Supermarkets look likely to steal a further slice of general retailers’ sales as both Tesco and Sainsbury’s revealed plans to extend their non-food operations in their first-quarter trading updates this week.
In its first-quarter trading update, which revealed a like-for-like sales rise of 7.8 per cent, Sainsbury’s said that it would launch a non-food online offerof “about 8,000 products” during the next quarter. Sainsbury’s chief executive Justin King said that the online offer would be about double the size of the range stocked in the stores at present.
It also unveiled a £445m fundraising to accelerate the expansion of its store estate with an extra 2.5 million sq ft of selling space by March 2011. It plans to take advantage of the weak property market to acquire more sites, accelerate the store extension programme and add 150 more convenience stores over the next two years.
Tesco, which unveiled a 4.3 per cent rise in UK like-for-like sales in its first quarter, is also ramping up its online activities. Tesco executive director, corporate and legal affairs, Lucy Neville-Rolfe said that the grocer will launch an online clothing offer in September. She would not elaborate on details but said: “It will be a good offer - as you’d expect.” Tesco also revealed that its non-food offer had returned to like-for-like growth in the first quarter.
But Planet Retail research director at Bryan Roberts said that although the gap between Tesco and the other retailers remained substantial, Tesco could see its market share under attack.
He said: “Tesco is still some way from reaching its ceiling. It’s in every postcode, but there are still locations where it’s not represented and it still has online to go for. But in relative terms, there is a lot more growth potential for Sainsbury’s, Asda and Morrisons.”
The updates at a glance
Tesco 13 weeks to May 30
- Group sales up 12.6 per cent
- UK like-for-like sales up 4.3 per cent
- Sales in Asia up 43.8 per cent helped by an “excellent” performance in the converted Homever stores in Korea
- Online clothing launches in September
Sainsbury’s 12 weeks to June 13
- Like-for-like sales up 7.8 per cent
- Capital raising of £445m to accelerate growth plans
- Online non-food offer to launch in next quarter with 8,000 products
- Nine more stores acquired from Co-op