Budgens' decision to pull the plug on its online shopping service ­ just months after announcing plans to boost the offer ­ has baffled rival operators. Tesco.com chief John Browett admitted he was "stunned" by the decision. Three months ago Budgens told the City "plans are now being developed to extend the concept of Budgens Direct into a number of our larger stores" following "very encouraging" results from trials in Tamworth, Runcorn and Kensington (The Grocer, July 8, p6). This week Budgens chief executive Martin Hyson folded the service because there "simply wasn't enough demand to justify carrying on". "Ploughing even more money into Budgens Direct is not the way forward," he added. "The money is better spent on our core business ­ neighbourhood fresh food supermarkets." He would not disclose how much money had already been invested in the service, launched a year ago. But Hyson admitted Budgens probably didn't have the funds required to make a profit from online shopping. Tesco.com's Browett said: "It's very easy to lose money on the net. It's taken us two years to make tesco.com profitable." Hyson explained everything had been done to give Budgens Direct a fighting chance. "We couldn't have done more in terms of marketing. We've spent a lot of money on catalogues, but we're competing against some very strong brand names." A Budgens spokeswoman confirmed there would be some job losses but most staff working on Budgens Direct would be "absorbed into other areas of the business". Depots for sourcing online orders will continue to service the existing Teleshop home shopping operation ­ a distributor servicing local authority contracts for deliveries to the elderly and infirm bought in 1998 ­ which is "going strong," added Hyson. {{NEWS }}

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