Motor scooters, power breakers, perfume, even designer jeans... it's amazing what you can find in grocery retail these days. In the past 18 months almost every grocery retailer has made non food a priority for expansion, driven by the infinitely better margins it offers compared with the dismal returns on food. Following Wal-Mart's acquisition of Asda last year, the competition to develop non food lines has intensified, spurring on the creation of the one stop shopping concept. It has also unleashed a fierce price battle, particularly among electrical and leisure goods and health and beauty products, in a bid to snatch custom from the high street, e-commerce suppliers and other grocery retailers. This month Asda is stepping up the price war by giving its George clothing brand the Rollback treatment for the first time. George merchandising director John Hogan says core lines are being slashed by 20-30%, while many others will be cut by 10%. And it's being achieved by bringing Wal-Mart/Asda's phenomenal buying power to bear on manufacturers. "We deal only with manufacturers, never third parties. Rollback's introduction coincides with George's 10th anniversary and is supported by a TV campaign this month," says Hogan. George clothing takes an average 15% of Asda's floor space and achieved 17% sales growth in the second half of last year. Hogan says the key growth drivers are children's clothing and schoolwear. "Schoolwear sales were £4.5m three years ago and are now more than £25m. We've done it by improving quality and bringing down prices." George will be an intrinsic part of the 12 stores concentrating on non food that Asda plans to open this year. The multiple, along with others, sees electrical goods, home and leisure and health and beauty as key areas for development. In the £1.1bn health and beauty market, the multiples have already taken control, using price to build their position, according to a recent Verdict report. The retail consultancy says the multiples now command 42% of consumers' spend on toiletries, cosmetics and OTC medicines, beating sector specialists such as Boots and Superdrug. However, retail analyst Brian Roberts of Retail Intelligence believes there's scope for improvement in the way the multiples address this market. "Their offer is hit and miss, particularly in specialist areas such as perfumery where they don't have the merchandising, atmosphere, depth of range and service levels needed. Asda's perfume range is patchy and because of this lacks authority. "Boots hasn't been hit as hard as people expected because it provides the service in specialist areas that customers need," maintains Roberts. In the non food battle, Tesco's latest weapon is electrical departments in seven Extra stores last November, which will be introduced to a further 50 stores over the next 18 months. Price cutting is at the heart of its strategy to capture sales. Director John Gildersleeve says up to 20% has been slashed off Argos' prices for the 100 top name electric items, which range from televisions and videos to vacuum cleaners and blenders. He says: "Customers know they can buy for less at Tesco ­ even compared with catalogue shops. That's why we sold more than 250,000 TVs in six months last year. By using the grey market in Europe we can sell for less in the UK." Tesco spokesman Simon Soffe says personal computers and mobile phones are also selling "brilliantly" along with one-off when it's gone, it's gone lines' such as the motor scooters for less than £1,200 which the multiple was offering last summer. Soffe claims that consumers are knowledgeable about hi-tech products. "On the whole, they've done their research, know what they want and don't want to be told. But we provide hotline numbers to deal with computer queries." With the growth of electricals, the multiples are also seizing the opportunity to sell small appliances and accessories, says Greenbrook Electrical marketing director Michelle Reardon. The company has repackaged its power breakers, smoke detectors, extension leads, door chimes and timers in vibrant colours to give them the visual impact necessary to capture impulse sales. "As many of these products are not frequent purchases, it's important to make packaging and point of sale merchandising impactful to stimulate sales in the grocery environment," says Reardon. Increasingly, non food is becoming the mechanism for reinforcing the point of difference between multiples. Sainsbury, for example, has differentiated its offer by installing Early Learning Centre (ELC) fixtures in more than 200 stores over the past two years. It is now taking the concept further. Its West Hove store, which opened last year, has an enlarged 40ft ELC fixture coupled with a babycare section, Adams' children's clothing and an extensive cookshop range. Its newly extended Epsom, Surrey, store has similar size ELC fixture plus a large aisle of branded toys ­ its first move into this area. Smaller retailers aren't being left behind, either. Budgens senior trading controller Andy Smith says that although the group's average store size is 4,000 sq ft, non food is growing and accounts for 10% of turnover. He lists stamps, mobile phones and phone cards, batteries and paper products as key areas of growth for the chain. "We're also giving greater emphasis to health and beauty with merchandising and fixtures that are more consumer friendly," he says. Last November the company introduced one off lines such as a CD/tape/radio system for £29.99 promoted through a point of sale display, which Smith says has been very successful. "We will be doing more of this as and when we get good deals from manufacturers." Costcutter trading manager Robin Hemingway lists videos, CDs, cassette tapes, car care, cards and stationery, batteries, flowers, and fuel such as coal, logs and gas as main growth areas. But the aspect he is most excited about is top up mobile phone cards. "It's a massive market for us. We estimate it'll account for 13% of our turnover if the growth rate continues. One store is doing £10,000 a week in top up cards." Costcutter is currently trialling a machine that will print top up cards for any network. "We plan to launch it in July," says Hemingway, "and we're also looking at using it to print railway, London Underground and local car parking tickets. It offers a big future for convenience stores." n {{FOCUS SPECIALS }}