ASDA PLANS SERVICE, DC FOR SHOPPING FROM HOME

JAMES FALLON

LEEDS, England (FNS) -- Asda Group here is the latest retailer to jump on the alternative shopping bandwagon. The United Kingdom's third-largest food retailer plans to spend $4.98 million this year on three initiatives aimed at catering to customers who can't physically visit its stores.

Asda is establishing a home-delivery service with dedicated distribution centers. Through the service Asda will sell its home-entertainment products, and plans to launch a series of satellite television programs later this year to sell its Christmas merchandise in advance of introducing its own television channel.

Allan Leighton, Asda's chief executive, said the moves will help accelerate Asda's growth and exposure into regions where it currently is under-represented.

The home-delivery service, which is to be introduced this fall, will be the United Kingdom's first to use dedicated centers to fulfill orders rather than retail stores, according to Asda. The retailer's larger competitors are all testing home-delivery services, but generally the orders are fulfilled by in-store staff.

"The economies of scale involved in this approach will enable Asda to deliver great value to customers through a fast, accurate, high-quality service run at low cost and handling large volumes," said an Asda spokesman.

The first center will be located in south London and orders will be fielded by a call center. The move will create 170 jobs at the warehouse.

Asda will initially target 450,000 homes in a 6-mile radius of the center. A catalog of about 5,000 products, both major brands and Asda's private-label products, will be distributed to the homes.

The catalog initially will offer only grocery products, although over time it might be extended to nonfood, home and leisure items and apparel, the spokesman said. Customers will order by telephone and payment will be made via debit or credit cards. Asda is exploring the possibility of allowing customers to order by fax and, in the long term, via the Internet, the spokesman said.

While such retailers as Tesco, Cheshunt, England, and J. Sainsbury, London, offer Internet shopping services, these are generally restricted to their private-label wines and spirits. Sainsbury, however, recently announced plans to launch an Internet shopping test later this year offering its full catalog of food and nonfood products.

At the Asda fulfillment center, orders will be picked directly from picking slots rather than from store shelves, and delivery will be made in temperature-controlled Asda vans. The retailer did not reveal whether there will be a delivery charge.

The Asda spokesman estimated the center will have to pick about 500 orders a day, averaging $132.80 each, in order to break even.

Leighton insisted the service can be profitable. "This is our 'stealth stores' approach to the home-shopping market," Leighton said. "Our service, initially based in an area where we have low market share, is aimed at those people who do not have the benefit of access to one of our stores."