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FOOD RETAILERS LOOK TO CYBERSPACE FOR HOLIDAY BOOST

Holiday e-tailing has hit the supermarket channel in a big way this year as chains around the country are leveraging their Web sites to promote everything from private-label beef to gift certificates.Fourth-quarter Web-based retail sales will rise more than 25% this year, to about $27 billion, according to a forecast by Retail Forward, Columbus, Ohio, and many of the nation's supermarket operators

Holiday e-tailing has hit the supermarket channel in a big way this year as chains around the country are leveraging their Web sites to promote everything from private-label beef to gift certificates.

Fourth-quarter Web-based retail sales will rise more than 25% this year, to about $27 billion, according to a forecast by Retail Forward, Columbus, Ohio, and many of the nation's supermarket operators seem more determined than ever to capture a slice of that business.

For the first time this year, Quincy, Mass.-based Stop & Shop and Giant Food-Landover allowed customers to order fully cooked turkey and ham dinners for Thanksgiving through the chains' Web sites, according to Andrea Astrachan, director of consumer affairs for the two Ahold-owned banners.

"It's been an interesting learning experience, and the Web has increased sales quite dramatically," she said.

About a week before Thanksgiving, sales at Stop & Shop were up about 40% over the levels of a year ago, when dinners could only be ordered by phone or in-store, she said. About 2,000 orders at the chain had come through the Internet, vs. 3,500 via phone. Giant Food has had similar results, she said.

"We think it has really helped our customers in terms of ease and convenience," Astrachan added.

The dinners cost $49.99 to $59.99 and come with Boston Market side dishes and two dessert pies. Additional meals are planned for the Christmas season.

The online meal offerings at Stop & Shop and Giant are among several new efforts by supermarket companies to leverage the Internet this year.

Safeway, Pleasanton, Calif., launched a new Web site called www.ranchersreserve.com, through which it is offering its private-label Angus beef and other high-end meat and seafood products as gift items, akin to Omaha Steaks, the Omaha-Neb.-based online gourmet retailer.

"RanchersReserve.com is an ideal holiday purchase," said Mitch Rhodes, chief executive officer, Safeway.com, which is operated through a join venture with British retailer Tesco.

Meanwhile Cincinnati-based Kroger Co. and supplier ConAgra Foods, Omaha, are partnering for a holiday promotion that includes exclusive recipes on Kroger's retailer Web sites. Sheila Lukins, cookbook author and food editor of Parade magazine, developed the recipes especially for Kroger, a ConAgra spokesman told SN. Holiday entertaining tips are also provided.

Stater Bros. Markets, Colton, Calif., will use the Web for the first time this year to promote its holiday offerings on prepared holiday meals for Thanksgiving, Christmas and New Year's, Jack Brown, chairman, president and chief executive officer, told SN.

"We felt we were one of the only companies not doing it and that it was time we got our act together," he said. "We felt this was the perfect time to try to promote these meals on the Web because we already had our holiday packages together and our ad layouts ready to go."

Stater is promoting five holiday meals on the Web: three turkey dinners, one prime-rib dinner and one ham dinner. It is also duplicating a program in place at 47 stores in which it sells gift cards for 30 other retailers, such as Home Depot.

Several retailers have also begun to sell gift certificates for their own stores through their Web sites, marketing them to local businesses as a bonus to be given to employees for the holidays.

At Piggly Wiggly Carolina, based in North Charleston, S.C., the company this year is offering gift certificates through the Web, "and that's generating significant amounts of business compared with last year," said David Schools, senior vice president. He did not disclose specific sales volumes.

The gift cards can be purchased for any dollar amount and can be reloaded with additional value. The cards also can be purchased throughout the company's 130-store network or by phone.

"Around the holidays, our biggest Web-based promotion is for gift cards," Schools told SN. "It's a year-round offering, but beginning around September it starts spiking tremendously, because people give them out at Thanksgiving and Christmas."

Clear Thinking Group, a consulting firm based in Hillsborough, N.J., last week projected that gift cards will be a particularly strong category for retailers this year, with sales expected to grow by up to 12% compared with the 2004 holiday season. The average consumer is expected to receive three to four gift cards, the company predicted.

Internet-based grocers said their sales always rise significantly at this time of year.

At Peapod, Chicago, which provides the Web service for fellow Ahold-owned banners Stop & Shop and Giant Food in addition to offering a Web-based e-grocery service in Chicago, business is expected to rise about 30% during the holidays, according to Tony Stallone, vice president, fresh markets.

"We have added natural turkeys, emphasized dinners more, and we are seeing more fully cooked turkeys selling better as well," Stallone said of the company's Thanksgiving offerings.

Christopher Brown, chief executive officer, SimonDelivers.com, Minneapolis, said his company expects to experience the typical lift most grocery stores get during the holiday season, but that the lift will be skewed toward specialty items like prepared meals and gourmet products for gifts and entertaining. Customers also increase their frequency, he said.

"When you get to the holidays, we're finding our customers who typically order maybe once a week are ordering a couple times during the same week," he said.

He expects newly available branded prepared items to do well, including Simon's Diner prepared meals, DiLusso deli products and Betty's Pies.

"This week, we've started offering deli trays," he said. "We've done well before with vegetable trays and fruit platters, now we've got deli trays that have really taken off. We're emphasizing them for the holidays."

Steve Michaelson, president, FreshDirect, New York, said the company offered a Thanksgiving dinner through its Web site this year and is planning to position some of its offerings as holiday gifts.

"We're offering gift baskets and chocolates, and we are partnering with a wine dealer who can do six-packs and two-packs of wine," he said. "They will all be arranged in a gift store-within-a-store that will go online after Thanksgiving."

TAGS: Kroger