Pioneers raise pounds 2m for expansion

A home shopping service which supplies groceries provided by Sainsbury's has raised pounds 2m to expand its UK coverage. Flanagan's, which has been offering its Supermarket Direct service in south London since 1995, plans to take the service to the north of the capital later this year as part of a longer- term plan to build a nation-wide network.

According to joint managing director Adrian Flanagan, the plan is to invest more funds in the group's Wandsworth site which supplies homes in south London while it seeks other suitable sites. It will gradually extend the range of products available in its catalogues from 2,500 to 6,000 by the spring. More cash will be pumped into new technology. Other funds will be invested in new kitchens which will manufacture a new range of ready-made meals under Flanagan's own label.

None of the pounds 2m has come from Sainsbury's, which retains links with the company. Most has come from 35 private investors, which include the directors and Sir Michael Sandberg, the former chairman of the HongKong Shanghai Banking Corporation, who chairs the group.

According to Mr Flanagan, the group is now on a stable financial footing after a period in 1996 when it ceased trading due to cash flow constraints.

Mr Flanagan says Supermarket Direct has 5,000 regular customers who fax or phone in their orders and pay a pounds 4 charge for delivery. He says the service is achieving its break-even target of 170 orders per day.

The bulk of the customers are ordinary families, not high earning, dual income couples.

The expansion of Supermarket Direct is just one of a series of new initiatives in supermarket home delivery. Tesco launched an Internet home shopping service in west London in October. Sainsbury's is also offering a delivery service from some stores and Safeway is considering home delivery. Marks & Spencer offers home delivery from some stores such as its High Street Kensington shop in central London.

Other companies have linked up with supermarkets or home shopping groups to offer "Shop from work" schemes. Cap Gemini, the consultancy group, and the computer group Hewlett Packard both have schemes allowing staff to have their groceries delivered to work.

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