According to the group’s annual results published at the end of April, Tesco expects to launch new savings products and mortgages by the end of 2010 to 2011, with current accounts to follow in the second half of 2011.

The question is: should estate agents, mortgage advisers and lending institutions feel threatened, now that Tesco – the UK’s biggest supermarket chain – is going to sell mortgages, homes and personal finance along with beans, TVs and pretty much everything else? And, how will these market developments affect their revenue streams?

Firstly, let’s take a look at Tesco’s current offering. Apart from the group’s supermarket stores, superstores, and smaller branches (Tesco Express and Tesco Metro), Tesco has diversified into non-food sectors, such as homeware, and services including banking, fuel and telecoms.

Citigroup retail analyst David McCarthy commented: “[Tesco has] pulled off a trick that I’m not aware of any other retailer achieving. That is to appeal to all segments of the market.”

As of the year end of 2006, Tesco was the fourth largest retailer in the world behind Wal-Mart, Carrefour and Home Depot. It then moved ahead of Home Depot in 2007, by which time Tesco was operating almost 2000 stores in the UK with just over 285,000 staff. By May 2009, the total number of stores had jumped to 2282 – a 14.7% percentage increase in just 27 months.

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In December 2009, Tesco was leading the supermarket sector with a 30.5% market share compared to 16.9% for ASDA and a 16.3% market share for Sainsbury’s. By February 2010, the company’s annual turnover was £62.5bn.

By focusing on the customer’s needs and diversifying, Tesco has been successful and grown faster than the industry as a whole. Tesco’s strategy has been to continue to invest throughout the economic downturn in their customer offering, their stores and infrastructure. The aim has been to place the company in a position whereby it can grow faster and improve shareholder returns as the global economic recovery strengthens. According to Tesco’s latest financial results, the strategy has five elements: to be an international retailer; to maintain a strong core UK business; to be as strong in non-food as in food; to develop retailing services; and to put the community at the heart of what they do.

As part of this growth model, Tesco has announced that it is to ‘plough £1.6bn into rampant two million sq ft UK expansion’, and after that, it also announced plans to create four ‘mini-villages’, making the retailer a one-stop-shop for homes. Tesco is hoping to secure approval next month for 400 properties, a primary school, hotel and a park – all next to the Olympic Park in Bromley-by-Bow, east London. Tesco is also vying to build 200 homes in Streatham, South London, and 500 homes in Woolwich, South-East London and Dartford, Kent.

Despite its current success in the retail market, Tesco has only really dipped its toe into the waters of the property and financial markets. Can the retailer really compete against lenders, estate agents and mortgage advisers, who have years of expertise and knowledge of the property market?However, this could be about to change with the announcement of two new dedicated offices, both due to be completed in mid-2010; one in Glasgow, supported by Glasgow’s International Financial Services District; and one in Newcastle, supported by Tritax, one of the UK’s leading independent commercial property investment companies.

Indeed, for mortgage brokers and lenders, having a supermarket giant launch mortgage products direct to the consumer, could be a real concern. Tesco’s market share in the UK is considerable and the high street mortgage broker, as an individual business, simply does not have the same kind of infrastructure and support to help them offer a more competitive range of products. What Tesco does lack, however, are the years of experience in the mortgage market. The supermarket is a newcomer, and whilst the mortgage sector has come under fire in the past few years, the remaining stalwarts of the industry have seen the sector grow and shrink and consequently have gained experience of the customer’s needs.

For estate agents, Tesco’s initial forage into the market was fairly tentative. The number of properties on their virtual site, iSold, has in no way reached the levels that the more established property specialists have reached, and therefore they currently pose little threat to the agent. At the same time, iSold could be a great way to get across to mortgage brokers that they can also offer property sales through the virtual estate agent, and this could be great news for agents who have invested in their online services. Saying that, the numbers on the site are creeping up and agents need to be prepared. They will need to set up business plans, for example, to accommodate the lowest fees.

There are fears that if Tesco’s ‘one-stop shop’ can provide the mortgage, act as estate agent, provide a credit card and sell you a house, the retailer could end up with more personal data, particularly financial information, about the individual in question than any other institution.

This could be critical to Tesco’s success in the future. As David Black, banking analyst for Defaqto, commented: “Someone from every household has to go into a supermarket at least once a week, and Tesco has a big market share. They will have an awful lot of marketing clout to get products in the faces of their customers. If they harness promotion of their financial products with their clubcard points that could attract a substantial proportion of customers.”

The movement of Tesco into the estate agent, mortgage and banking markets should not be underestimated. Tesco’s influence in these sectors may indeed be small, but they could well build up to have a significant impact in the long term. Property specialists in the current market should be trying to diversify and advance their current offering to ensure that if Tesco does decide to exert more influence in terms of mortgage lending and housing transactions, the smaller independents have a service built on expertise and customer service to rival the corporate giant.

Robin King is a director of Movewithus