June 18, 1997

More Than One Million Area Residents Can Now Shop On-Line at Schnucks' New Home Shopping Club

ST. LOUIS -Schnuck Markets, Inc. today launched its Home Shopping Club, the area's first full-scope, on-line grocery shopping service. The service allows customers to select and arrange for direct home delivery of more than 15,000 products available at area Schnucks. With the first phase of implementation, the Home Shopping Club is immediately available to an estimated 1.1 million residents living in 456,000 households in 52 Missouri zip codes in the City of St. Louis and St. Louis County as well as Arnold and Fenton in north Jefferson County. Computer users can access the service through the Schnucks home page at www.schnucks.com.

Over the next several months, the service will be phased in throughout most of the St. Louis region. By late summer, Schnucks expects to extend the service to residents in an additional 26 Missouri zip codes in St. Louis County, St. Charles County and Jefferson County. The next phase will extend service to residents in 39 Illinois zip codes in the metro east.

Internet Usage Suggests Great Market Potential

"We expect our newest way to shop at Schnucks will be a great hit," said Scott C. Schnuck, president and chief operating officer of Schnucks. "Last year, nearly 40 million Americans used the Internet, and one-quarter of those users bought on-line."

Approximately 25 percent of metro St. Louis households have Internet access at home. That figure does not include the people who have Internet access at their office. "Since all the signs point to even greater Internet usage, we wanted to develop a way to serve our customers with increased convenience through this option," said Schnuck.

On-line shopping for groceries is expected to explode in the coming years. "Experts predict that somewhere between three percent and 15 percent of grocery shopping will be done on-line within three years. Since today's sales in the nation's grocery industry total about $300 billion, that tells us the potential market for this on-line service could be extremely large," said Schnuck.

On-Line Shopping With Reliable Delivery Will Benefit Busy Customers

Schnucks is offering the Home Shopping Club to relieve time pressures on busy people and provide help to shoppers who cannot easily make a trip to the store. "Research shows that about three out of four on-line shoppers are women and most are between 25 and 50 years old. About half of all on-line shoppers have children under 18 years old and even more work in management positions," said Schnuck. "These are very busy people. We want to offer another level of service to make our customers' lives a little easier."

The Home Shopping Club offers first-time users a step-by-step guide to placing an order. "We have heard from customers that they appreciate this detailed guide. They tell us that each time they go back to the site, their 'shopping trip' is faster since they know the system," said Schnuck.

Customers visiting the on-line Schnucks will find their favorite products in the same department as at their neighborhood Schnucks. For example, an on-line shopper will visit the dairy department to order milk.

Orders can be delivered the same day for $14.95 per order (if ordered before 11 a.m.) or the next day (if ordered by 5 p.m.) for $9.95 per order. On-line shoppers can pay with credit card when ordering or by check upon delivery. The latest information encryption technology is used to ensure personal information, such as a credit card number, is not intercepted by a third party.

Home deliveries are made by St. Louis Grocery Express, Inc. "We have worked with Grocery Express since 1993 to fill and deliver phone orders. By entering into an alliance with them to deliver the Home Shopping Club orders, we know our customers will have their orders delivered exactly as they specify," said Schnuck. Grocery Express staff making home deliveries will wear Schnucks Home Shopping Club shirts for easy identification.

Development and Testing

Schnucks' experience with home shopping and delivery dates to 1990 when it offered customers access to a computer-based shopping system developed by Prodigy. While Prodigy stopped offering the service in 1991, the experience encouraged Schnucks to begin evaluating computer-based shopping alternatives.

"Computers were very slow then compared with today's models. Access to modems was unreliable. Nonetheless, we had about 100 customers who used the service weekly," said Larry Maggio, director of marketing services. "Our experience proved there was a core group of shoppers who would likely use an on-line shopping service, given fast and reliable technology."

In 1995, Schnucks began developing its on-line shopping software. A test phase of the on-line service, involving 35 people, began in March 1997.

Customer Input Improved System Development

Feedback from test users helped Schnucks perfect its system. For example, test shoppers expressed concern about the number and mix of items available. When the test package was introduced, shoppers could pick from 8,000 items. "The shoppers said the system did not offer enough of their favorite items. Now we offer our most popular 15,000 items," said Bob Drury, vice president of management information.

Schnucks also altered product descriptions. "Our test customers told us some of our descriptions were vague," Drury said. "For example, on-line users order bananas by weight, but when shopping in a store, customers buy a specific number of bananas. We added an explanation to give shoppers the average number of bananas per pound."

Customer input will continue to be applied. "While we have conducted a rigorous test phase, we plan to continue making changes based on customer feedback. We encourage customers to pass along ideas for improving our Home Shopping Club," said Drury.

Schnucks Home Page Offers Additional Features

The Home Shopping Club is the latest addition to the Schnucks home page, launched in May 1996. Since then, nearly 1,700 Internet users have visited the home page each month, including hundreds of shoppers making floral purchases. Also, Schnucks' home page was selected from 10,000 sites as one of the Top 100 Web sites by Computerworld, a leading computer technology journal.

In addition to the Home Shopping Club, the Schnucks home page offers other features, including:

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Contact: Suzanne Holroyd or Marie Casey, Casey Communications, Inc., 314/962-0944

or Dee Wetzel at Schnuck Markets, Inc., 314/994-4608.