Tesco prepares to reintroduce the delivery boy

For years, customers have packed their groceries themselves. Now some stores are considering going full circle

Tesco is set to announce an expansion of its home delivery operation in the next few weeks in a move which will bring the concept of electronic shopping and the virtual store one step closer.

Tesco Direct offers customers the choice of placing grocery orders via the telephone, fax, or through the Internet. The orders are then delivered to their homes for a charge of pounds 5.

The service is already operating in five areas, including Osterley in West London, Leeds and Sutton, Surrey. It is thought that Tesco is finalising plans to develop the service further though the supermarket group yesterday declined to give further details ahead of its results next week.

Tesco's move is one of several home delivery initiatives being aggressively rolled out. Iceland last week announced plans to offer its home delivery service nationwide backed by a fleet of 850 vans. Burton, the fashion retailer, started selling its Evans brand via the Internet at the weekend. Its other formats, including Dorothy Perkins, Debenhams, Principles and Racing Green, will start trading electronically over the next two months.

Analysts are divided on the significance of these developments. Andersen Consulting estimates that up to 20 per cent of supermarket shopping could be conducted via non-store electronic channels by 2000. But Clive Vaughan of Verdict Research is more sceptical: "I think there is a genuine desire among retailers to check out these new channels. But I don't believe they will go mass market without companies investing sizeable sums in them. Are they really going to do that and jeopardise their store portfolio? I think the idea is that they want to control it and keep what little business there is in their own hands."

Of the major supermarkets Tesco is already the most advanced in home delivery. It has been running Tesco Direct for nearly a year with an electronic store that offers 20,000 lines. Half of its customers order by phone and fax with the remainder using the Internet site.

Sainsbury's is being more cautious but is also looking to extend its trials. It has been running an Order and Collect service in Watford and Solihull. Under this service customers place their orders via phone or fax but must come to the supermarket to collect the shopping. The charge is pounds 2.

Sainsbury's also runs an office shopping service at Hewlett Packard which it is looking to extend later this year. Staff at the HP office in Bracknell order their groceries through the office computer. The goods are then delivered to the car park at specific times in the afternoon from the local branch of SavaCentre in Calcot.

Safeway has been running a service called Collect and Go in two stores since July. This is similar to Sainsbury's Call and Collect scheme though it only offers dry groceries, not chilled or frozen items. Steve Webb, Safeway's marketing director, says: "We are not wholly certain what customers want yet. We are seeing if there is sufficient interest and the results have been encouraging so far."

The central conundrum for the supermarkets and other retailers is that if the electronic shopping home delivery does gain mass market acceptance, it will take customers out of the stores, leaving the retailers with a redundant store portfolio.

The initial costs are also very high for an uncertain reward. Iceland is investing pounds 12m in its home delivery operation and admits it will not break even this year. Given that Iceland is not charging for the service it is relying on a significant, and unspecified increase in sales volumes, to make the service pay for itself.

Even Tesco's pounds 5 charge would not cover its costs, according to Verdict's Mr Vaughan. His view is that customers in tower blocks or in homes that are off the beaten track would be far more expensive to service.

Many retail analysts feel that the home delivery operations being tested by retailers are more defensive than strategic. They feel retailers are protecting themselves against potential new entrants who may have lower cost bases.

It is a battle which the high street banks also face. With their expensive branch networks, the major clearers will struggle to compete with Internet banking operations which have lower costs than telephone-based providers such as First Direct.

For retailers it is ironic that after decades of encouraging customers to do more of the work in the form of self-service, packing and even self- scanning, the market appears to being going full circle - back to the delivery boy.

Iceland's nationwide launch was criticised by many analysts who said it was too expensive to operate and too easily copied to be successful. But it would only take one of the big four supermarket operators to break ranks and the rest would follow.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Books should be for everyone, says Els, 8. Publisher Scholastic now agrees
booksAn eight-year-old saw a pirate book was ‘for boys’ and took on the publishers
Life and Style
Mary Beard received abuse after speaking positively on 'Question Time' about immigrant workers: 'When people say ridiculous, untrue and hurtful things, then I think you should call them out'
tech
Life and Style
Most mail-order brides are thought to come from Thailand, the Philippines and Romania
life
News
i100
Life and Style
tech
Voices
Margaret Thatcher, with her director of publicity Sir Gordon Reece, who helped her and the Tory Party to victory in 1979
voicesThe subject is being celebrated by the V&A museum, triggering some happy memories for former PR man DJ Taylor
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions