Tesco launches one-hour delivery to London customers

Tesco, Britain's biggest retailer, is to offer a one-hour grocery delivery service to customers in central London, firing the latest salvo in the cut-throat online supermarket sector.

Online shopping is one of the better-performing parts of Britain's retail sector and has become a key battleground for the big supermarkets as they grapple with the growth of German discounters Aldi and Lidl.

Britain's online food market is expected to grow by 54 percent to 16 billion pounds ($20.3 billion) in the five years to 2022, according to industry research group IGD.

Tesco said on Monday the new service will allow customers to order, through the Tesco Now app, up to 20 items from a range of 1,000 products, including fruit and vegetables, meat, bakery goods and dairy.

Orders will be picked in a local store and delivered to customers via moped within 60 minutes.

Priced at 7.99 pounds ($10.16), Tesco Now will be available to customers in some central London postal districts between 0800 until 2300 on weekdays and 0900 until 2300 at weekends.

Tesco's service is similar in concept to Amazon's (AMZN.O) 'Prime Now' offer and follows a one-hour home delivery trial from Sainsbury's (SBRY.L), Britain's No. 2 supermarket group, that was launched last year.

Last year Amazon also launched a British version of its U.S. AmazonFresh food delivery service, stepping up the pressure on the traditional big supermarkets.

Earlier this month Amazon agreed a $13.7 billion takeover of Whole Foods (WFM.O) signalling how serious it is about food retail.