Peapod grows in D.C. after HomeRuns' fall

The company said Tuesday that it expanded its service in the Washington, D.C., area, taking over the territory once served by HomeRuns.com, which closed last month after running out of funding.

"We saw a 30 percent surge in demand once HomeRuns went out of business," Peapod spokeswoman Paula Wheeler said.

A little more than a year ago, Skokie, Ill.-based Peapod appeared as if it would be among the first online grocers to go bust. The company had burned through its money and was close to shutting down. But since Dutch grocery conglomerate Royal Ahold purchased a controlling share of the company last year and oversaw a shift in its business strategy, Peapod has rallied.

The company has been able to harvest new customers by moving into areas abandoned by other failed Web supermarkets, including Webvan and Streamline.com.

For instance, after Webvan shut its doors last month, Peapod reached out to Webvan's former customers in Chicago and saw a large jump in the number of orders, Wheeler said.

To enter the Washington market initially, Peapod bought a distribution center from Streamline, which pulled the plug on its operations last year.

Wheeler also said that Peapod had inquired about obtaining HomeRuns' customer lists and about hiring some of its former employees. Although no deal could be reached for the customer lists, that did not stop Peapod from moving into HomeRuns' former turf.

The company said the Washington expansion should be completed by Sept. 19.