Tesco is expanding its network of 'dark' stores used exclusively for internet picking to capitalise on the fast growth in online shopping.
At an investor day last week dotcom chief executive Laura Wade-Gery said Tesco would open one new store per year for the foreseeable future and predicted the 'dark store' format could be taking 15% of online turnover by 2014.
The third internet-only store would open next year in Greenford, Middlesex; the two existing stores are in Croydon and Aylesford.
With profits of £109m on sales of £1.9bn, Tesco's online operations were not only sustainable, Wade-Gery claimed, but capable of considerable growth. Tesco was "systematically tackling the barriers to shopping online" among consumers, she claimed, predicting uptake for online shopping in the UK would increase from 3% to 5% in the next five years. The business was introducing new services to encourage take-up, she added, including specialist ranges such as diabetic products.
Tesco.com's profitability was a major achievement, said Shore Capital analyst Clive Black. "The vast majority of internet food businesses are losing money," he said. "Just look at Ocado. So I wouldn't understate Tesco's achievement in making internet grocery profitable. It really stands head and shoulders above the competition."
Morrisons, which has repeatedly said it would only offer internet shopping if found a financially viable model, would have to spend years to catch up, he added.
Tesco also plans to offer online shopping in more overseas markets, starting with the Czech Republic in 2010, Wade-Gery told investors. As well as the UK, Tesco currently offers online shopping in Korea and the Republic of Ireland. It was developing a full operating model for international roll-out from next year, but the decision to introduce online shopping would be dependent on internet penetration, population density and the propensity to shop online, Wade-Gery added.
At an investor day last week dotcom chief executive Laura Wade-Gery said Tesco would open one new store per year for the foreseeable future and predicted the 'dark store' format could be taking 15% of online turnover by 2014.
The third internet-only store would open next year in Greenford, Middlesex; the two existing stores are in Croydon and Aylesford.
With profits of £109m on sales of £1.9bn, Tesco's online operations were not only sustainable, Wade-Gery claimed, but capable of considerable growth. Tesco was "systematically tackling the barriers to shopping online" among consumers, she claimed, predicting uptake for online shopping in the UK would increase from 3% to 5% in the next five years. The business was introducing new services to encourage take-up, she added, including specialist ranges such as diabetic products.
Tesco.com's profitability was a major achievement, said Shore Capital analyst Clive Black. "The vast majority of internet food businesses are losing money," he said. "Just look at Ocado. So I wouldn't understate Tesco's achievement in making internet grocery profitable. It really stands head and shoulders above the competition."
Morrisons, which has repeatedly said it would only offer internet shopping if found a financially viable model, would have to spend years to catch up, he added.
Tesco also plans to offer online shopping in more overseas markets, starting with the Czech Republic in 2010, Wade-Gery told investors. As well as the UK, Tesco currently offers online shopping in Korea and the Republic of Ireland. It was developing a full operating model for international roll-out from next year, but the decision to introduce online shopping would be dependent on internet penetration, population density and the propensity to shop online, Wade-Gery added.
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