Tesco challenges Argos with catalogue outlets

Tesco is to take on the catalogue giant Argos by installing catalogue checking self-service terminals at all its new non-food Homeplus stores.

The UK's biggest retailer will introduce Argos-style shop-in-shops, with an enlarged area for stocking products for immediate collection, at its new Homeplus stores in Nottingham and Edinburgh that will open over the next few weeks. This follows a successful trial of the Argos-style digital terminals at Tesco's Homeplus store at Cribbs Causeway, Bristol, in the summer. A source also said Tesco was considering introducing the Argos-style shop-in-shop into its grocery stores, but a Tesco spokesman declined to comment.

Tesco's initiative is significant because it comes at a time when Argos, owned by the Home Retail Group, is suffering its worst sales in 35 years and rival grocer Asda is powering ahead with opening its Asda Living non-food stores. A Tesco spokesman said it was considering retro-fitting its seven other Homeplus stores with the stock checking terminals.

He said: "The technology will be in all new stores going forward – with potential (though no plans yet) to retro fit in those that can support it." The spokesman said that, unlike Argos, the Homeplus smart stock check technology suggests alternative products when the desired item is out of stock, as well as offering multiple digital product pictures.

Unlike the other seven Homeplus stores, the 50,000 square foot store at Cribbs Causeway store has a 10,000 square foot area for stocking products from Tesco Direct, its combined catalogue and website. In October, Tesco said it would open 10 further Homeplus stores in the months ahead, including the stores in Edinburgh and Nottingham before Christmas.

Asda has already opened 17 Asda Living stores and will open another four before 31 December.