'Virtual store' shows Tesco's online aims

Tesco has landed another blow on the online grocer Ocado by opening a huge internet delivery facility in north London, as it closes in on achieving a dominant, 50% share of the market for food ordered on the web.

The grocery giant's highly-automated,
115,000 square foot warehouse in Enfield aims to cover a catchment of 980,000 registered households from Bromley-by-Bow to just beyond New Barnet, and is its fourth, so-called "virtual store" , with no customers.

The supermarket chain now has 48% of the UK online grocery market, based on Kantar Worldpanel data, and it expects its grocery sales on the internet to double to about £5.5 billion over the next five years.

Its huge market share lays bare the long-term challenges faced by internet rivals Asda, Sainsbury's, Waitrose and Ocado, the online specialist that has never made a pre-tax profit in 10 years. Clive Black, an analyst at Shore Capital, has concerns over Ocado's ability to compete with Waitrose in the long term. "We believe that Ocado is largely Waitrose on wheels," he added.

Tesco said it had launched the Enfield facility and its three other virtual stores in Croydon, south London, Aylesford, Kent, and Greenford, Middlesex, to meet soaring demand in densely-populated areas. The grocer plans to open a fifth such virtual store in Crawley early next year.