High gas, food prices take their toll on Simon Delivers

Simon Delivers President Liwanag Ojala informed customers of the decision to end service in a letter that went out Tuesday to customers.

Ojala did not return a phone call for comment, but her letter says today's economic conditions, including the spike in food and fuel costs, forced the company into the difficult decision to discontinue service.

Most of the groceries provided by Simon Delivers were also available in the nearest supermarket. But the company was valuable to its customers, because it offered the convenience of skipping what is to some the most dreaded errand of the week.

Carmen Peota of Minneapolis says a couple of years ago she modified her routine, replacing a trip to the grocery store with a visit to the Simon Delivers Web site.

"I had a weekly time. My day was Friday. And so by Thursday night at 11 o'clock the order had to be in for Friday. So for awhile there I had a pattern there of doing that, and Friday afternoon I'd get home from work and had groceries," said Peota.

The groceries arrived in insulated containers, so customers did not need to be home for pickup. Workplace deliveries were also available.

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Peota, who works as an editor of a medical magazine, says the groceries were more expensive than those at warehouse-style supermarkets, but they were still cheaper than at high-end food stores. But she says she turned to Simon's for reasons that had more to do with time than money.

"When you're raising kids, when you're a family with both parents working, when there's so much going on in your life, it didn't seem like a luxury, it seemed like a strategy. Ha ha," Peota said.

A couple of years later, though, with her kids a little older and more self-sufficient, Peota found she'd drifted away from the habit of online grocery orders.

In today's sour economy, cost-cutting may have been behind other households choosing to forego Simon's deliveries.

But another Minnesota food company built on home deliveries reports sales have increased recently, and the sour economy is actually helping.

Marshall-based Schwan's Home Service delivers frozen foods under its own label, which is not available in stores. Vice-President of Marketing Brian Nau says by offering its customers premium foods, Schwan's occupies a different market niche than Simon's Delivers.

"It's not enough for us just to provide products they can get at the grocery store, because in this economy that's going to be tough for people to justify that," said Nau. "So, we kind of exist between restaurants and grocery stores. We are really more of a replacement for somebody that is deciding not to go out to a restaurant as often, but still wants to have that convenience."

Nau says Schwan's is also benefitting from a strategic decision the company's founder made more than thirty years ago.

During the oil embargoes of the 1970s, Nau says Marvin Schwan created a subsidiary company to convert Schwan's trucks away from petroleum.

"Our fleet of trucks run on propane. And while propane prices have also been increasing, they've not been increasing at the same rate as gasoline or diesel. And that has given us a little bit of insulation against the pressures of increasing fuel costs," explained Nau.

Simon Delivers is based in New Hope and has served the Twin Cities area, Rochester, and western Wisconsin with about 300 employees. Ojala writes that the company will deliver its last orders over the next two weeks.