Tesco expands home shopping

TESCO IS planning to roll out its home shopping service in stores across the country over the next few months, as the supermarket group attempts to cash in on the success of its free Internet service.

Tesco will offer the service, which allows customers to order their shopping online and have it delivered to their homes for a pounds 5 fee, from 100 of its stores, enabling it to reach most of the country.

The move comes after a two-year trial of the service involving 11 stores, during which Tesco experimented with allowing customers to order by phone and fax. However, it has concluded that costs will be kept down if customers only order via the Internet.

"Clearly customers want the service," said Andrew Higginson, Tesco's finance director. "But you have to be red-hot on accuracy and quality if it's going to work."

Tesco expects the service to expand its customer base by tempting shoppers who cannot travel or who live too far away from a supermarket.

The offer is also likely to appeal to users of Tesco's free Internet service, which was launched earlier this year. More than 200,000 people use Tesco as their Internet provider, with a further 10,000 joining each month.

Tesco said the home shopping service would create an extra 1,500 jobs in the UK as part of a total of 10,000 that Tesco expects to create this year by extending existing stores and opening new ones. The company is also adding another 10,000 jobs to its operations in central Europe, Thailand and South Korea.

The move came as Tesco shook off the gloom in the supermarket sector to report a 7.8 per cent rise in pre-tax profits to pounds 881m for the year to the end of February.

The rise was achieved despite last year's price-cutting campaign, which would have reduced profits by pounds 40m. This was followed in February by another round of price cuts that will cost Tesco pounds 60m on an annualised basis.

Tesco said like-for-like sales growth of 4 per cent was due to a 2.5 per cent increase in sales volumes and a 1.5 per cent rise in prices, the result of higher taxes on tobacco and petrol.

Terry Leahey, Tesco's chief executive, said 1998 was a "challenging" year for the industry despite the recent conclusion by John Bridgeman, the director general of the OFT, to refer the supermarket industry to the Competition Commission.