Peapod Continues Western U.S. Phase-out

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Peapod Inc. will exit the San Francisco market on March 11. The closing of its fulfillment and marketing operations in the area will result in 100 layoffs.

Peapod, Skokie, IL, also closed operations last September in Columbus, OH, Austin, TX, Dallas and Houston.

These closings along with the San Francisco shutdown represent Peapod's strategy to exit western US markets - a plan that has been emerging since Dutch supermarket giant Royal Ahold became the majority owner of the Internet standalone last April. Peapod has meanwhile increased its focus on East Coast markets where Royal Ahold already has strong offline presences with its regional grocers such as New England chain Stop and Shop.

Peapod struck a partnership with Stop and Shop last summer that resulted in the fulfilling of orders in Boston, Long Island, NY, and Fairfield County, CT, with "fast" pick and pack centers. The centers are either located in small warehouses on the premises of Stop and Shop stores or in the mezzanines of the stores.

The online grocer also has designs on entering the Westchester County, NY, Philadelphia and New Jersey markets. Dates for the market entries have yet to be announced.

Otherwise, Peapod is currently taking orders in the northwest Washington, DC, Montgomery County, MD, and Fairfax County, VA, markets with its fulfillment center in Gaithersburg, MD. The company handles orders via a large warehouse in its other remaining market, Chicago.

Peapod also reported its financial earnings Wednesday, stating that it plans to raise $30 million in financing this year to remain solvent.

The online grocer reported losses of $23.8 million during the final three months of 2000, more than doubling the previous year's loss of $9.1 million. During all of 2000, the company lost $56.8 million, compared with losses of $28.5 million in 1999.

Company officials said overall sales rose by nearly 12 percent last year as strategies such as online coupons, longer delivery windows and tiered delivery fees based on the amount of goods ordered proved successful.


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