Shopping from home by telephone is hardly a new idea. Before supermarkets many people did so. But few stores today offer such a service and where it is available it has become a luxury.
Shopping for groceries over the phone almost always means shopping at a store that charges more than a supermarket. One exception in the Washington area is located in Fairfax. It doesn't look like a corner grocery store and isn't even located on a street corner. It's is an industrial park and even if you wanted to select your groceries yourself, you couldn't.
Ultra-Mart, the 2-month-old brain child of 23-year-old Gary Glass, has taken the shop-by-phone idea one step further and in the process has been able to provide its customers with lower-priced goods that they can buy in the local supermarkets.
Members, who must pay a $2 to $4 fee, order by number from a catalogue of between 3,000 and 4,000 non-perishable and frozen food items. The brand name, size, price and unit price of each item is listed by category in the catalogue. The order-taker types the numbers into a computer as they are received over the phone. The computer issues a warning if an item is out of stock or if there is less in stock than the customer wants to order. It is such a sophisticated piece of equipment that if a customer misreads the catalogue number, the computer won't accept it.
A printout is sent downstairs to the warehouse where it is filled.The customer drives up, pays by check, cash or credit card, and picks up the already bagged groceries. For a small charge, ranging from $2.25 and $3.75 depending on the distance from the warehouse, the order will be delivered within a seven-mile radius.
"What's the catch? What's the gimmick?" is a typical reaction. "How can they afford to charge less?" is a standard comment.
Glass and his three associates, all under 25, are not doing it with mirrors. They are able to offer most of their [WORD ILLEGIBLE] for between 5 and 15 percent [WORD ILLEGIBLE] than the supermarket chains because they have reduced considerably the overhead cost of getting the goods to the purchasers.
Their warehouse, which doesn't need to be fancy because shoppers spend very little time in it, is far smaller than a supermarket, only about [WORD ILLEGIBLE] square feet. (A supermarket may need 40,000 or even 100,000.) The square foot cost for the warehouse in an industrial park is considerably less than that for a supermarket facility in a suburban shopping center. Because shoppers do not "shop" the store, shoplifting - which can be a significant most factor - is eliminated.
Computerizing the operation, which many supermarket chains have also begun to do, reduces errors and provides strict inventory control.
Since prices are to be kept constant anywhere from one to three months, according to Glass, the cost of changing them is reduced. In a related effort to keep from changing catalogue prices as manufacturers put "cents-off" offers on products, Ultra-Mart charges the catalogue price but attaches a "cents-off coupon" to those packages. It is good for cash any time.
In addition to lower prices, discounts are offered on case prices: 2 percent on coffee; 3 percent on grocery items and 4 percent on personal hygiene products.
So what's the hitch?
You can't do all your shopping at Ultra-Mart. There are no meats, daily products or produce, though Glass hopes to have frozen meats and dairy products by the end of the year.
The variety of sizes offered by the supermarket is not available at Ultra-Mart though they do ofter as many as four sizes for some products such as laundry detergents.
Because the concept is so new, the investors so young, their credit not established, and their needs still so small, they are having trouble getting some of the items they list in their catalogue: Breads and cigarettes are examples.
They still have not ironed out all their inventory control kinks so the warehouse is out of stock at times on items. For products that are subject to volatile price changes, such as coffee, the supermarket sometimes provides a better buy.
In a random check of 54 items, 47 were cheaper at Ultra-Mart than the local supermarket, five were higher and two were the same. Four of those five higher prices were for vacuum packed coffee. Curiously, the supermarkets were higher for three kinds of instant coffee.
Ultra-Mart was anywhere from a penny to 50 cents cheaper on the other items, averaging about 15 to 20 cents an item less.
Baker's German Chocolate cost $1.39; 24 ounces of Crisco oil was $1.25 instead of $1.35; 16 ounces Ritz Crackers, 95 cents instead of 99; 64 ounces of Clorox was 69 instead of 73 cents.
But Glass, who worked for a supermarket chain while he was "bouncing around three years of college," prefers to emphasize the service angle instead of the price.
"To be frank, I don't want to start a price war," he said. "It's not a wholesale discount operation. But some people tell me they save money in a different way. They don't buy anything on impulse and they don't have to take their little kids who always begging for things into the store.
"We offer a service that saves the shopping hassle. There are a lot of people who feel shopping is a chore. They get tired walking up and down the aisles. Things get moved around. I decided there was a better way."
Glass spent three years developing "the better way." His company is a privately-held corporation with 30 investors from who he raised "somewhere in the neighborhood of $75,000.
"I know it doesn't seem like much money," he said, "but you have to realize the people who are working with us want to see this thing going so we've cut a lot of deals." For example, some of the management personnel are working for very little in exchange for a financial interest in the firm.
Glass has a grand scheme for the future: a massive distribution center with delievery servicce to small retail locations in suburban shopping centers. The retail locations would act as warehouse centers where customers' orders were filled and picked up. Within six months he hopes to have the computers hooked up directly to the phone system so that people with touchtone phones can "punch their orders in on the phone."
Right now Ultra-Mart is "just below the break-even point," Glass said. "We think we will break even between now and the first of the year. But," he added, "we must break even in a year."
Glass considers his operation part of the trend in food retailing toward warehousing as a way to cut costs. But the warehouse concept has the customers doing the work. In Fairfax the work is done for them.
Susie Hall of Falls Church thinks it works fine. "It's cheaper and it's easier," she said. "I spend $80 to $100 a week on groceries and save $20 by shopping here.Now when I go to the supermarket I only have to go around the perimeter to pick up the other things."
Ultra-Mart is located at 2929 Eskridge Rd., Fairfax. Tel: 560-5040.