£2.5bn profit for Tesco as supermarket vows to get bigger

As the company unveiled plans for further expansion, critics last night warned Britain was in danger of turning into a 'one supermarket state'.

The country's biggest and most profitable retailer already has nearly 2,000 shops but wants to open another 142 over the next year.

The supermarket chain, dubbed the 'King Kong' of the retail jungle, already takes almost £1 in every £3 spent in grocery stores in Britain.

Tesco now controls 31.2 per cent of the grocery market, nearly double that of its closest rival Asda, with just 16.9 per cent.

It is a far cry from the company's roots as a humble market stall in the East End of London selling surplus groceries.

Tesco now employs 400,000 staff around

the world, equal to the population of Liverpool. Another 25,000 workers will be recruited over the next 12 months.

Yesterday critics urged the Competition Commission, currently investigating the supermarket industry, to rein in the company's advance.

Andrew Simms, policy director of the New Economics Foundation and author of the book Tescopoly, said urgent action is needed. He said: 'Unless the Commission proves it is up to the task in hand, the endgame could be Britain turning, in effect, into a one supermarket state.'

The rise of Tesco has coincided with the closure of independent shops at the rate of 2,000 a year.

Nick Goulding, chief executive of the Forum of Private Business, said: 'The Competition Commission must answer the question - Is King Kong Tesco playing by the rules? We know that smaller retailers in this sector are struggling because of the influence of their larger competitors.

'The buying power of the supermarkets allows them to squeeze suppliers, the financial clout of the supermarkets allows them to bully planning committees and hog more than their fair share of land.

And the aggressive pricing tactics of supermarkets undermine the profitability of their competitors.'

The environmental charity Friends of the Earth said it was time to 'curb the power of the Tesco juggernaut'.

The company's annual results show that it is becoming equally powerful in 'non-food', including everything from clothes to toys.

Chief executive Sir Terry Leahy has previously stated he wants the business to be 'as strong in non-food as in food'.

Last night he said the recordbreaking figures showed the company is 'coping well with challenging conditions in some markets'.

Yesterday's results show total sales of £46.6 billion, equal to roughly half of the entire economic output of Ireland.

Around £10.4 billion came from non-food sales, five times' the total sales of Debenhams.

Nearly every single area of nonfood showed huge growth, with consumer electronics up 35 per cent, toys and sports goods up 30 per cent and clothes up 16 per cent.

A Tesco statement said: 'These areas provide exciting growth opportunities.'

Foreign expansion is also part of Tesco's ambitious plans for the future. It already has stores in China, Korea, Malaysia, the Czech Republic, Poland, Turkey, Slovakia and Hungary, opened 484 stores overseas last year and plans to open another 442 during the current financial year. Tesco is also due to open its first American store, on the west coast, later this year.

Yesterday Sir Terry denied that Tesco has a virtual monopoly in this country. He said: 'If we were to raise prices, shoppers would simply go elsewhere. Consumers are very happy to switch.'