TESCO edged out Dunnes Stores to win the pre-Christmas retail war - the British chain captured 23.9 per cent market share, nearly two points ahead of its indigenous rival.

Sales in Tesco's international division, including 76 outlets in the Republic, climbed 25 per cent year-on-year in the seven weeks to January 4th, although groceries revenue in the Republic was flat over the past 12 months despite three new store openings.

But it is its pre-Christmas triumph over Dunnes Stores which will most hearten Tesco Ireland executives. Data compiled by market researchers Taylor Nelson Sofres (TNS) reveals the retailer won nearly a quarter of the core grocery market in the 12 weeks to the end of December.

Dunnes trails closely behind with an estimated 22 per cent share, followed by SuperValu at about 19 per cent. SuperQuinn, had a disappointing Christmas with market share slumping below 10 per cent.

Based on the monthly home purchases of 1,350 consumers across the state, the Taylor Nelson Sofres retail sharewatch measures sales of fresh foods, packaged groceries, toiletries, healthcare products, beer and wine but omits deli items, newspapers and tobacco.

Though Tesco's advantage over Dunnes appears slender, margins in the retail sector are extremely tight with even a moderate fall in market share potentially slicing millions off profits, according to industry analysts.

Grocery sales figures, however, do not reflect accurately Dunne's dominance of the wider retail market, as it excludes clothes and fixtures turnover - a major profit generator for the chain, according to Mr Terence Cosgrave, editor of Retail Intelligence.