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Thursday, July 2, 1998 Published at 07:39 GMT 08:39 UK

Business: Your Money

Tesco takes on Net giants

Online shopping is expected to mushroom in the next five years

Computert users in the UK will soon be able to choose their Internet service provider (ISP) between the potato and pasta aisles.

Britain's leading supermarket chain Tesco plans to take on the computer giants by offering customers access to the Internet via their own service provider, TescoNet.

[ image: Providing a name shoppers can trust...]
Providing a name shoppers can trust...
The company, which already has a site on the Internet and uses the network for home shopping offers, says connection to the TescoNet service will cost 8.99 ($14.98) a month.

The service will be available from July 8.

Like many other service providers, TescoNet will give customers five e-mail addresses per subscription and five megabytes of disc space to create Websites.

What's the attraction?

Being a service provider is not a very profitable business in the UK. With more than 230 ISPs fighting for a share of a market currently worth just 100m, only about 10% make any money out of it.

David Howard of Grey Matter Consultancy: "Clearly this is an initiative that focuses on their younger customer profile"
Tesco believes the attraction lies in the future potential of the Internet, especially where online shopping is concerned.

UK users currently spend less than 10m a year on shopping on the Internet, but this is expected to grow to more than 500m a year in the next five years.

[ image: Most customers will still go to their local shop]
Most customers will still go to their local shop
Tesco's information technology director Ian O'Reilly believes that once online shopping takes off in the UK, customers will want to buy from well-known outlets.

"Our experience has shown the new wave of Internet users are looking for a name they can trust. The launch of TescoNet is another milestone in helping customers get the most out of technology," he said.

Focus on younger customers

Tesco is not the only company eager to encourage people to shop on the Internet. Other supermarkets, banks and building societies are also looking to move into this area.

But regular Internet users are not necessarily typical supermarket shoppers.

Shoppers in Tesco seem unenthusiastic about the venture
David Howard of Grey Matter Consulting says there were no guarantees that online shopping would take off in the UK as it has in the US.

Mr Howard says Tesco is aiming the service at its younger customers and those who are not afraid to try new products.

But he said there was a long way to go before the average supermarket customer gave up visiting their local shop.

A BBC Business Breakfast report on the subject found little enthusiasm among Tesco shoppers who were asked about the Internet.

Most seemed happier to visit their local supermarket or had too little interest in computers to attempt shopping from one.

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