April 23, 2013, 2:46 PM

British grocer Asda plans a big e-commerce push

The Wal-Mart subsidiary, budgets $1 billion for web, supply chain and store development.

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Asda, one of the biggest grocery store chains in the United Kingdom and a subsidiary of Wal-Mart Stores Inc., is planning a major investment in e-commerce.

Asda, No. 17 in Internet Retailer’s Top 400 Europe, is investing about $1.07 billion (700 million British pounds) and creating 2,500 jobs to launch new initiatives related to its supply chain, some store redevelopment and e-commerce.

Asda, which in 2012 generated Internet Retailer-estimated web sales of $1.52 billion (997.1 million British pounds), up 35.7% from $1.11 billion in 2011 (734.7 million British pounds), plans to commit an undisclosed amount of money into expanding its click-and-collect program, which enables consumers to shop online, pay for the purchase and have the groceries ready for pick-up at an arranged time at an Asda location.

Asda will use part of the new investment this year to roll out click and collect to all of its 568 stores in the United Kingdom and expand the list of products consumers can purchase to include groceries, clothing from George, a private-label apparel brand, and other general merchandise. Consumers also will be able to collect their online purchases at 200 other locations, such as lockers located at Asda gas stations, the company says. “By focusing on their needs through accelerating our investment in the technology and infrastructure to make shopping more convenient, customers can shop for what they want, when they want it,” says Asda CEO Andy Clarke.

The click-and-collect service for grocery shopping, introduced last fall, now accounts for about 4% of all online grocery sales, says Asda, although the company didn’t release any specific figures.

To support a bigger e-commerce operation, Asda also will open a new 120,000-square-foot fulfillment center near Nottingham, a city in the central part of England. The center also will let shoppers pick up online purchases directly at the new distribution center including ready-to-eat meals such as pizza. “Customers will have extended delivery slots between 6 a.m. and 11 p.m. and access to a product range of more than 25,000 items, with everything from fresh fish to local suppliers,” Asda says.

Asda is stepping up its e-commerce operation as it looks to keep pace with other large food and general merchandise chains such as Tesco Plc, No. 3 in Internet Retailer’s Top 400 Europe, and Ocado Ltd., an online grocer with web sales that grew 11.2% to $1.09 billion (716 million British pounds) in 2012 from $980 million (643 million British pounds) in 2011.

In a small country with a dense population such as the United Kingdom, online grocery shopping is becoming big business, says the London-based trade group Institute for Grocery Distribution. By 2017 annual online U.K. grocery sales could reach $17.86 billion (11.12 billion British pounds), up 108.4% from $8.57 billion (5.62 billion British pounds) in 2012, the group says.

“Online grocery is evolving at a blistering pace,” says Institute for Grocery Distribution chief executive officer Joanne Denney-Finch.

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