Tesco's Gains Puts Pressure on Discounters

Tesco's expansion plans for its clothing offer are likely to put extra pressure on the bottom end of the market, according to analysts. The supermarket grew its YUK clothing market share by 40 per cent in value and 60 per cent in volume terms in 2002, to 1.4 and a 4.4 per cent of the market respectively. Analysts estimate it is currently achieving sales densities of around GBP350 to 400 per square foot.

During an analysts' tour of stores in the Manchester area, Tesco said it was on track to double its number of hypermarkets over the next three years. Two-thirds of growth would come via extensions of existing stores, which analysts say is likely to lead to greater clothing market share gains.

By September, Tesco will have recruited 260 specialist clothing managers and, with its new clothing only warehouse in Daventry, this should lead to productivity gains. The City further expects Tesco to start to use it's leverage price further as it grows its clothing business.