Stores risk big bill for home shopping

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The Independent Online
SUPERMARKETS which introduce home delivery services for customers risk increasing their costs without gaining a long-term competitive advantage, according to a report published today by the retail consultancy Corporate Intelligence.

It says that while the first companies to introduce such schemes enjoy short-term gains these quickly disappear as rivals copy them. The report also warns that while home shopping is likely to prove popular such schemes mean that supermarket operators risk cannibalising sales in their own superstores. "A drop in the number of store visits would also mean the stores missing out on the lucrative impulse buys which they have courted so assiduously," warns Corporate Intelligence's Robert Clarke.

Start-up companies which have no stores do not face this conundrum and have been growing rapidly, according to the report. It adds that Food Ferry, which started offering grocery home delivery in London in 1990, saw sales grow by 20 per cent to pounds 1.3m last year. Sales at Flanagan's, a south London-based home delivery company with links to Sainsbury's, passed the pounds 6m mark last year.

Tesco and Sainsbury's have been the most aggressive in home delivery. Both offer internet ordering and home delivery in certain areas. The delivery charge is pounds 4-pounds 5. Somerfield is offering free home delivery from 30 stores for transactions over pounds 25 and within a five mile radius. Iceland is now offering free home delivery in all outlets on orders over pounds 25. Many of the supermarkets are testing schemes whereby customers order their goods by phone, fax or internet and then collect the shopping from the store.