CONVENIENCE AND QUALITY HOME DELIVERED BY STREAMLINE

DAVID ORGEL

PALM BEACH, Fla. -- Streamline, the consumer-direct company based in Westwood, Mass., is building more bridges to consumers in its emerging food channel.

The company has made its on-line interface more graphic and is moving closer to a wider geographic rollout of its service -- efforts aimed at building its base of remarkably loyal customers, said Timothy DeMello, chairman and chief executive officer of Streamline. "Consumers want convenience and simplicity and want products and information brought to them," he said. The company fosters that goal by offering home delivery of products -- including items for sampling -- and on-line promotions and cross merchandising.

In fact, the mission of providing convenience and information appears to be more important to Streamline than the ordering method. While the great majority of Streamline's customers order via the Internet, phone and fax service is also available.

DeMello warned that suppliers and retailers need to become better schooled in the consumer-direct channel.

"Manufacturers need to get educated on this emerging channel," he said. "Your best customers are going into this channel -- the brand-buying, non-price-sensitive, non-coupon-clipping consumer.

"Retailers haven't enjoyed results [in this sector] because they've only dabbled in it."

Streamline has fine-tuned its customer delivery method. Shoppers order once a week and the items are delivered to their homes the following day in a freestanding three-temperature-zone unit to ensure product integrity. Product is picked from a local fulfillment center. The $30-a-month subscription fee doesn't seem to bother customers, given that Streamline has a 98.5% retention rate.

Streamline is supplied by Minneapolis-based wholesaler Supervalu.

The first piece in Streamline's expansion plan beyond the Boston Market is to open in the Washington-area market. A facility in Gaithersburg, Md., will open to serve that region in the spring. That will begin the company's national expansion, involving the launching of warehouses in numerous markets.

"We're looking at the top 15 to 20 markets, and our objective is to see that done in a 5- to 7-year period of time," he said. "We'll need to be operationally sound and will need more capital."

Among the early locations that may see centers are Atlanta, Philadelphia and northern New Jersey. Other strong candidates to eventually get centers are Chicago, Denver and Seattle.

The latest capital infusion was a $23 million investment from Nordstrom last month. Nordstrom's interest proves that Streamline's appeal goes beyond food, DeMello said.

"We don't see ourselves as just grocery, we see ourselves as doing relationship management," he said.

In addition to its wide-ranging food offerings, Streamline currently offers 8,000 nonfood stockkeeping units, including health and beauty care items.

The company's updated interface makes the channel more real to consumers by "moving visual images from the store into the home." The new look -- built with support from Intel -- is faster and highly graphic. Customers see images of all products, and all sides of packages. They see nutritional and other information on labels. Promotions are customized to individual users.

Cross merchandising has also become more visual. A customer choosing cereal will see the image of a banana roll onto the screen, and can even select the level of ripeness.

Nonfood items and perishables, including prepared meals, complement the packaged food offerings.

The session with DeMello was moderated by Maria Cousineau Hom, senior marketing manager, Market Development and Acceptance, for Visa U.S.A.