Tesco has begun testing its non-food Tesco Direct offer in its small-format city centre Tesco Metro stores.

The grocer has installed Tesco Direct desks in 19 Tesco Metro stores and will roll them out if they are successful. A spokesman said Direct desks have proved “very popular in larger stores” and the decision was taken to trial them in smaller stores where there was sufficient space.

He said: “Having the Direct desks in Metro stores allows us to get our non-food offer right into the heart of neighbourhoods and if we can do that without impacting the space needed for grocery in those stores then that’s a good way of expanding our offer.”

Tesco has 233 stores with Direct desks at present, split between its superstores, Extra and Homeplus fascias. In July it launched its first Argos-style shop-in-shop at its Homeplus store in Bristol with a 10,000 sq ft storage area for products. In several of its smaller Express convenience stores it has installed catalogue stands for its autumn/ winter catalogues.

The move steps up Tesco’s challenge to Argos by competing in city centre locations as well as in out-of-town areas. It also puts further pressure on Asda, which launched its Direct web site in October and will start installing Direct desks in stores next year.

This week Tesco reported that its UK third-quarter like-for-like sales, excluding petrol, rose just 2 per cent – their lowest level of growth since 1993. Total sales climbed 5.9 per cent in the quarter.

Tesco said the reason the headline figure is so low is that it has launched the Discounter range and lowered prices. Chief executive Sir Terry Leahy said the Discounter range is “hugely successful, but it has driven down the average item price in the business”.

Tesco said the range now accounts for more than 5 per cent of its UK grocery sales and it has led to 300,000 more customers a week, slowing the stream of shoppers to the likes of Aldi and Lidl.

Overall, the grocer reported group sales up 11.7 per cent for the 13 weeks to November 22.