Shopping: Supermarkets bank on the world

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Once upon a time, the local supermarket was a place to stock up on the week's groceries. Now you can get your hair cut, pay in a cheque, book a holiday and buy a television.

One-stop shopping is the buzzword in the ferociously competitive world of food retailing. In their eternal quest for bulkier profits, the major chains are seeking ever-more innovative ways to lure in customers and retain their loyalty.

The future lies not in food, but in a range of goods and services that are turning supermarkets into mini high streets. Books, compact discs and videos are already a familiar sight a couple of aisles away from the fruit and vegetables. Tesco, Asda and Sainsbury now sell televisions, videos and hi-fis. Asda has gardening tools. Tesco has sportswear and, to the fury of Levi, cut-price jeans.

But it is in offering the widest variety of services that supermarkets are vying to outdo one another. At some Safeway branches, you can drop off the dry cleaning and get your holiday snaps processed. Asda has given concessions to hairdressers, post offices and travel agents. Creches, coffee shops and petrol stations are commonplace.

Most of the big players offer bank accounts, and Tesco and Sainsbury have linked up with the Automobile Association and the Royal Automobile Club to offer a free breakdown service to shoppers.

The supermarket of the future could be even more versatile, according to Neil Mason, a retail analyst at Mintel. "Supermarkets have a captive audience because everyone has to shop for food," he said. "Once you've got people in through the door, the sky's the limit." GPs' surgeries, dentists and opticians could become widespread, he said.

Clive Vaughan, of Verdict Research, said supermarkets might offer share dealing and insurance services. But he cautioned them against branching out into mortgages.

"People feel warm and cuddly towards supermarkets and precisely the opposite towards building societies," he said. "If a company like Sainsbury started throwing people out of their homes, it could damage their image."