Tesco has recoveredmost of its lost ground

In the battle of the supermarket trolleys, Tesco is now clearly gathering ground at the expense of its arch-rival, J Sainsbury. While Sainsbury is busy pursuing the do-it-yourself brigade and expansion opportunities overseas, Tesco is taking the safer course - for the moment at least - of trying to put some sparkle back into its UK operations.

Impressive looking results from Sir Ian MacLaurin's men had the companies squabbling over whether Tesco had or had not retaken the lead in the packaged groceries market. The answer seems to be that it all depends on which segment of the basket you want to measure. All good sport for those who are paid to worry about such things. Those with less time will look to what the market is saying: and here the message isunambiguous.

Sainsbury, which reports next month, is the bigger company on any measure that matters to its shareholders, including margins, market share and return on capital. But the gap is narrowing. Having underperformed Sainsbury by 40 per cent between 1990 and 1993, Tesco has now recovered most of the lost ground. Sainsbury's certainly seems to be the more aggressive - or risky - strategy, and nobody should discount its formidableretailing skills.

The key question for both remains how to keep growing in a marketfast approaching saturation. The scares of endless price wars a year ago now seem to be receding, judging by the share price performance of thesector in the last year.

The trend towardssmaller high street sites, such as Tesco's Metro stores, shows the great flight to the suburbs and out-of-town roundabouts is no longer all one way. The betting must still be that Tesco will eventually come to the view, as Sainsbury has done, that it needs a new bow to its arrow.