Retail success not just a click away

By Gavin Haycock

LONDON (Reuters) - The growth of non-food sales over the Internet shows no signs of abating, but click-and-buy is no panacea for retailers' problems, says Kevin Hawkins, Director General of the British Retail Consortium.

"I really would be skeptical about technology coming galloping over the hill to the rescue," Hawkins said at the Reuters Consumer and Retail summit in London.

For some, like Britain's biggest foodseller Tesco Plc (TSCO.L: Quote, Profile, Research, Stock Buzz) and Asda, the Internet is a gateway to a rich seam of new sales, tapping into both existing and new customers.

Tesco's latest full-year results showed sales via its online site, which handles more than 200,000 orders a week, surged 32 percent in the year to almost 1 billion pounds ($1.84 billion), with profits up 55 percent to 56.2 million pounds.

At the same time, the company said it was investigating whether it could build a substantial online non-food business.

Despite surging sales, the company's online business has a long way to go before it gets anywhere near to challenging overall sales, which rose 13 percent to a hefty 42 billion pounds.

Still, 40 to 50 percent of new business now comes over the Web, Tesco Finance Director Andrew Higginson told Reuters.

Tesco's online business has grown at 25-30 percent a year for a number of years and looks set to do so again this year.

"We call it an online business, but the truth is the home-delivery business is facilitated by the Internet. There is a growing demand for it," Higginson said.

When Asda launched its entertainment site via links from its online site in mid-2005 it became a top-10 music site in a month, despite a low-key launch and no external marketing, a spokesman for the company said.

Asda, the UK arm of the world's biggest retailer Wal-Mart Stores Inc. WMT.M, has been accelerating the rollout of its online offering over the year while investing more than 7 million pounds in its grocery delivery service. The company has also launched an online optical service selling disposable contact lenses and a photo shop.

Elsewhere, figures from retailer John Lewis Partnership JLP.UL showed sales via its online site were up 68.6 percent on the week to June 10, compared with the same week a year ago.

WEB WOES

But the web is not the answer for every retailer.

"For those who are still making losses, which is the majority of them, it could well be a long haul," said Hawkins.  Continued...