Tesco plans giant stores build stores

Tesco's latest stores will not only sell you a TV dinner - they will sell you the TV. The chain sees the expansion of its "Extra" hypermarket concept as a key component of its strategy to maintain a lead over its rivals.

It plans to build two more huge Extra stores in Peterborough and Weston Favell, near Northampton, to add to its existing one in Pitsea, Essex, as its next move in the battle among supermarkets for market share.

Tesco says the space of Extra stores give it the ability to offer more non-food items. At Pitsea, shoppers can pick up cooking wares, small electrical appliances, clothing and televisions.

While Tesco is likely to confirm its dominance of the supermarket business when it reports around a 9 per cent rise in first-half profits on Tuesday, it cannot afford to rest on its laurels. Asda, Safeway and a resurgent Sainsbury are trying to close in on its market share with innovations that include selling own-brand clothing, offering banking and employing new technology to cut queuing time.

Tesco's Pitsea store covers 103,000 square feet, compared with 70,000- 80,000 square feet for its largest supermarkets. It is close in size to Asda superstores, whose success has spurred a resurgence in interest in the hypermarket format in the UK.

"Tesco has realised there is potential, and Asda has shown what can be done," said Robert Clark, director of the Corporate Intelligence consultancy on retailing.

Asda's resurgence has a lot to do with having stores that are about 50 per cent larger than those of its rivals. The company has used the space to expand beyond food retailing, selling its George brand of clothing and fast food. It also rents space to dry cleaners, travel agents and, most recently, Lloyds TSB bank counters.

The hypermarket concept, well established in France, has been ignored in Britain because of the difficulty of finding tracts of land large enough to build the stores on. Success at Asda and to a lesser extent Sainsbury's Savacentre, has much to do with the fierce competition among supermarkets and the need to find new ways of increasing sales as well as changes in shopping habits.

It is by no means certain, however, that Tesco will be able to pepper the UK with Extras. It may fall foul of local planning laws and residents opposed to the environmental changes that huge stores inevitably bring.