The latest issue of UK Retail Report, by retail consultants Corporate Intelligence, says sales of music and video products by the big four supermarkets topped pounds 400m last year. With the UK entertainment market worth pounds 2.9bn, that means Tesco, Sainsbury's, Safeway and Asda saw their share of the UK market rise from 10 per cent in 1995 to 15 per cent last year.
As the grocers cut prices on the biggest-selling chart compact discs and videos, the report says they will continue to exert pressure on rival retailers in the market, particularly WH Smith, Our Price and Boots.
"It is just another example of a product area where the supermarkets are creaming off the volume end of the market," says Corporate Intelligence's Robert Clark.
He points to sectors such as petrol, health and beauty products and books as other examples of the supermarkets' successful drive into non- food areas.
The report says that the retailers most vulnerable to the supermarket's relentless march are WH Smith and Boots. "These stores rely on women and older shoppers for a majority of their music sales, in contrast to specialist shops like HMV and Virgin," Mr Clark says. "But they do not offer sufficient breadth of range or quality of service to differentiate themselves from the crowd."
He adds that Our Price, which still operates from relatively small stores, could suffer for similar reasons.
Specialists such as Tower Records, whose six large stores give it 1.4 per cent of the UK market, should continue to prosper as it stocks a huge range of back catalogue music and videos. Kingfisher's Music and Video Club should be protected as it specialises in discounted back catalogue CDs, which are unlikely to be targeted by the supermarkets.
The smaller, independent retailers will have to carve out their own individual niche to survive, says Mr Clark.
Though the report rules out a price war, it says that the supermarkets will embark on a "war of attrition" to win further market share.