Britain’s largest grocer, Tesco, has today [Monday] launched its online e-tail service in the US with local partner Safeway, and company officials have made it clear that the US venture is to be a stepping stone for global expansion.
The Internet tie-in with Safeway, California’s largest supermarket chain and separate to the UK retailer, is said to offer consumers a e-shopping experience “almost identical, just painted different colours” to the UK’s existing Tesco.com system. Safeway’s online e-tail site, GroceryWorks, in which Tesco has a 35% stake, bought Tesco’s e-commerce technology and adopted its in-store picking model.
The deal, which was announced last June, formed part of a US$22m joint venture between the two retailers, which Tesco CEO Terry Leahy called “ironic, but also notable”.
CEO of Tesco.com, John Browett, said that he was now looking to form similar partnerships with grocers in France, Germany, Canada, Japan, Australia and northern Italy. He told the Financial Times: “We have been approached by lots of people who are interested in similar deals […] It’s a question of finding the right partners in the right place at the right time.”
The online operations were launched in Portland, Oregon, where a trial has run successfully in three Safeway stores since early December. Portland was earmarked for the launch because it currently has no online grocery service, after the demise of WebVan last year. Furthermore, the city was chosen above San Francisco, to “avoid a blaze of publicity” – as the system will collapse on the first day if too many people attempt to order food because of too much publicity.
It is still unknown how long it will take to roll out the e-service to all of Safeway’s US customers, but Browett did however suggest that only between a fifth and a third of Safeway’s 1,500 stores would need to get online to access to a market of 180m people.
