Tesco set to open new discount Jack’s store to rival Lidl and Aldi
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British supermarket operator Tesco is set to unveil a new network of Jack’s stores: a budget grocery concept it hopes will take the fight directly to German discounters Aldi and Lidl.
While the company has not made an official announcement, sources are reporting details leaked from multiple sources.
In the first phase of a roll-out program, Tesco plans to open 60 Jack’s stores, initially in main cities. A Liverpool outlet will reportedly open its doors within five weeks and staff are being recruited for at least another three stores, suggesting an opening is imminent.
A source revealed the chain will be called Jack’s and advertisements for staff refer to small teams in a new company that is operationally independent of Tesco.
Analysts suggest Tesco will be able to use its recently acquired wholesaler Booker to help supply stores and Jack’s limited range and compact footprint would differentiate it from full-service Tesco stores with large product ranges and Booker’s cash-and-carry model which primarily targets business and the foodservice sector, selling in bulk.
Some media have quoted inside sources saying the designs of Jack’s stores show “striking similarities” with Belgian chain Colruyt.
Tesco trialled a discount format called Victor Value in the 1908s, but scrapped the concept after four years, fearing it would cannibalise sales of its main network. But in today’s UK grocery market with Aldi and Lidl already accounting for 13 per cent of the British grocery market and achieving year-on-year sales growth around 8 per cent, cannibalisation is less of a concern than losing sales to rival chains.
Questions & Answers
Q.What is the initial scale of Tesco's new Jack's store roll-out plan?
What is the initial scale of Tesco's new Jack's store roll-out plan?
Tesco intends to open 60 Jack’s stores in the first phase of its roll-out program. These new discount outlets will initially be located in main cities across the UK.
Q.How will Jack's stores differ from standard Tesco supermarkets?
How will Jack's stores differ from standard Tesco supermarkets?
Jack's stores will have a limited product range and a compact footprint. This will differentiate them from Tesco's full-service stores, which offer a much larger selection of goods.
Q.What role might Tesco's wholesaler Booker play in the new Jack's stores?
What role might Tesco's wholesaler Booker play in the new Jack's stores?
Analysts suggest that Tesco will likely utilise its recently acquired Booker wholesale arm to help supply the new Jack's stores. This could streamline the supply chain for the discount concept.
Q.Why is Tesco launching a discount format now, despite past concerns about cannibalising sales?
Why is Tesco launching a discount format now, despite past concerns about cannibalising sales?
Tesco is less concerned about cannibalisation now due to the significant market share and growth of Aldi and Lidl. The priority is to compete directly with these discounters rather than lose sales to them.
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