UK: Budgens pulls plug on Internet operations
The plug is being pulled on the Internet operations of UK supermarket chain Budgens this week, following the revelation that the e-commerce site Budgens Direct has failed to meet sales expectations. Christian Williams, deputy executive chairman, commented: "We couldn't see the light at the end of the tunnel so we decided if we weren't going to make a lot of money we had better concentrate on what we are good at - selling fresh food from stores." The online shopping service, which will be making deliveries until the 29 September, has cost the company around £2m over the last 18 months. Williams added: "We certainly haven't got the cash resources to experiment with our shareholders' funds. Our brand name is not as strong as others." He would not discuss the exit costs for the programme.Some rivals have made their Internet shopping initiatives pay. The UK's largest supermarket group, Tesco, recently announced its intention to expand its Internet service, tesco.com. Adding items such as DVD systems and dishwashers to the groceries on offer online, it hopes to rake in even more than the current £5m turnover. According to the CEO of tesco.com, John Browett, the costs of adding electronic goods onto the groceries service are minimal. Budgens believe that Tesco has succeeded because of its well-known brand names: "Tesco is head and shoulders above the others in terms of shopping on the Internet." Indeed, the announcement by Budgens follows hard on the June decision of food retailer Somerfield to quit e-commerce and frozen food chain Iceland is believed to be reconsidering its iSeeTV television-shopping proposal.Retail analysts have speculated positively on long-term benefits for Budgens following the closure of the Budgens Direct service, and the share price has stayed solid.
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