THREE CHAINS DISCONNECT ELECTRONIC HOME SHOPPING

DEENA AMATO-McCOY

EAST BRIDGEWATER, Mass. -- At least three retailers will have pulled the plug on their electronic home shopping programs by week's end and it remains unclear when or whether they'll offer the service again.

The shutdown of home shopping at Shaw's Supermarkets here this coming Friday is the latest in a series of similar moves by several retailers contracting with Shopping Alternatives, Bethesda, Md., for order processing and delivery.

Byerly's, Edina, Minn.; Scolari's Food & Drug, Sparks, Nev.; and the Pittsburgh-based Shop 'n Save division of Supervalu, Minneapolis, are among those whose home shopping programs were discontinued in recent weeks as Shopping Alternatives prepared to be acquired by another company.

Kevin Sheehan, president of Shopping Alternatives, confirmed his company discontinued contracts with several retailers. The company is scheduled to be acquired by Streamline, Westwood, Mass., a consumer-direct company.

Bernie Rogan, Shaw's spokesman, said the chain has no immediate intention to resurrect home shopping but is leaving the door open to future opportunities.

"Home shopping is an element in the supermarket business and you need the right formula to provide the top service," Rogan said. "To offer this service later, it has to come in a different package."

The current business model used by Shaw's and other retailers that partnered with Shopping Alternatives calls for products to be picked from store shelves; however, many industry observers believe a more centralized approach, through a designated warehouse, for example, might prove more efficient.

"There are many models out on the street, and when they come up with a better mousetrap they will contact us," Rogan added. "We haven't thrown out the baby with the bath water, but it is too early to make a decision about continuing the service."

Shaw's program, which was launched with much fanfare in January, had been generating some 500 orders each week.

"I guess there was not enough business volume under the format we had," Rogan said. "I think it is a fair statement to say the service could not carry the load" in a cost-effective way.

Scolari's, whose home shopping service was to have been shut down this past Friday, said Shopping Alternatives' desire to end its contract was somewhat unexpected.

"We were a bit surprised by the request to discontinue the service," said Jackie Shelton, spokeswoman. "Though the service was slow in catching on, Scolari's was happy with it."

Byerly's discontinued home shopping service Nov. 30, after declining to accept a different business arrangement with Shopping Alternatives, according to Dale Riley, chief operating officer for Byerly's.

"We didn't want to change how we do business, and they did not want to support the service under the present contract," he said. "We also did not want to hold them to the contract if they were unhappy, so we mutually decided to end the relationship."

Byerly's is offering its home shopping customers a $10 store gift certificate to thank them for using the service and Shaw's has been contacting customers to notify them of the program's shutdown.

"I was pleased with our relationship with Shopping Alternatives, and saw steady growth on Internet use," Byerly's Riley said. "It was a good experience, but it is unfortunate we had to drop the service to the customers."

Shelton of Scolari's said the chain will re-evaluate the market and see if there are other ways to improve customer convenience, though there are no present plans to continue home shopping.

Byerly's also has no immediate intent to offer the service again. "We have no current plans to continue. We know our limits," Riley said.

All three home shopping programs allowed customers to order groceries through Shopping Alternatives via a toll-free telephone number, fax or by personal computer over the Internet. Fees to use the service ranged from a low of $6.95 at Scolari's to $10.95 at Shaw's.

Shaw's service, reaching consumers in the greater Boston area; Hartford Conn.; Portland, Maine; and Providence, R.I., was launched in January.

The groceries, picked by Shaw's employees, are delivered to consumers' homes through a local third-party service, also provided through Shopping Alternatives.

Scolari's, whose service was in place a little more than a year, was offered by four stores to consumers in the Reno, Sparks and Carson City, Nev., areas.

Byerly's service, launched in March, fulfilled orders in six stores in the Twin Cities area, according to Riley.

Sheehan of Shopping Alternatives said he has not lost faith in the concept of home shopping. "In fact, I think it will be a significant retail channel over the next 10 to 20 years," he commented. "We are simply looking for a more effective way to provide this service to consumers through retail, wholesale and technology partners."