January 30, 2003, 12:00 AM

With a new chief, Vons.com rolls into the Las Vegas market

Continuing an expansion of online grocery operations that began a year ago on the West Coast, Safeway introduced Vons.com into Las Vegas. With a new president, Safeway’s betting on more than luck as it expands eastward.

Continuing an expansion of its online grocery operations that began just over a year ago on the West Coast, Safeway Inc. introduced its Vons.com in the fast-growing Las Vegas metropolitan area last month. But, with a new president of its online operations steeped in e-commerce experience, Safeway’s betting on more than luck as it expands eastward.

Mitchell Rhodes, who led the online retail operations of Gap Inc.’s Old Navy, Banana Republic and Gap brands from 1999 until last year, was named president last month of GroceryWorks, which operates Safeway’s online businesses. GroceryWorks is owned 50% by Safeway and 35% by the United Kingdom’s Tesco PLC.

With Rhodes at the helm of GroceryWorks, he can be expected to push forward Safeway’s plans to continue entering new online markets. Safeway reports success so far with its online operations, which launched about a year ago with Safeway.com in Portland, Oregon, followed by San Francisco and Sacramento, CA. In the second half of last year, it debuted its Vons.com in the San Diego area.

Safeway has said it is considering expanding its online operations eastward to cover markets served by its other supermarket chains, including Dominick’s in Chicago, Tom Thumb in Dallas and Genuardi’s in Philadelphia.

Rhodes, the third person to serve as GroceryWorks president in less than a year, brings unprecedented e-commerce experience to the job. Rhodes succeeds Gary Rocheleau, who rejoined Safeway Inc., where he had previously served as vice president of marketing operations for the Vons supermarket division. Rocheleau became president of GroceryWorks in May of last year, succeeding Steve Frisby, who also returned to Safeway, as president of its Randalls division in Texas.

Before joining Gap in 1997, Rhodes worked for about 10 years for major suppliers to the grocery industry. He served in multiple management roles at Kraft Foods Inc., including business director of its $650 million cheese division, and before Kraft was brand manager of detergent and household cleaning products for Procter & Gamble Co. “He has about as good a background as you could hope to have for this job,” says David Kathman, an e-commerce stock analyst with investment research firm Morningstar Inc. in Chicago. “He has the online experience with Gap, but he also has experience with Kraft and P&G, which should be good for the grocery business.”

As the company’s newest market, Las Vegas offers a lifestyle that appears to be particularly well suited for an online grocer. “It has sections that are very affluent, a good ratio of family areas and good Internet usage,” a GroceryWorks spokesman says. “But the lifestyle is different there, with people working at all times of the day and night, and this is one of those markets where you get a lot of late-night shopping.” He adds that web traffic is high between midnight and 2 am. That suits Vons.com well, since its deliveries are made between 10 a.m. and 9 p.m.

Vons.com will fulfill from a Vons supermarket in one of Las Vegas’s more affluent areas. It will cover 20 Zip Codes, bringing Safeway’s total online market coverage to 770 Zip Codes in 332 communities.

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