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Supermarkets Threaten UK's Non-Food Retail Sector
By the end of 2006, Tesco will not only be UK's biggest food retailer, but also its largest non-food retailer, according to a report published this week by retail analysts Verdict Research, part of the Datamonitor Group.
UK Non-food in Grocers 2006 says Tesco will increase the pace of its non-food sales growth in 2006 to overtake former non-food no.1 ARG, owner of Argos and Homebase. Asda and Sainsbury's have also been growing this side of their business at speed.
Alastair Lockhart, Senior Retail Analyst and author of the report, comments: 'Tesco continues to add substantial new non-food space through mezzanines, store extensions and new store builds. It's skilfully enhancing its ranges across all categories; and leading the way in Internet and in-store catalogues to create new opportunities. As it opens more of its largest Extra stores over the next few years, we can expect to see a lot more clothing, homewares and electricals goods in Tesco's stores. Ranges will be broader, and the way product is displayed will improve.'
Consumer spending on non-food products grew a mere 0.9% last year, but grocers' non-food sales rocketed by 8.4%, boosting their share of the market from 8.5% to 9.1%. The leading players have aggressive plans for the coming year and Verdict expects them to gain further territory into the foreseeable future, putting pressure on the competition 'like never before' with high street non-food specialists fighting over a meagre 0.7% per annum growth once online and grocers are stripped out.
Verdict says that between 2000 and 2005, the combined non-food sales of Asda, Tesco and Sainsbury almost doubled, while other grocers achieved only 7.6% growth. The agency says Morrison, in particular, 'is now starting to look quite exposed in non-food'.
Lockhart concludes: 'Capitalising on their low-price reputations and overriding convenience, grocers' non-food ambitions now stretch to almost every area of the retail market - including even furniture and large electricals items through their web sites and catalogues.'
Verdict Research, online at www.verdict.co.uk , is a wholly owned subsidiary of Datamonitor Plc.
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