ST. LOUIS (FNS) -- Schnuck Markets here expanded its Internet-based home-shopping venture into the St. Charles County, Ill. market area last week, and plans future expansions into other areas of Illinois, said Jack McGauley, manager of consumer research for Schnuck.
Schnuck's Home Shopping Club is presently operating at a break-even point, but will "eventually make money" as volume increases, said McGauley. He spoke to the St. Louis chapter of the American Marketing Association, Chicago.
Order selection for the St. Louis-area stores, which currently comprise the bulk of Schnuck's home-shopping business, is done from the retailer's Arsenal Street store in the southwestern part of the city, which McGauley said was a good central location for delivery efficiency.
Asked if home shopping could ever evolve into an operation that requires warehouse picking, McGauley said "possibly -- in the far future. We're getting cost savings by picking from an existing facility."
While the retailer wouldn't reveal the number of customers using the service, Schnuck has been pleased with consumer response. "We've had an enthusiastic reception of the Home Shopping Club, and we're seeing continued growth in use," said Scott Schnuck, president and chief operating officer of Schnuck's, in a statement. "Best of all, we believe we're helping many of our customers ease time-management stress and transportation dilemmas."
Consumer-direct services are gaining increased attention in the supermarket industry, though predictions as to how large the business will grow vary greatly. Experts say the percentage of on-line grocery purchases within three years could be as low as 3% or as high as 15%.
A number of retailers, as well as several third-party firms, are offering home-shopping services, attempting to build customer volume and to make the picking, packing and delivery processes both reliable and cost-efficient.
Schnuck's program, which allows consumers to choose from 15,000 items and offers same-day and next-day delivery options, was made available to 1.1 million residents in St. Louis and nearby areas when the program began in June 1997. Another 257,000 potential customers were added last summer.
The most recent expansion makes the Home Shopping Club service available to 250,000-plus residents of St. Charles County, according to the retailer.
Initial concerns that Schnuck would lose impulse sales were unfounded, said McGauley. "The average sale is three times higher than the typical in-store order," he noted. "Home shoppers are significant buyers."
In addition to orders from individuals, the service is being used by corporations for picnics and other company events, he added.
Shopping via the Internet was tested for about three months prior to the initial rollout. Sixty volunteers, including members of the Schnuck family, senior-management personnel and a few outsiders, were part of the pilot group. The tests brought about some immediate changes, such as extending the available product line to 15,000 items -- an increase of 50%.
Now, in addition to groceries, consumers can order prescription drugs, videos and flowers via the Web site, www.schnucks.com. Following a user survey, Schnucks began using product pictures, where possible, to enhance descriptions on the Web page; today, about 80% of all items offered are accompanied by pictures.
Another change, instituted last July, was the introduction of new delivery coolers. Previously, frozen foods had been softening during the delivery process.
