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Tesco direct eyes Click & Collect

Tesco is considering a plan to allow customers to pick up their internet orders from its vast network of convenience stores.

The strategy would see the supermarket giant drop off orders from its non-grocery site Tesco Direct to about 1,400 Express and Metro stores through its existing delivery network.
This could effectively cut out the need for the chain to rely on Royal Mail and significantly reduce the cost of delivery.

Discussions about the project are understood to be at an early stage, but Tesco last year separately began trials of a grocery service commonly known as click-and-collect.

Analysts said the plan for nongrocery items would require limited reorganisation in its shops to drop off packages and provide space to store orders, but would otherwise require little investment by Tesco.

'The "last mile" is seen as a key barrier for home delivery,' said supermarket analyst Clive Black at stockbroker Shore Capital.

'A lot of people might be persuaded to order online if they could turn up to a local store rather than wait for hours at home until the delivery arrives.'

Tesco declined to comment. However, click-and-collect operations are becoming increasingly popular with shoppers and retailers.

Black said Sainsbury's, which has about 400 convenience stores, is likely to watch closely any developments at Tesco.

Several other retailers have begun to encroach on the territory traditionally seen as the preserve of catalogue retailer Argos.

Marks & Spencer operates a collect service called Shop Your Way while John Lewis last year began allowing shoppers to pick up orders from its sister chain Waitrose.

Tesco has also launched Argosstyle catalogue service desks in some of its large Extra stores.

The click-and-collect details have emerged as Tesco's long-serving chief executive Sir Terry Leahy prepares to hand over the reins to successor Philip Clarke this week.

To mark the occasion Tesco will tomorrow launch a £200m price-cut campaign to reassert its dominance over its rivals.

City experts said they were not expecting radical changes from Clarke, though many analysts have predicted that he will closely monitor the performance of the troubled US chain, which has yet to show significant signs of success.

Clarke, the son of a Tesco store manager, has a wealth of experience at Tesco and his profile has become similar to Leahy's. Clarke joined in 1981 as a graduate trainee after completing an economics degree while Leahy joined joined as a marketing trainee in 1979.

Clarke has since gained experience in Britain, the Continent and Asia.

Meanwhile, a study by IGD, Britain's supermarket trade body, estimated that Tesco would show the fastest growth of the biggest four retailers worldwide, ahead of France's Carrefour, Metro of Germany and America's Wal-Mart, which owns Asda.

Source : Neil Craven - thisismoney.co.uk

26 February 2011
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