The concept is to build local store sites through a turnkey online operation that will provide cyber-shopping with home delivery of groceries, insiders at the companies said.
For P&G, trying to decide how to best take advantage of cyberspace, the program would allow the package-goods giant to place its brands in advantageous positions on virtual shelves. P&G also could run promotions on the sites.
STRESSING LOCAL CONTENT
TCI, the nation's largest operator of cable systems, has said it believes local content will be key to drawing its customers repeatedly into cyberspace in large numbers. It hopes transactions in cyberspace will become real business opportunities with the advent of high-speed cable modems.
Integral to the TCI/P&G plan would be acceptance by the retail community, because the stores control the shelf space, virtual or not. P&G has strong ties with retailers as a result of working with them to develop Efficient Consumer Response programs. That grocery-industry plan maximizes supermarkets' ability to respond to consumer buying habits by using scanner data as a way to allocate shelf space.
"That data program could also be modified for use in cyberspace to maximize those sales as well," said one executive close to the TCI/P&G talks.
Kroger Co., the nation's leading grocery chain in both number of stores and volume, has had its own site (http://www.foodcoop.com/Kroger) up since late last year to test consumer response.
Though available for anyone to view, the site is specifically for the Columbus, Ohio, market, and only Columbus residents can order from the site and get home delivery.
Dale Hollandsworth, manager of advertising for Kroger in Columbus, said he knew nothing of the P&G/TCI talks but noted: "P&G has a high consumer awareness, and if they come up with a plan to make cyber-shopping easier, I'm sure we'd listen to them."
Besides helping local grocers develop the sites, TCI would like to tie in the purchase of cable commercials on its local systems to promote the sites.
If a deal is consummated, TCI and P&G would be competing with a number of online shopping services already up, including Peapod, backed by Ameritech and Tribune Co., and Supermarket Shopping Network, whose partners include General Mills, Con-Agra, Coca-Cola Co. and Tropicana Products.
TCI wouldn't comment on the talks; a P&G spokeswoman said she knew nothing about them.
The cable giant has had separate talks with Unilever's Thomas J. Lipton Co. about an online site featuring recipes.
In its efforts to build local franchises, TCI has also been talking to America Online about a joint venture based on AOL's Digital City concept (AA, March 4). But TCI may not be willing to pay AOL's price to become a partner, an insider said.
AOL also is talking with U S West, Bell Atlantic Corp., Tribune Co. and The New York Times Co., said another executive close to the discussions.
Contributing: Mark Gleason.