Marks & Spencer may have sent a shockwave through the stock market on Wednesday but it is Sainsbury’s Christmas trading statement that arguably holds far more significance for the rest of the high street.

At a time of almost universal panic about consumer spending, rising mortgage bills, petrol prices and energy costs, Justin King expects Sainsbury’s to “thrive”.

Like-for-like sales rose in the third quarter by 3.7 per cent, bang in the middle of the forecast range, despite fierce competition that hit the business in the run-up to Christmas. While continuing to generate growth in food sales, Sainsbury’s is finally making big strides into nonfood.

Whereas before, the supermarket would have been happy to chirp away about its sales of salmon fillets and sherry trifles, now it boasts about outperforming the market in DVD sales in the new year. It also sold more than four Sony LCD televisions each minute between Boxing Day and New Year’s Day.

If Sainsbury’s is achieving this, at a time when it was seen as the laggard of the Big Four, then imagine the non-food market share being picked up by Asda and Tesco.

Herein lies the key. During a slowdown, the supermarkets will always cope given the simple fact that people need to eat. However, in an effort to drive profits they have not only broken into new non-food markets but are in the process of becoming major players.

Part of the reason Sir Stuart Rose had to cut the price of a pair of M&S men’s underpants to 60p was the sheer muscle of Asda and Tesco’s clothing empires.

Clothing was one of the first areas the grocers moved into, but now Tesco sells everything from fishing rods to showjumping equipment. Its Tesco Direct home delivery service, which is proving a thorn in the side of Argos, started selling bathroom suites before Christmas. It is near impossible to predict anything in retail but if one thing is for certain, it’s that supermarkets’ share of the nonfood market will only increase.

Verdict, the retail analyst, believes it will climb to more than 12 per cent by 2011, nearly double the level a decade ago.

In the current climate, supermarkets hold numerous advantages, not least the fact that millions of customers are already driving to their stores to do the weekly family food shop.

They enjoy huge economies of scale and, being out of town, can take advantage of cheaper rents. But, whatever customers say about their love for the quality corner shop, they love the prices on offer in a branch of Tesco even more.

Asda and Tesco have already made a success of nonfood and now Sainsbury’s is planning far more store extensions, simply to grow the nonfood offer. It can only be a matter of time before Morrisons starts making some inroads of its own and we see more corporate casualties elsewhere.

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