Publix plans online grocery

The supermarket chain hopes to fill Web site shopping carts and deliver customers' orders to homes by next year.

By MARK ALBRIGHT

© St. Petersburg Times, published April 27, 2000

Not long ago, the idea of buying groceries on the Internet was a business promoted by come-from-nowhere companies with dot-com names selling to Web-obsessed shoppers in San Francisco and Manhattan.

Now your neighborhood Publix wants in on the action.

Publix Super Markets Inc. on Wednesday revealed plans to bring Internet grocery shopping to several major markets in Florida, including the Tampa Bay area, and Georgia. However, those who want to buy a loaf of Publix french bread or a roasted chicken online will have to keep their computer mouse holstered until at least 2001.

It is going to take Publix that long to set up the pricey logistics required to begin home delivery in three or four of its biggest markets. Still, the plans make Publix, based in Lakeland, the first major chain to commit to selling groceries online in Florida.

Publix is creating a subsidiary for the venture and scouting for sites for as many as four 100,000-square-foot distribution centers to use as hubs for home delivery of online orders. It is unclear how far from a warehouse Publix will offer home delivery.

The chain also is planning to make online ordering an option for customers who could pick up their bagged purchases at Publix stores. While home delivery could be a welcome innovation for infirm elderly and disabled shoppers, making a quick pickup at a store may appeal to busy professionals who are seldom around to meet a delivery van.

Many major supermarket chains are taking steps to jump on the online shopping bandwagon just as many loss-ridden pioneers of the nascent industry are running out of cash to survive.

Last week, Royal Ahold SA, the Dutch retailing giant that has been aggressively buying supermarket chains in the United States for the past decade, rescued Peapod Inc. from insolvency by taking over the Chicago online startup for a $73-million investment. Safeway Inc. recently poured $30-million into securing controlling interest in GroceryWorks.com in Dallas. Food Lion's acquisition of Hannaford Brothers in the Northeast includes one of the nation's earliest online grocery-shopping ventures in Boston.

Shoppers can even bid for groceries at Winn-Dixie Stores Inc. in eight states, and as far south as Atlanta (but not yet Florida) through Priceline.com.

Albertson Inc. opened its prototype online store in the Seattle area last November, and it may prove typical.

Located near Microsoft Inc. headquarters, Albertsons Dot.Com is a conventional grocery store split in two. Half is for customers who do their own shopping. The other side is a small distribution center in which employees fill orders that come in from the company's Web site.

The prices are the same on both sides. Delivery is free for orders exceeding $60. Otherwise delivery costs $5.95.

Publix plans to build its online operation internally rather than invest in an existing one. It got serious last November with the appointment of Tom O'Connor as senior vice president of e-commerce. Connor, who started his career as a Publix bag boy, had been in charge of the chain's distribution system.

"We've been watching the online supermarket industry for some time," said company spokeswoman Jennifer Bush. "We now know there is going to be a niche for Publix. We set up a separate subsidiary so they can be totally focused on how this business will be developed."

Publix declined to say how much money is being committed to develop what is being called a "pilot" program. Publix is an employee-owned but family-controlled company that in 1999 earned $462-million on revenues of $13.1-billion. Other online grocers nationally have been losing millions trying to build a profitable business model. GroceryWorks, for instance, lost $38-million on sales of $16-million in the most recent quarter.

"Although the capital investment is going to be large, Publix is well-positioned to fund it," said Bush. "The initial costs would not have a material effect on Publix."

Like most of the country, Florida has been bypassed by the dot-com grocers for several reasons. Online supermarkets have popped up mostly in densely populated cities such as Boston, Chicago, San Francisco and New York, where grocery shopping is inconvenient and there are more customers to serve within a short distance.

Online grocers have worked on the theory that young people are more likely to use computers, so most experiments began in places with lots of college-age residents and higher incomes.

Florida grocers have been dubious about the local market for home delivery since the demise of Shoppers Express. That was an independent service that delivered phoned-in orders from Winn-Dixie, Kash n' Karry and Eckerd Drug until it went out of business in the early 1990s. While delivery was free if the orders were big enough, the service never turned a profit during its five-year run.

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