INDEPENDENTS ON THE WEB

JON SPRINGER

FORT WAYNE, Ind. -- One might describe the White Swan IGA supermarket here as a small duck in a large pond.

At 21,000 square feet, and 56-years-old, White Swan today is surrounded by larger, newer, better-funded competitors -- according to owner Tom Dant, at least six Krogers, three Meijer's, two Wal-Mart Supercenters and 12 Scott's Foods vie for customers in Fort Wayne, a city of about 200,000. "We're the only independent around," Dant said.

But the Internet doesn't care how big you are.

In September, Dant and White Swan launched a Web site selling groceries that has not only expanded his store's reach but done so at the expense of his competitors. According to Dant, 96% of the purchases from his site, Fortwaynegrocery.com, are from customers who are, for reasons of geography, not potential customers of White Swan.

"It's going very well," said Dant, who would not divulge sales figures. "Each month, we're getting more hits and more positive comments. And since we're the first service like this in town, we've got great public awareness."

The site was born of a concern over competition and a desire to give customers better service, Dant said -- issues the independent grocer faces in the real and virtual worlds. "Wal-Mart sells the same can of beans I sell," he said. "As a grocer, I'm always looking for ways to sell more of them. I've always been interested in computers and the Internet myself and thought this was something I should look into."

According to Dant, the Internet has allowed him to achieve the dream of many independent grocers today -- using local expertise, a fighting spirit and quickness to reach a market niche its larger competitors cannot or will not achieve.

"The independent grocer should learn that there's a lot more business out there than he realizes," said Dant.

In reality, David-and-Goliath stories of Internet retailing are quite rare for independent grocery retailers, who appear to have the issue of e-tailing no more figured out than national brick-and-mortar companies or Internet "pure-plays." A number of independents contacted for this article said they were optimistic about their chances for success with Internet divisions, but at the same time frustrated over the technology, worried about costs and fearful their efforts will be met with indifference by their customers. While some independents get on-line to feed a niche and others have bigger plans, the results thus far are a mixed bag.

"For independent grocers there seems to be no cookie-cutter answer for e-commerce," said Shannan Blagg, a spokeswoman for IGA, the Chicago-based network of more than 2,000 independently owned stores in the United States. "Every market is different."

As a result, IGA focuses its Internet efforts toward marketing local stores and not toward e-commerce, Blagg said. Similarly, Memphis, Tenn.-based Piggly Wiggly is focusing its efforts on a business-to-business network called PigNet, said its director of e-commerce, Richard Varnon.

"We definitely want to offer [e-commerce] service to our stores, but we haven't figured out what works best and what doesn't," Varnon said.

Rudy Dory, who owns two small IGA markets in the resort community of Bend, Ore., feels the Internet could help his store fill a niche market. Dory believes an Internet operation would allow hundreds of his tourist-customers to stock up their second homes with groceries without missing out on the outdoors activities they come to Bend to experience.

"Bend is a great 'ing' city -- if it ends in i-n-g they do it here -- fishing, hiking, cycling, skiing, running. People want to be outdoors," Dory said. "I'm also a big believer that people are going to shop on-line more and more. A large base of customers are harried for time and don't always have time to shop."

Dory partnered with a local technology firm, which set up a Web store months ago. But the site has yet to launch due to problems integrating the store's new scanning system. "People on the Internet side have been ready for us for months but my system isn't," he said. His conclusion: "Getting your store on-line takes twice as long and costs twice as much as you think it will," he said. "Not just in hard costs but in frustration."

Dory hopes to have his system up and running sometime later this year.

Some small grocers with perfectly well-running Webstores have been dissatisfied with their experiences thus far.

Ken Maus, owner of Maus Foods, Monticello, Minn., said his store's shopping site, up for a little more than a year, has been met lukewarmly by his customers.

"The customers who use it, use it regularly -- but there's just not that many of them," he said. "We've had trouble getting people to test the waters."

Maus said the main reason the store launched the site was "to be able to put another notch in belt as far as customer service. We thought it would enhance our image as an upscale, high-tech company. We knew from the start it wasn't going to be a profit center."

Maus' site, run through eGrocery, the Plymouth, Minn., company formerly known as the Grocery Store Network, offers his shoppers the opportunity to shop on-line, but does not offer delivery because Maus is not sure the order volume would justify the cost.

"The biggest question mark for me is whether we should be offering home delivery," he said. "The problem with that is that it's something we'd have to do with our own staff and we'd have to evaluate how we'd be able to do that.

"So you can probably tell, we're a little apprehensive," Maus added. "I think we'll stick with it for another year or two and see what we think then."

Rural customers may not be ready for e-commerce, said Jeff Schultz, owner of of Cirilli's County Market, in Rhinelander, Wisc. Schultz' store has offered on-line shopping through eGrocery for more than a year.

"I thought there would be a little niche in there for time-starved people who want to take care of their shopping from home," Schultz said, "but that hasn't been the case. I'm not sure if it's we're just too small a town. I really don't know."

Schultz said his customers appear to be using his store's Web site to check weekly specials, but not to shop. For that reason, he said he would keep the Web site up.

But maintaining an e-commerce site for customers to "take or leave" can be a mistake, said Mike Spindler, president of MyWebGrocer.com, a New York-based company that provides e-commerce solutions for independent retailers. According to Spindler, a common mistake many independent grocers make is not putting forth enough commitment to make their Web sites a success.

"We haven't found too many small grocers with the confidence to really go after the on-line customer," said Spindler. "It can't be a side deal or an afterthought. You can't go in half-hearted."

However, Spindler strongly believes independent grocers can succeed in e-commerce, even among the competition from pure plays and national chains.

"The real advantage independents have is the ability to get into it with both feet, faster than the chains, who have to move in a more deliberate fashion," Spindler said. "The other issue is that the independents that have survived until today probably already know how to compete with the chains. They're not just opening their doors and waiting for customers. To compete against a Wal-Mart store you have to do more than that."

Spindler's company is among a wave of third-party technology firms currently courting independents, including ShopEaze, Santa Clara, Calif., and Peachtree Network, Montreal. All promise they can offer independent grocers the technical expertise and professional look to make their sites as mechanically and visually efconsumer data mining.

Jim Mills, owner of five Snyder's IGA stores in the Oklahoma City area, signed up with MyWebGrocer recently after viewing its presentation at the Food Marketing Institute show in Chicago in May. He said he decided not long before the show that getting his stores on-line was something his chain should do while it could.

"If you asked me three or four years ago, I would have told you I would never try anything like this," Mills said. "But the demands of customers are changing. I believe this is the wave of the future."