The only item out of stock is another groundbreaking idea

After revolution, the struggle for growth
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The Independent Online

When Sains- bury's first threw out the marble and tiles and opened its gleaming new Croydon site as a self- service store in 1950, one customer threw her wire basket at "Mr Alan" Sainsbury's head in disgust. Rivals and commentators sucked their teeth and declared that this American import would never catch on.

"How wrong they were," declared Mr Alan, grandson of founder John Sainsbury, some time later. "How lucky we were that they were wrong." Tesco was swift to follow and – as they surfed the wave of post-war prosperity aided by the proliferation of cars, domestic refrigeration and increasing numbers of working women – supermarkets grew from a novelty to a convenience to a necessity.

As women embraced the liberation of once-a-week shopping, the stores grew at breakneck pace, creating profitable innovations as they went. The greatest of these was the ready meal, pioneered by Marks & Spencer but soon adopted by every group with spectacular success. A poor culinary tradition meant the British relished tasty food they did not have to cook, while geography allowed for the delivery of chilled food overnight to almost anywhere in our islands.

Supermarket sales now account for over 75 per cent of the £100bn-plus grocery market in the UK. Along the way, the stores have delivered huge benefits in terms of increased hygiene, freshness and above all variety. Who had even heard of balsamic vinegar 20 years ago, let alone thought of putting it on their strawberries in February?

The next profit-spinner was non-food – clothing, entertainment and electrical goods with their big mar- gins. Tesco's aggressive move into non-food vaul-ted it to the number one supermarket slot in 1996, since when it has soared above the rest. But even Tesco is struggling as higher energy costs and the response to climate change drive up food prices and put margins under even greater pressure.

It is hard to see another innovation that will deliver a step-change in profitability, and the big groups are being squeezed from above and from below. Each month, research by TNS World Panel shows the market shares of discounters Aldi, Lidl and Iceland edging up. At the top, Waitrose and M&S continue to grow and farmers' markets have now entered the statistics.

Watching Tesco's frenzied moves into new markets overseas and ever more non-food at home only shows that food retailing has never been tougher.

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