GRISTEDES TO GO NATIONAL ON AMAZON

JON SPRINGER

NEW YORK -- Gristedes is best known here in its home city, but is making plans to go national -- virtually.

The grocery chain is busy outfitting the basement of one of its stores to serve as a wareroom and picking center to serve a national partnership with online retailer Amazon.com, sources told SN.

Neither Amazon, based in Seattle, nor Gristedes confirmed they had an agreement. However, John Catsimatidis, Gristedes' chief executive officer, confirmed to SN the chain was preparing to serve "a large national Internet retailer" beginning later this summer.

According to Catsimatidis, Gristedes will provide "the full range of what's available in our stores" -- dry groceries, meat and produce -- to Internet shoppers. The items would be published on its partner's Web site. Gristedes employees would receive orders from its online partner and pick, pack and ship them.

Known mainly for books and video, Amazon.com has extended into numerous other product categories in recent years, including gourmet food, which launched late last year and is currently available on the Web site in "beta," or test, form. Most of the food products currently available through Amazon are delivered directly by vendors, including Omaha Steaks, Harry & David and Seattle's Best Coffee. New York-based specialty food retailer Dean & Deluca offers goods for sale, and has a storefront on the Amazon site.

Gristedes could realize sales "anywhere from a couple hundred million and up" as a result of the partnership, but "there's no way we'll know until we actually do it," Catsimatidis said. The company has provisions to open a larger fulfillment center for online orders should volume necessitate it, he added.

"Our principle is to do this with existing overhead and existing inventory. Otherwise, it doesn't make sense," Catsimatidis said. "The customer should have the confidence that Gristedes will survive before the stand-alone Internet retailers will survive. We see a great benefit to our brick-and-mortar stores because of this."

The new venture will be headed up by Michael Criscuolo, Gristedes' director of marketing.

Gristedes, which operates 48 stores in New York City and its suburbs, will continue offering local online shopping through its partnership with Xpressgrocer.com.