Tesco set to become Britain's biggest non-food retailer

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The Independent Online

Since the mid-1990s, Tesco has been the UK's biggest grocer. But by the end of this year it will also dominate sales of non-food goods, trumping the owner of Argos and Homebase as the country's largest non-food retailer, according to a report.

The grocer's voracious appetite for growth has seen it leapfrog some of the biggest names in general merchandise from a standing start 10 years ago. It has added products as diverse as cashmere jumpers and laptops to its food ranges, helping it outpace the rest of the high street.

Verdict Research, a retail consultancy, predicted the pace of Tesco's growth meant it would control 3.6 per cent of the UK's total non-food market by the end of this year. This would trump the combined 3.5 per cent share held by Argos and Homebase, which are part of GUS, and the 2.9 per cent controlled by DSG's UK retail chains, including PC World and Currys.digital.

Alastair Lockhart, senior retail analyst at Verdict, warned the pressure from Tesco would put many smaller players out of business. "Ultimately there is no retailer than can afford to have grocers outside of their vision," he said.

Tesco has pulled ahead of its non-food counterparts by pushing into product areas such as garden furniture and by widening the choice within its existing ranges. This autumn it is expected to launch a catalogue, similar to that offered by Argos, and sell more of its non-food lines over the internet. Just 10 per cent of its Web-based sales are non-food products and it sees plenty of scope for growth. Half of all its new floorspace in the UK is dedicated to non-food and it is opening 28 of its Extra stores this year.

Separately, Asda announced plans yesterday to take on Ikea with a new range of flat-pack furniture that it will sell through a catalogue.

Verdict's report said that while consumer spending on non-food products rose just 0.9 per cent last year, grocers' non-food sales surged 8.4 per cent. Tesco, Asda and J Sainsbury increased their collective share of the non-food market to 9.1 per cent from 8.4 per cent. Verdict expects grocers to soak up one in every £10 spent on non-food products by 2007. It also expects the supermarket chains to account for the bulk of the 2.5 per cent growth in the non-food market that it predicts over the next five years.