Earlier today (20/09/2018), Tesco announced the launch of their new discount chain, set to challenge the continuously rising dual threats that are Aldi and Lidl.
Called ‘Jack’s’, the first store is located in Chatteris, Cambridgeshire, in a former Tesco location, with another outlet in Lincolnshire opening on Thursday, although this site in Immingham is not in a previously owned Tesco building.
So far, between 10 and 15 branches of Jack’s have been planned, located either near to existing Tesco stores or in former Tesco metro sites. The brand has been named after Tesco’s founder, Sir Jack Cohen, with Tesco’s chief executive, Mr Dave Lewis, announcing that this new chain would seek to set prices lower than Aldi and Lidl, offering customers a new option when it comes to cost-effective products.
It is estimated that Jack’s stores will only sell approximately 2,600 products, which is only a small fraction of the 35,000 products housed by the average Tesco supermarket. Of these, it is suggested that 1,800 will be Jack’s branded products, which will be set at a low price. In comparison, a typical Aldi store carries approximately 1,800 different products.
Following the trend of its two German rivals, Jack’s supermarkets will also have a WIGIG retail aisle, a ‘When it’s Gone it’s Gone’ section that houses non-produce items at significantly discounted prices.
Aldi and Lidl have plans to significantly expand their UK market presence in the coming years, with both expecting to launch between 250 and 300 new outlets. As such, this suggests that there is still plenty of room for discount supermarkets within the UK, and Tesco may well be able to capitalise on this.
Along with seeking to compete against their German competitors within the discount supermarket industry, Tesco is looking for a way to stabilise its finances and business future. This is even more relevant in the current market since it now faces increased risk and a potential loss of market share due to the recent announcement of Sainsbury’s and Asda merging; a £15 billion deal which is currently being investigated by the Competition and Market’s authority.
Despite this, Tesco has suggested that at the present moment, it is only investing a modest £25 million into the new Jack’s franchise. This should give them enough money to see if the idea takes hold, and if consumers will be drawn to this new chain – given the popularity of discount supermarkets in the UK, the question now is whether Tesco can successfully capitalise on what used to be a purely German-owned market.