COLES MYER WILL BEGIN TRIAL OF HOME SHOPPING IN EARLY '98

LINDA PURPURA

TOORONGA, Australia -- Coles Myer here will launch its first ever on-line home-shopping and grocery-delivery service in a trial site, most likely Melbourne or Sydney, Australia, in early 1998.

Jon Wood, managing director of direct marketing at Coles Myer, which operates supermarkets under the Coles and Bi-Lo banners, said no large food retailers currently offer this type of service in Australia.

"Coles Myer has both a traditional retail business and a direct retail business through its catalog operations," said Wood. "In traditional food retailing we have the second-largest share in the country, and in the direct business we are probably the biggest. It seems natural to combine both and offer direct food shopping to our customers."

The on-line grocery-ordering system, as well as certain business systems such as fulfillment management, product database administration and customer support, are to be provided through a licensing arrangement with Peapod, Evanston, Ill.

Peapod provides on-line grocery-shopping and delivery services in partnership with several major retailers in the United States. Coles Myer is still completing the terms of its contract with Peapod, Wood said.

Coles Myer plans to offer a complete selection of products from its Coles Supermarkets. Orders will be accepted by phone and fax, but Coles Myer will encourage consumers to use their personal computers to place electronic orders.

Once received, orders will be converted into a pick sheet that will be routed automatically to the back of the store. From there, Coles Myer employees within the supermarkets will pick the orders.

If its home-shopping business grows, Coles may eventually pick dry groceries from a dedicated distribution center, such as the one it uses for its catalog business.

The retailer is still determining how to handle product deliveries. Coles Myer is exploring whether to hire drivers itself or to outsource this function to a company that specializes in delivery. Various components of training and support offered by Peapod are also being worked through.

In choosing where to market the home-shopping service, Coles Myer will target areas where its customer demographics fit the profile of consumers using Peapod's services in the United States. Peapod's demographic profile is typically women in the work force, aged 25 to 45, with children.

Wood noted Peapod will continue to experiment with its solutions in the U.S. market, which provides Coles Myer with a "test bed" from which it can learn and apply methods to operations within Australia.