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Tesco online sales continue to grow
Second dot-com-only store to open

By Julian Goldsmith

Published: Tuesday 30 September 2008

Grocery giant Tesco has reported strong sales for its food and non-food online arms in its latest half-year report.

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Tesco.com grew sales by 20 per cent in the 26 weeks to 23 August, to £902m. Profit also rose for the online retail channel by 21 per cent to £48m in the same period.

Grocery order volumes rose by more than 10 per cent to £7.5m, against a growth of 9.7 per cent for store sales, including petrol.

The retailer said Tesco Direct, its non-food catalogue and online arm did well in growing average order value.

The retailer also announced the opening of its second dot-com-only store in Aylesford, near Maidstone Kent. Tesco's fulfilment model is based on store staff picking orders from the nearest store. The first dot-com-only store situated in Croydon South London is laid out in the same manner as a normal store and run by store staff but there are no tills and the building is not open to walk-in customers.

The retailer said the Croydon store has grown like-for-like sales (revenues counted only from the stores that existed in the same period a year before) by 29 per cent for the reporting period. Weekly sales at the site are well over £1m per week.

In a video interview discussing the results posted on the company's website Tesco CEO Terry Leahy said the online channel is still growing strongly but added: "It can't go on forever growing at exactly the same rate. It will have to slow down at some point. But there is very strong demand for it."

He added he was particularly pleased with the development of Tesco Direct, the non-food business and said: "And if you look out to the future it's very important that Tesco is strong on the internet. We've got some exciting things coming forward that will be launching in the months and years ahead."