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Monday, May 17, 1999 Published at 10:43 GMT 11:43 UK

Business: The Company File

Home shopping war hots up

Britain's supermarkets are intensifying their battle for home shopping with two of the biggest names, Sainsbury's and Asda, investing millions of pounds in new depots.

They join Tesco, the UK's largest supermarket, which has already been busy expanding its home delivery system in conjunction with its Internet presence.

Asda is building three new depots in and around London dedicated solely to home shopping. Its expansion plans come as Sainsbury's unveils its plans to invest up to £10m in a new centre dedicated to home shopping.

The BBC's Nicola Carslaw: "The increasing demand for home shopping"
Its location is still to be confirmed but Sainsbury says it will create up to 120 new jobs.

One of the big differences between these fiercely competitive businesses is Asda does not have an online shopping and ordering service, but that too will change in the next few months when it plans to roll-out its expanded Internet shopping Website.

Of the three retail chains only Tesco's ordering service uses the Internet exclusively. Its competitors' systems rely heavily on the telephone and fax too.

M25 boundary

Both Asda and Sainsbury's are developing their home shopping plans within the M25. The density of population and proportion of double income families brings a greater demand for the services, according to Sainsbury's chief executive Dino Adriano.

Asda already has a depot in Croydon and its next new one will open in Watford by September, creating 100 new jobs. Two more home delivery centres will open in the London area by the spring of next year.

[ image: Sainsbury: Like Asda it is developing separate home delivery depots]
Sainsbury: Like Asda it is developing separate home delivery depots
Asda spokeswoman Elli Mackirdy said: "Our research showed us people in the London were happy to use these services.

"Our number of stores is not as large in this area as elsewhere and it gives shoppers greater access to Asda."

Store-based debate

Home shopping for groceries is still relatively under-developed but some consultancies believe there is a vast potential.

Andersen Consulting has forecast the UK market for grocery delivery will be worth as much as £3bn in the next three to five years.

[ image: Tesco operates is home shopping from existing stores]
Tesco operates is home shopping from existing stores
Tesco says it already has 200,000 users of its Internet shopping service and 10,000 new customers are signing up each week.

Sainsbury's, which like Tesco has been offering home shopping for three years, differs from its great rival in that it is moving to establish separate depots dedicated solely to home shopping.

Mr Adriano said: "Our extensive experience over the past three-and-a-half years, combined with that of US retailers, indicates that the feasibility of store-based home shopping services is not a sustainable long-term proposition.

"While a store-based system is operable in principle it is neither viable or capable of dealing with significant volume without effecting the quality of services being offered to shoppers in-store."

Tesco now runs home deliveries from 14 of its stores, 11 of which are in the London area and three more are about to offer this facility too in Leeds, Gatwick and Fulbourn, Cambridgeshire.

The group said that by the end of February 2000 it will have 100 of its 639 stores offering home deliveries.

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