Thai web store is next pin on Tesco's world map

Supermarket giant to add to its overseas empire with internet groceries

James Thompson
Sunday 24 February 2013 01:00
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Tesco is ramping up its global internet empire by launching an online grocery in Thailand next month and China in the spring.

The supermarket giant, which has operations in 13 countries, has been introducing food home shopping in capital cities before a wider roll-out. The next major city will be Bangkok in the next few weeks.

This adds to Tesco's online operations in Poland's Warsaw, Slovakia's Bratislava, Czech Republic's Prague, South Korea and Ireland at a time when the group is finally on the up again in the UK, which still accounts for more than 60 per cent of profit.

Thailand is one of Tesco's most significant overseas markets. It opened Tesco Lotus in 1998 and now has 1,257 stores in the country, generating annual revenue of more than £3bn.

The grocer will also launch online stores in China's Shanghai in May, making the fast-growing city a test-bed for a possible expansion to the capital Beijing in the future.

While it does not sell food on the web, Marks & Spencer began selling fashion and homewares online in China in December through a local partner, Taobao. All of M&S's 14 stores are in or around Shanghai, which accounts for half of the high-street bellwether's online revenue in the country.

Tesco has more than 120 stores in China after launching there in 2004 but it has been more cautious with its expansion plans in recent years. The world's third biggest retailer's underlying sales in the Asian country were flat in the first half of 2012.

In the UK, Tesco introduced online grocery in 2000 and the profitable business grew sales by 20 per cent over Christmas.

While food online is typically the least profitable grocery operation, it is a crucial battleground for big supermarkets to ensure customers don't migrate to their rivals both over the web and in stores. Internet grocery shoppers are also often wealthier, which means they spend more on food, as well as other non-food products or services. Online grocery spending is set to almost double from £5.6bn in 2012 to £11.1bn in the UK by 2017, according to trade body IGD.

The online expansion is another positive piece of news for Tesco's chief executive Philip Clarke. He sanctioned a £1bn investment last year to turnaround its flagging UK business. This helped it power ahead of rivals with a 1.8 per cent rise in sales over the six weeks to 5 January.

This compared with growth of 0.9 per cent at Sainsbury's and 0.1 per cent at Asda. Morrisons sales fell 2.5 per cent over a similar period. But, how the horsemeat scandal has hurt sales has yet to be reported.

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