Coborn's takes wheel from Simon

  • Article by: STEVE ALEXANDER , Star Tribune
  • Updated: August 26, 2008 - 8:11 PM

The St. Cloud grocer will reopen failed online grocer SimonDelivers, calling it CobornsDelivers.

SimonDelivers, a failed but pioneering online grocery shopping service based in New Hope, will deliver again after being acquired Tuesday by St. Cloud grocer Coborn's Inc. for an undisclosed amount.

Privately owned Coborn's, an 87-year-old grocery store chain, will restart the SimonDelivers service in October under the name CobornsDelivers.

Coborn's may be an unfamiliar name to many Twin Cities shoppers, but it's a fixture in central Minnesota, and in recent years it has nibbled at the edges of the metro area with stores in Ramsey, New Prague and Hastings. Still, the SimonDelivers deal marks Coborn's entry into the bulk of the Twin Cities grocery market.

"Clearly, online grocery shopping allows us to reach new customers in the Twin Cities, and that's one of the reasons we were interested," Coborn's spokesman Steve Gottwalt said. "In addition, online is an intriguing, emerging market. We've been wanting to do more with it for a long time because more consumers are tech-savvy, people are crunched for time and gas now costs more."

Nine-year-old SimonDelivers, which took orders through its website and delivered groceries to 19,000 people in the Twin Cities, closed last month because it lacked enough customers and operating capital at a time when it was forced to pay higher prices for food and gas. It said at the time that its annual sales had been mostly flat at $55 million for the past few years.

At its peak, SimonDelivers garnered 1 to 1.5 percent of the Twin Cities supermarket dollar, according to Simon Foster, the man who created the company and who is now a consultant at Spencer Stuart, a headhunting firm with offices in Minneapolis.

How will CobornsDelivers succeed where SimonDelivers failed? Coborn's will have the advantage of its size, which allows it to buy food at more favorable prices than SimonDelivers could, Gottwalt said.

Coborn's employs 6,000 people in six states and operates 34 Coborn's and Cash Wise Foods grocery stores, as well as convenience, liquor and video stores and pharmacies that often are in or adjacent to its grocery stores.

Although Coborn's already offers online shopping through seven of its non-metro grocery stores, it has no plans to build any more stores in the Twin Cities, Gottwalt said.

Coborn's has extended job offers to some of SimonDelivers' 300 former employees but won't say how many, Gottwalt said. The firm also expects to hire an unspecified number of new employees.

The St. Cloud company has renewed the lease on SimonDelivers' headquarters in New Hope, but it's unclear whether it plans to keep SimonDelivers' distribution centers in the Twin Cities, Gottwalt said.

Coborn's also clearly hopes to tap into SimonDelivers' customer base.

"Metro customers who used SimonDelivers will be able to easily reactivate their accounts and access their past order histories" through CobornsDelivers, the firm said.

Steve Alexander • 612-673-4553

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