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Monday, 4 September, 2000, 19:47 GMT 20:47 UK
High-tech bins boost online grocers
Tesco online shopper
E-freindly households will spend £3,000 each online by 2008
High-tech gizmos such as bar code-reading dustbins will help the food market become UK's biggest e-tail sector, with sales of £30bn a year, analysts believe.

Online sales of groceries, drinks and toiletries will account for 40% of the UK's e-commerce market by 2008, the Ecom3 report says.

The expansion in grocery sales over the internet, WAP phones and interactive television will be driven by fierce competition between UK and foreign supermarket chains, and an expansion of 30 times in UK e-commerce overall, the report says.

Total UK spending online is set to rise from £2.6bn to £75bn by 2008, when e-friendly households will spend an average of £3,000 a year via the internet.

"A natural target"

"The fact that supermarket shopping is unpopular makes it a natural sector to be switched online," Andy Taylor, E-Insight's chief executive, told BBC News Online. "The technology will be there to bring about change."

Major areas of online spending, 2008 (£bn)
Groceries: 11.3
Fresh food/ ready and takeaway meals: 10.1
Travel: 7.5
Beers, wines, spirits: 6.8
Clothing: 6.8

(Source: Ecom3)

Innovations being tested include a dustbin which reads the barcode of food items as they are discarded, so allowing e-friendly households to keep real-time inventories of larder stocks.

Lists of foods in short supply can then be sent via WAP phones to householders, who can surf the sites of online retailers for best offers, or order the goods immediately through arrangement with a store where they hold a loyalty card.

"The technology will be there to allow replenishment of groceries to be done automatically," Mr Taylor said. "And if purchases aren't done by the WAP phone, they will be done through interactive television."

Huge market

Around 40 million computers or televisions capable of handling e-commerce transactions will be installed in UK households within eight years, says the report, published on Monday.

Total online spending (£bn)
2000: 2.6
2001: 5.3
2002: 9.5
2003: 17.7
2004: 26.4
2005: 34.5
2008: 75.0

(Source: Ecom3)

The potential of the food e-tail market justifies the sums being spent by retailers on setting up their online activities. About one third of total UK food sales will be carried out online by 2008, the report says.

Tesco, which is spending £120m of the £200m spent by UK shopping giants this year on web activities, is set to be the largest winner, with estimated e-tail sales of more than £8bn by 2008.

"Not only has it seen the potential, it also has a broad market appeal," Mr Taylor said. "Asda or Iceland do not have this, and do not stand to gain as much."

Only a core survive

While Sainsbury and Waitrose will survive the switch to online markets as food-based chains, groups such as Kingfisher, Boots and Marks & Spencer would be better off concentrating on non-food markets, the report said.

UK offshoots of foreign e-tail groups such as the US e-tailer Priceline, or French giant Carrefour, pose a greater threat to Tesco's dominance.

"At the moment it looks like home advantage will win the day," Mr Taylor said. "But that cannot be taken for granted."

Some foreign retailers may buy a headstart into the UK market through acquiring a British retailer, with Safeway named in the report as "the prime candidate" for such a takeover.

Ecom3 includes in the food market all groceries, drinks, toiletries, and ready-cooked and takeaway meals ordered online.

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