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TESCO, the supermarket group, has fired a warning shot in the direction of high street clothing and homewares stores with plans to open two large stores selling non-food items.
The retail chain confirmed yesterday that it is to open two stores of 30,000 sq ft — a third the size of an average Tesco supermarket — in a trial operation.
The stores, called Homeplus, will be opened in Manchester and Aberdeen in October and will each have 100 staff. They will be conversions of existing retail park Tesco branches and will sell a range of goods from clothing to entertainment and homewares and electrical goods.
About 20 per cent of Tesco’s total sales come from non-food items, giving the group a 6 per cent share of the higher-margin non-food market.
The group, which achieved profits of £2.03 billion last financial year, is thought to have added about £1 billion of extra non-food sales over the past year. But analysts said that Tesco was likely to approach the stand-alone format with caution. Andrew Kasoulis at Credit Suisse First Boston said: “[Tesco] will need to trade through two Christmases to see how it will fare. It will not decide on a roll-out quickly. But if the footfall is high enough then it may prove to be something of an extra string to Tesco’s bow.”
Grocers’ non-food sales have soared by 60 per cent over the past five years. In 2004 they stood at £13.5 billion, accounting for 12.2 per cent of the total non-food market. Verdict, the research consultancy, forecasts that the grocers’ market share will rise to 12.7 per cent this year.
Asda, Tesco’s smaller rival, already has a non-food store chain, Asda Living, although it consists of just two branches at present.
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