UK supermarket chain Tesco has revealed bumper Christmas sales. Tesco reported its impressive trading performance a week after research indicated a gloomy Christmas picture for many other leading UK retailers. The figures highlight the company’s continuing dominance of the UK retail landscape; and its likely expansion into non-food stores poses a further threat to its high street rivals.
Tesco revealed that like-for-like sales in the seven weeks to 8 January 2005 were up 7.6% on a year ago, leaving it on course for a profit of £2bn (US$3.7bn) this year.
In stark contrast, most other food retailers – such as Marks & Spencer and J Sainsbury – had a much more lacklustre festive period and, understandably, Tesco has said it was “delighted” with the results. Even its overseas performance complemented its UK success with international sales growing by 16.1% over the Christmas and New Year trading period. This was in spite of difficult trading conditions in some central European markets.
The company currently has a 6.5% share of the non-food retail market in the UK, with sales of items such as chart music, books, and health and beauty products, its own-label clothing ranges, and electrical goods. These non-food sales have helped fuel the company’s growth and were worth about £7bn to Tesco last year.
Tesco already takes about one pound in every eight spent in Britain’s shops. With continued investment such as the focus on non-food activities its phenomenal progress is set to gain further momentum.
Earlier this week it emerged that Tesco is planning to develop a new chain of non-food stores that will specifically offer customers a range of clothing, music and electrical goods. The new format store is likely to be launched this year at an out-of-town retail park.
The development of a non-food chain would certainly provide Tesco with yet another means to take on the competition, with specialist non-food retailers such as the electrical goods chain Dixons, the music store HMV or the newsagent WHSmith firmly in its sights. Given that Tesco has brushed aside its supermarket rivals with contemptuous ease in recent years, these established high street names should already be very, very afraid.
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