Elaine Watson
Sainsbury has emphatically denied reports that it is planning to close its picking centre in London to drive its online shopping operation into the black by the target date at the end of next year.
The retailer is closing its Manchester picking centre this month, but a spokesman said picking from its smallest, busiest stores in London was not viable, especially as volumes increased.
However, Cheuvreux analyst Mike Dennis said the only way Sainsburys to You could make a profit by 2003/4, was to close Park Royal. "How they will go from losing £20-25m at Park Royal to zero is not clear," he said.
"For these centres to be profitable, you have to have critical mass, and they are nowhere near that."
Dennis said he didn't see why store picking couldn't work for Sainsbury in the capital, where rival Asda recently abandoned its warehouse picking operation.
"They have got some large stores in the capital."
Sainsbury admitted in January there had been "teething problems" at Park Royal, while it had suffered by "slavishly following the American [warehouse picking] model".
However, the company was convinced a mixed model was the best solution.

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