FRED MEYER LINKS WITH NET RETAILER FOR HOLIDAYS

CHRISTINA VEIDERS

PORTLAND, Ore. -- Fred Meyer here is the latest retailer to partner with on-line entertainment retailer, CheckOut.com, Beverly Hills, Calif., in a co-promotion designed to benefit both retail and Internet channels of distribution this holiday season.

The program, launched Nov. 23 in 139 multidepartment stores in six states, allows Fred Meyer shoppers to take advantage of special incentives offered through CheckOut.com and extends the chain's in-store music, movie and game offerings to CheckOut's extensive on-line selection of titles and entertainment information.

Shoppers who place an order through CheckOut.com will be sent a $10 coupon off their next music, movie or game purchase at a Fred Meyer store. The promotion, which runs through the end of this month, is being supported on Fred Meyer's Web page and through in-store promotional materials.

"The program with CheckOut.com is a natural progression of our commitment to technology and customer service. We can now provide our customers with a more comprehensive selection of hard-to-find music, movies and games. We can meet our customers' needs by offering both in-store and on-line solutions," stated Marty Tassoni, Fred Meyer's group vice president and general merchandise manager of home electronics, in a company press release.

"By referring customers to a Web site they can feel comfortable with and that caters to their needs, this provides a perfect solution [in fulfillment of product not always available at retail]," said Alan Kipust, chief operating officer of CheckOut.com, who emphasized the added value and service retailers are providing through such an on-line co-marketing effort.

"This partnership builds on CheckOut.com's existing off-line relationships with Wherehouse Music and Ralphs Grocery stores, giving us access to more than 20 million customers weekly. The alliance allows both companies to do what most on-line and traditional brick-and-mortar businesses are striving to achieve and that is to create a cohesive experience for consumers both off- and on-line, taking the convergence of traditional retail shopping and the Internet experience one step further."

Also last month, the Internet provider kicked off an exclusive sell-through tie in with the video and DVD release of "The Iron Giant," the children's animated movie from Warner Home Video, Burbank, Calif., in conjunction with Ralphs Grocery Co., Compton, Calif.

The video and DVD are being marketed in several stages and supported with various incentives. Prior to its Nov. 23 release, Ralphs' shoppers could reserve the family title on the retailer's Web site (www.Ralphs.com), which is linked to CheckOut.com, and receive an "Iron Giant" litho cel and action figure with the purchase. Through the Internet, Ralphs was able to promote the title prior to its release date, noted Kipust. Traditionally, retailers are restricted from promoting video titles until their official release.

Since its release, promotions being run include those targeting Ralphs' club-card shoppers who purchase the home video in-store using their cards. In making the purchase, they receive a $15 Ralphs' gift certificate redeemable only after making a purchase of $15 or more of music, movies or games at CheckOut.com.

When Ralphs' customers purchase either the video or DVD by entering CheckOut.com from Ralphs.com, they receive an exclusive litho cell and a $15 Ralphs' gift certificate with no further purchase requirement. For customers outside Ralphs' marketplace, "The Iron Giant" is available on VHS and DVD at CheckOut.com and all purchasers receive "The Iron Giant" litho cell.

CheckOut.com is the exclusive outlet for Ralphs' customers to purchase "The Iron Giant" on DVD. "This enables Ralphs to service its customers with product, especially DVD that many grocery chains aren't heavily into as yet," stated Kipust. "The Iron Giant" video is priced at $14.98, while the DVD is being sold for $17.49.

The two retail chains, now both owned by Cincinnati-based Kroger Co., and Checkout.com are indirectly linked through a shared investor, Yucaipa Cos., which is the largest shareholder in Kroger Co. and a backer of CheckOut.com.

Kipust declined to give figures on the early effect of the retail promotions or of the site's performance since it went on-line in August. He said "the basic component to prove out our business model is impressive, meaning they [consumers] are coming back frequently and staying."

Earlier this month, CheckOut.com became the on-line arm of Wherehouse Music, a division of Wherehouse Entertainment, Torrance, Calif. Both companies pledged $40 million in the partnership venture.