Tesco extends same day grocery delivery to whole of UK

LONDON, July 24 (Reuters) - Tesco, Britain's biggest retailer, is extending its same day online grocery delivery service across the whole of the country, it said on Monday, ratcheting up competition in the cut-throat 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 and encroachment into all areas by U.S. giant Amazon.

Britain's online food market is expected to grow by 54 percent to 16 billion pounds ($21 billion) in the five years to 2022, according to industry research group IGD.

Tesco launched same day grocery delivery in London and the south east of England in 2014.

It said that by the end of August the service would be extended to over 300 stores across the United Kingdom, covering over 99 percent of the country's households - the biggest reach of any UK retailer.

Britain's No. 2 grocer Sainsbury's offers same day delivery from 30 stores.

For a fee of 3-5 pounds ($3.90-$6.50), Tesco customers can order by 1pm and have their shopping delivered from 7pm onwards.

Tesco said same day deliveries had increased 18 percent so far this year.

Earlier this year, the company extended its same day "Click+Collect" service to 300 locations across the United Kingdom. Last month, it launched Tesco Now, which offers deliveries within an hour to customers in central London.

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

In June, Amazon agreed a $13.7 billion takeover of Whole Foods, showing its food retail ambitions.

($1 = 0.7670 pounds) (Reporting by James Davey; Editing by Mark Potter)