January 19, 2001, 12:00 AM

Peapod Goes Shopping

Don Davis

Editor in Chief

Chicago-based Peapod Inc. has paid $12 million in cash for the operations of rival online grocer Streamline.com in Chicago and Washington, D.C. At the same time, Peapod announced plans to exit Columbus, Ohio and three markets in Texas ö Houston, Austin and Dallas ö this month. Under its new growth strategy, Peapod will focus on the Chicago and East Coast markets, say company officials. "This acquisition will speed our time to market entry in the Baltimore-Washington market and provide state-of-the art facilities including expansion space for our Chicago operations," says Mac van Gelder, president and CEO of Peapod. The move also completes Peapodâs conversion from an in-store picking model that uses local supermarkets to a centralized distribution model in which it owns and operates warehouse and distribution facilities in each market where it operates. Struggling Stamford, Conn.-based Streamline.com, meanwhile, says it has refocused efforts on the northeastern region of the country, where it now serves customers in Boston and northern New Jersey. Under that strategy, the company says it has terminated the lease for its Minneapolis facility. "Just a short time ago, rapid national expansion was the focus and expectation for companies in our industry," says Timothy A. DeMello, founder and chairman of Streamline.com. "Clearly, it has now become apparent that these companies must first prove unit center profitability."

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