UK's biggest retailer to sell top electrical brands, piling pressure on rivals
Category-killing grocer Tesco is set to strike fear into the heart of electricals specialists, with a ferocious assault on the market for digital cameras and music players.

The UK's biggest retailer is, for the first time, to stock a wide selection of the latest gadgets from top brands such as Sony, Apple, Olympus and Canon.

The digital music range will start at£24.97 for an Inovix 128 MB player, but will also stretch to incorporate the must-have electrical products of the year, such as Apple's iPod Shuffle.

The initiative is Tesco's latest drive into non-food. The grocer's general merchandise offensive has been so successful that broker Citigroup Smith Barney believes it will swallow half of all non-food retail sales growth in the UK this year if it maintains its current performance. It predicts Tesco could lift non-food sales by£800 million excluding VAT this year.

Last year, Tesco increased non-food sales by 17 per cent to

6 billion, with home entertainment sales up 20 per cent. Citigroup said the effects of Tesco's growth will hit rivals harder in the retail slowdown.

'Tesco grew non-food sales last year by nearly£700 million excluding VAT,' Citigroup noted. 'It brought the available market growth down from 4.7 per cent to 4.3 per cent. This is a major impact. In a year like 2005 this residual analysis is terrifying for a non-food retailer that does not have any clear profit levers.'

Tesco's push is a major blow for Dixons, which has positioned itself as a destination for digital products - using the strapline 'the future for less'.

Andrea Cockram, analyst at Verdict, believes Tesco's non-food sales are on track to overtake Dixons Group in 2006. 'Tesco is now selling more non-food than Marks & Spencer. The grocers are behind a lot of the margin pressure in electricals,' she said.