NEW YORK -- Royal Ahold announced on Monday that it would acquire the remaining 42% of online grocery service Peapod that the supermarket retailer did not already own.
The move comes after a recent announcement that leading British supermarket chain Tesco was partnering with Safeway in its GroceryWorks.com online shopping venture; and also following last week's collapse of Webvan's online grocery service. There was no word whether or not Ahold would re-brand the Peapod venture to its own name, as Safeway said it would do with GroceryWorks.
"Strategically, we are convinced that the Web-based grocery business combined with our store network under strong local brands will prove to be a powerful concept to attract and retain loyal customers," said Michiel Meurs, Ahold's chief financial officer responsible for e-commerce.
Ahold, which operates about 8,500 supermarkets worldwide, already has been consolidating Peapod operations to focus on U.S. markets in which the Dutch retailer already owns chains, including Chicago, Boston, Connecticut, Washington, D.C. and Long Island, N.Y.
"Some of these online grocery companies found one or two markets in which they were successful. But once they expanded, they found the waters to be extremely rough," said Josh Peters, financial analyst for Morningstar.com, Chicago. "Now, the big supermarket players are the only ones that have a chance make it work. The questions are how much are consumers willing to pay for the service, and how much will the retailers cannibalize their own stores to make online shopping succeed?"