RANDALLS ENCOURAGED BY EARLY HOME-SHOPPING RESULTS

ADAM BLAIR

HOUSTON -- Randalls Food Markets' ambitious plan to launch home-shopping services in three Texas markets this year has started strongly, with 5,000 Houston-area shoppers signed on during the program's first nine weeks of operation.

The home-shopping service, introduced earlier this year, is being offered in conjunction with Peapod, Evanston, Ill., which provides on-line (via Internet and dial-up services) ordering and delivery services in conjunction with supermarket retailers in seven U.S. markets.

Randalls here alerted customers to the availability of home shopping with in-store promotions, broadcast advertising and direct mailings, according to Ron Clyde, Randalls' vice president of electronic commerce.

"Randalls is grateful to Houston for the way they've embraced this new technology and this new channel to the grocery industry," he said.

Nine of Randalls' 52 Houston locations are being used as order-fulfillment sites for the home-shopping program, said Clyde. The on-line ordering has been integrated with Randalls' frequent-shopper program, so that card members receive frequent-shopper credits for their on-line orders.

Clyde said Randalls plans to expand its home-shopping service to two other Texas markets in 1997: Dallas, where the chain operates 54 stores under the Tom Thumb banner, and Austin, where it has 16 stores.

"We believe our customer wants a home-shopping option," said Clyde. "We consider it a customer service commitment."

While he did not provide specifics on the amount being ordered via the home-shopping program, Clyde indicated that the number of subscribers and their usage of the service were both greater than Randalls had expected.

Peapod charges Houston-area home shoppers $6.95 per month for access to its web site (http://www.peapod.com), and 5% of the order total for picking, packing and home delivery. Users can schedule delivery, available seven days a week, within 90-minute windows.

While shopping on-line, customers can sort items in a variety of ways, such as by price, size, total calories, sodium content and kosher or non-kosher. Item screens provide the detailed nutrition information that would be found on the product label.

Customers can also place orders up to two weeks in advance, and make changes up to 90 minutes before the scheduled delivery time.

Payment methods include check. electronic funds transfer and major credit cards.

Customers pay the driver when they receive the orders.

In most markets where it partners with supermarket retailers, Peapod's employees pick, pack and deliver groceries to home-shopping customers. In Houston, however, Randalls employees perform these services.

"We [typically] work out of individual grocery stores, with a Peapod staff of trained shoppers and drivers," said Tony Priore, Peapod's vice president of marketing.

"The stores are like our warehouses." Such an arrangement allows Peapod to use short-haul delivery in large geographic areas.

Peapod is also expanding to new markets. It began offering home-shopping services earlier this month in Atlanta, in conjunction with Bruno's, Birmingham, Ala. Priore said the company will operate out of four Bruno's locations to cover most of the Atlanta area.

In late February, Stop & Shop stores, Peapod's Boston-area retailing partner, expanded its home-shopping services with the addition of its South Bay store as a distribution location. Stop & Shop, part of the Atlanta-based Ahold USA group, says it now services more than 100 communities in the greater Boston area.

Peapod, founded in 1989, serves 33,000 households with on-line ordering services. The company, which had been privately held, announced it had filed an initial public offering (IPO) with the Securities and Exchange Commission on April 1.

Other retailers providing home-shopping services in conjunction with Peapod are Jewel Food Stores, Melrose Park, Ill., a division of American Stores, Salt Lake City, in Chicago; Safeway, Pleasanton, Calif., in the San Francisco and San Jose, Calif., markets; and the Columbus, Ohio division of Kroger, Cincinnati.