01 June 1999

HARD ON THE HEELS of the announcement that J Sainsbury plans expansion of its Orderline home shopping operations within the M25 circle, came news of the chain's axing of phone/internet ordering and home delivery facilities in the hinterland beyond the pampered patch. Launched in March 1998, Orderline was on offer at 27 stores across the UK, nineteen of which are beyond the M25. The service was abruptly withdrawn from these 19 outlets on Saturday 22 May because, said Sainsbury chief executive Dino Adriano, 'our extensive experience over the past three and a half years, combined with that of US food retailers, indicates that store-based home shopping services is not a sustainable long-term proposition.'

Predictably, Dino's defeatist dictum is not shared by Tesco: 'We're very confident it will work outside the M25; we've already got 200,000 home shopping customers', said a spokesman. And, matching words with deeds, Tesco confirmed plans to roll-out its home shopping trial nationwide to one hundred of its 639 stores within the next eleven months.

Asda too is making an aggressive bid for supermarket home shopping supremacy in the Greater London area, with plans to open three more local fulfilment depots within the next year.

The first of these - a 40,000 sq ft depot in Watford - is capable of servicing 450,000 homes, with two more due to open in the first quarter of 2000. The expansion builds on the success of Asda's first depot in Croydon which opened earlier this year. The total cost for all three new depots is expected to reach £20 million, a price Asda seems prepared to pay in order to compete with rivals Tesco and Sainsbury, which currently dominate the Greater London grocery sector with market shares of 26.5% and 30.1% respectively. In comparison, Asda, which has relatively few stores in the South East, holds just 7.8% of the London market. Commented one retail analyst: 'The fact that Asda is expanding so quickly after launching into Croydon suggests it is prepared to be aggressive and because it is not a national group such as Sainsbury or Tesco it can go into areas where it has a low market share and be very aggressive in home shopping without cannibalising existing sales.'