed, pre-measured and pre-chopped, and can be ordered online from Peapod.

‘As the demand for meal kits continues to increase, we are thrilled to collaborate with restaurants like Wildfire and Big Bowl,’ said Baird in a statement. ‘It was a natural progression to work with trusted and popular restaurants based right here in Peapod's hometown of Chicago, and we are excited for our customers to be able to make these delicious recipes right at home.’

Peapod customers can order their groceries via an online app, via text or the Alexa skill, ‘Ask Peapod.’ To date, Peapod has delivered more than 40 million orders to customers. The company offers deliveries to homes and businesses, as well as more than 200 pick-up locations for convenient grocery shopping.

Insider Take:

Companies like Peapod will find it difficult to compete with online grocers like Amazon and Walmart, who had 26 percent and 16 percent of the online grocery market in 2016, respectively, but cutting prices, offering discount programs, and subscription options will make them more competitive.

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