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Budgens home shopping trial; 'Groceries on wheels' a slow starter.

The jury remains out on whether or not home shopping will catch on in Britain, says store group Budgens.

The Budgens Direct home shopping service was set up last autumn, with trials taking place at Tamworth, Runcorn in Essex, Harlow, and parts of Liverpool.

It followed Budgens' acquisition of Teleshop for pounds 400,000.

The "groceries on wheels" business gave Budgens the infrastructure it needed to allow customers to order goods over the telephone, fax or Internet and have them delivered to their front door.

Chief executive Mr John von Spreckelsen said plans were now underway to test the service at one of the group's stores in London's West End in the spring.

The existing service had got off to a slow start, but a marketing programme was helping increase sales.

Mr von Spreckelsen said customers using the service were spending an average of pounds 70 each time, compared with the pounds 7-pounds 8 spent by consumers who visited the Budgens convenience stores to top up on their weekly shopping.

"We are growing at a very satisfactory rate, albeit from a very small base," he said.

"Whether home shopping will be a viable business in the UK, nobody can say but the signs are very encouraging."

Mr von Spreckelsen has ruled the company out of the running for stores put up for sale by the ailing grocer Somerfield.

Working in the convenience and mini-supermarket sector, many of them are too big for Budgens which will concentrate on rolling out its b2 corner shops and stores on petrol garage forecourts.

As part of a radical overhaul of the business in the face of declining sales and profits, Somerfield has about 140 of its larger stores up for auction.

Hemmed in by planning constraints, the big food retailers are said to have bid aggressively for the chain, as have a number of property groups.

But Mr von Spreckelsen left commentators in little doubt of Budgens' plans. "We are not interested in the Somerfield store portfolio," he said, following robust first half results.

That is not, however, to say expansion is totally off the agenda.

"We have outperformed our rivals over the past five years if you look at the profit development of the business," he said.

"We have a very sound balance sheet with no gearing other than convertible loan stock.

"When opportunities arise such as acquisitions and store portfolios which would fit our objectives we would seriously look at them."

Mr Von Spreckelsen admitted Budgens smaller stores, used mainly for top-up shopping, had not yet been drawn into the cut-throat discounting currently making life uncomfortable for Sainsbury and Somerfield.

With "real food price" inflation helping to sustain operating profit margins, sales were a creditable four per cent like-for-like. For the first eight weeks of the second half, they were running at 4.5 per cent before new openings. The group unveiled record half-year profits.

It reported a 34 per cent jump in pre-tax profits to pounds 8.5 million for the 28 weeks to November 14, up from pounds 6.4 million at the same time last year.

Sales were ahead six per cent at pounds 245.1 million from pounds 232 million.

Mr von Spreckelsen said the healthy results followed a successful marketing campaign to attract more customers, store refits and the home shopping launch.

He added that the group was on the look out to snap up more stores to add to its chain of 190 Budgens and b2 outlets.

It had also sealed a deal with Conoco to open up food retail stores at 12 Jet petrol station forecourts. Budgens currently has shops at 27 petrol stations and wants to boost the number of outlets to 45 by April.
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Author:Duckers, John
Publication:The Birmingham Post (England)
Date:Jan 19, 2000
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