Non-food accounted for £9bn of Tesco's £42.3bn UK sales last year and were "resilient through the downturn", chief executive Sir Terry Leahy said this week as he unveiled its full-year results.
Clothing sales had grown 7.3% to reach £1bn for the first time, toys were up 25% and electricals had doubled in the past four years. The retailer will dedicate about 700,000 sq ft of new space to non-food this year.
Sir Terry couldn't resist taking a swipe at Asda's plans to open 150 Living stores by 2015, announced by Andy Bond at Walmart's analysts meeting last week. "Three years ago they said they were opening 300, so I couldn't decide whether that was an increase or a decrease. I think you have to take it with a pinch of salt."
Tesco's strategy was still "to be as strong in non-food as in food", said group finance director Laurie McIlwee, and it would dedicate about a third of the planned 2.4 million sq ft of new floor space to non-food. "There's plenty of opportunity for us to grow into non-food, as there is for Asda. Both have a relatively low market share."
City analysts questioned whether Asda, which currently has non-food sales of £5bn, could leapfrog Tesco in five years through expansion.
"Unless they make an acquisition it's very unlikely. There's no way they're going to catch Tesco unless they do," said Seymour Pierce's Freddie George.
Tesco reported a 10% rise in pre-tax profits to £3.4bn for the year to 27 February. Total sales rose 7% to £56.9bn with like-for-likes up 3.2% for the year.
Tesco also sold property worth £1.8bn, resulting in profits of £377m up 60% on the previous year.