Tesco to Challenge Argos in Non-Food Arena

01/09/06 Tesco PLC has launched its long awaited retail catalogue in a bid to capture a bigger share of the U.K. nonfood market, pitting the nation's biggest retailer against GUS PLC's discount retail business Argos.

Britain’s largest supermarket chain, which has also stepped up its assault on the financial services market by signing a joint venture with AXA PPP, a unit of the French insurer, to sell medical insurance, said that it would put 8,000 items online next week.

Only half that range of general goods, excluding clothing, is available in the biggest Tesco Extra store, and only a fraction of it is at present online.

General merchandise, excluding CDs and DVDs, makes up only £40 million of Tesco’s £1 billion-plus online sales. Industry experts said that the company had been disappointed with the progress of non-food internet sales. A joint venture agreement with Grattan, the home shopping firm, covering handling of non-food goods online will end next week.

Tesco Finance and Strategy Director Andrew Higginson said that "currently around a quarter of U.K. shoppers are able to get to a Tesco Extra store easily, so Tesco Direct will make our nonfood products more accessible than ever before."

Tesco already has a 31.6% share of the UK grocery market, and the service will rival catalogue firms such as Argos. In the online arena, Tesco's domination of the UK grocery market is even greater, with a 66% share, amounting to 30,000 orders per day.