Supermarket chain targets slice of Tesco and Asda’s non-food share with new Tu brand

Sainsbury’s is to launch a new brand and its biggest ever non-food offer this weekend as it aims to ramp up its general merchandise sales.

The UK’s third-largest grocer will unveil the Tu home brand this weekend and start selling 1,700 homeware products in two stores in Sydenham, London, and Oldbury, West Midlands.

The launch signals the serious-ness of Sainsbury’s ambitions to increase its non-food sales by more than£1 billion by March 2010 and develop a non-food offer to rival Tesco and Asda.

Sainsbury’s head of general merchandise Richard Jones said: “Tu home is an important milestone in the development of our non-food targets. Our customers are telling us that they want the added choice of stylish but great value homeware.”

The grocer will introduce products including kitchenwares, bathroom fittings, lighting and soft furnishings under the Tu home banner. The range will sit alongside its two existing home brands – premium range Different by design and value offer Basics. It will also include a collection for children featuring bedding, rugs, curtains and cushions.

Jones said that 70 per cent of the range will be sold under£10, but prices rise to£80 for larger purchases, such as fully lined jacquard curtains.

The grocer will extend the trial to a further four stores in June and will cover 11 stores by September 2009. 150 staff are being appointed to its general merchandise operation in Coventry to support the push.

Tu is an established clothing brand already, with sales of more than£300 million expected this year through 262 stores. Sainsbury’s non-food sales are growing at three times the rate of food and the retailer is expanding selling space in its stores by more than 10 per cent, with half the new space set aside for non-food ranges.

Nevertheless, some industry experts are sceptical about whether Sainsbury’s should be so gung-ho about chasing the non-food pound, given the relatively small size of its stores and the risk of diluting its reputation for quality fresh food.

Credit Suisse analyst Andrew Kasoulis said: “Sainsbury’s will need to address the amount of larger stores in its portfolio over time, which it is doing, to give it enough space to have sufficient authority in non-food.

“The jury is still out on whether the Sainsbury’s customer has the same attitude to non-food as the Asda and Tesco customer has had over time.”

Retail Knowledge Bank senior partner Robert Clark said the higher margins of non-food could help lift Sainsbury’s operating margins, which, at about 3 per cent, are lower than rivals Asda, Tesco and Morrisons.