Tesco plans non-food stores to challenge high street rivals

Tesco, the UK's largest supermarket chain, is planning to open stores that will not offer food but only a range of consumer goods in a move which is likely to send shivers down the spines of rival retailers.

Tesco, the UK's largest supermarket chain, is planning to open stores that will not offer food but only a range of consumer goods in a move which is likely to send shivers down the spines of rival retailers.

A pilot non-food store, selling clothes, books, DVDs, CDs, and electrical goods, is expected to be open before the end of the year. If the shop succeeds, Tesco will look to roll out the scheme to the rest of the UK.

Non-food sales in Tesco have grown strongly in recent years and now account for a fifth of the company's UK sales worth £7bn. But the group is keen to expand its non-food offering further.

Arch-rival Asda has already opened a non-food store, called Asda Living, in Walsall. Two more Asda Living stores are planned for later this year, and Asda has also opened high-street stores to sell its George clothing range.

A spokesman for Tesco yesterday said: "It is very early days yet, but we are looking to trial a non-food store. We have had a lot of success with our non-food sales and we want to develop it further, which is what our customers would expect. We've been watching what Asda is doing and we are keeping an open mind about the concept."

A specific site has not yet been chosen, but Tesco is looking at out-of-town retail parks. It may look for a struggling retailer in the out-of-town sector to purchase, to give it a property bank with enough floor space for the stores.

The move, however, is bound to alarm other retailers, many of whom are struggling after a tough Christmas sales period. Tesco's buying power for clothing, DVDs, CDs and books has already put pressure on other retailers. It claims to be the second-biggest seller of chart CDs in the UK, and has fought a price war with Boots to become one of the biggest retailers of health and beauty products.

The group is due to update investors on Christmas trading figures this week. It is widely expected to have experienced solid trading over the festive period. A number of City analysts are preparing to raise their forecasts, expecting Tesco to make profits of more than £2bn.