By James Arnold BBC News Online business reporter

Don't walk past; come in. Please.

Christmas is, of course, a time of mixed blessings: joy for some, misery for others.

For Britain's battling retailers, the festive cheer seems to have been dealt out especially unevenly this year.

The Christmas trading statements currently trickling out from retailers brutally underline a phenomenon that has been clear for months.

A small group of the most aggressive supermarkets - notably Tesco and Asda - are eating the lunch not just of other supermarkets, but of some of the High Street's biggest names.

How much further can it go?

The bleak midwinter

It was not, to say the least, a Christmas to cherish.

Overall sales - calculated on a "like-for-like" basis at stores that were in existence a year earlier - were down year on year in December, according to the British Retail Consortium.

Some big names have already admitting a mauling: Marks & Spencer suffered from glitches in its clothing ranges, while margins at both Matalan and WH Smith were battered by over-enthusiastic discounting.

Results due out from Woolworths and HMV are tipped to be no better.

At the same time, some retailers have scored.

Tesco and Morrison supermarkets had stellar seasons. Asda, whose results are buried inside those of US parent Wal-Mart, may have beaten the lot: Wal-Mart's international operations as a whole enjoyed a 17% increase in sales over the holiday period.

Three's a crowd

In a stagnant overall market, gains can only be made by poaching from other retailers.

CHRISTMAS RETAIL SALES Morrison: +10.2% Tesco: +7.5% Dixons: +4% Sainsbury: +2% Iceland: +1.9% WH Smith: 0 Marks & Spencer: -2.3% Matalan: -5% Note: Like-for-like sales for approx six weeks to 4 January, compared year on year.

For the past few years, Asda and Tesco have made hay at the expense of more sluggish rivals such as Somerfield, Safeway and - most notably - former market number-two Sainsbury.

Sainsbury's UK market share has fallen from 19% in 2000 to 16% now, falling behind Asda, mainly thanks to the perception that it offers poor value for money.

"Until not long ago, if you wanted balsamic vinegar, you had to go to Sainsbury's," says one brokerage analyst.

"Now you can get that sort of stuff anywhere, and without feeling you're paying top dollar."

Sainsbury's has striven to advertise itself on price, and has poured money into sweeping discounts - but without the slightest blip in sales.

"They have a Home Counties bourgeois image, and they seem to be stuck with it," the analyst says.

Forget food

But beating up Sainsbury gets boring after a while. Now, Tesco and Asda are hunting more ambitious game.

Sainsbury is swanky, but is it savvy?

Supermarkets have always sold non-food items like washing-powder and painkillers, and for years have stocked the odd opportunistic CD or T-shirt.

Now, however, the push into non-foods has gathered momentum.

Half the new retail space Tesco added last year was devoted to non-food items, notably electronics; now, it claims a 5% UK market share.

Asda now reaps more than one-fifth of its revenues from non-foods, mainly in response to prompting from Wal-Mart, which as well as being the world's biggest supermarket is also its biggest clothing and personal-supplies retailer.

This Christmas, selling chart CDs for less than �10 and DVDs below �13, they cleaned up in one of the few bright spots in an otherwise dismal season.

The lure of the �4 trouser

So far, this effect has hit certain markets disproportionately.

Try our clothes for size, says Tesco's Terry Leahy

High Street CD and DVD retailers like Woolworths and HMV should be seriously worried, says Paul Smiddy, retail analyst at Robert W Baird.

"A CD is a CD: there's nothing that [High Street] retailers can do to sell it more attractively."

Boots, whose core market of health and beauty products has already been snaffled by supermarkets, is reckoned to be highly vulnerable too.

It has carved out market-leading positions in niche businesses such as film processing, gifts and snack foods, but now looks hopelessly muddled to many analysts.

Meanwhile, supermarkets are still hungry.

Having made good money by colonising markets as diverse as pharmaceuticals and financial services, they are now going into fashion in a big way.

Asda has launched stores dedicated to George, its clothing label; Tesco launched its Cherokee label last year, and sells 30,000 pairs of its �4 Value Jeans every week; Sainsbury says it will launch its own brand in the autumn.

Street-smart

Can the High Street hold back the tide? Don't write it off just yet.

Is there a cure for Boots' ills?

First, supermarkets are unlikely ever to compete on anything much more sophisticated than convenience and price.

"Who would be really happy to say that their new jacket came from Tesco?" asks Alistair Charatan, head of retail at PA Consulting.

"Most people would be quite embarrassed at that, which leaves a huge gap in the market for the established clothing retailers."

Second, precedents suggest that intense supermarket competition need not smother a market.

Quite the opposite: when restrictions on book prices were abolished in 1995, many predicted that cheap supermarket sales would ruin the sector's diversity.

In fact, says Mr Charatan, supermarkets focused on selling large quantities of a few titles to non-bookish shoppers, some of whom were inspired to buy more at well-stocked High Street shops.

Ins and outs

Third, there is still plenty of life on the High Street.

At the end of 2002, Tesco bought the 862-strong T&S convenience store chain, and aims to convert more than half those outlets into Tesco Express neighbourhood shops.

Sainsbury plans to open 100 more local stores in conjunction with Shell; its first new outlet opened last month.

Even Ikea, the furniture retailer seemingly most wedded to the notion of cavernous out-of-town retailing, has said it is developing a small-store town-centre concept.

Optimists point to France, where many years' experience of aggressive hypermarket retailing has, if anything, left High Streets more charming than before.