Tesco unveils new discount chain Jack's to rival Aldi and Lidl

Mae Love
September 22, 2018

The brand is being widely hailed as a challenger to Aldi and Lidl, which have eaten into the market share of Britain's so called "big four" supermarkets.

“Its fitting that today, we mark the beginning of Tescos celebration of 100 Years of Great Value by launching a new brand, and stores bearing his name: Jacks.

Shares in Tesco were up 0.5 percent at 236.3 pence in late trading on London's benchmark FTSE 100 index, which was half-a-percent higher overall.

With the new chain, Tesco has to walk a fine line, challenging the discounters while avoiding cannibalization of its main store brand with lower prices.

Crowds lined up at 3am outside Jack's, Tesco's new discount stores on Thursday to check out the unique low-price offerings.

Tesco has launched its new discount store format named after its founder as it attempts to take the fight to German discounters Lidl and Aldi. "Great tasting food at the lowest possible prices, with eight out of 10 products grown, reared or made in Britain".

In addition to Jack's products, the stores will stock some familiar grocery brands and a range of general merchandise.

Tesco unveils new Jack’s concept
Delia Fernandez who queued from 3am for the opening

The stores to follow will include a mix of purpose-built locations, as well as those that will operate quite literally next door to already existing Tesco stores.

The flag-waving also lets Tesco contrast its United Kingdom roots with the German ownership of Lidl and Aldi, at a time when Brexit has heightened some Britons' awareness of nationality.

Tesco is Britain's grocery market leader with a share of 27.4%, while Aldi and Lidl have increased their combined share to 13.1%, according to the Kantar Worldpanel data.

Over the next six months Tesco will launch 10 to 15 Jack's stores in the UK.

Sainsbury's and Walmart-owned Asda, meanwhile, are trying to improve their fortunes with a planned merger. Sainsbury's dabbled in the space with a string of Netto stores with the Danish chain's parent group in 2014 but was forced to shut them two years later, while Asda's Essentials chain was closed in 2006 after it struggled to make a profit.

Tesco tried to go down the discount route in the 1980s, with its Victor Value brand.

"It won't be easy to crack the discount market though, even for a brand of Tesco's size", said Gordons law firm partner and head of retail Andy Brian. The shares marginally underperformed the broader United Kingdom market, with the benchmark FTSE 100 index adding 30.89 points to close 0.42 percent higher at 7,331.12, as investors digested the latest developments between the U.S. and China.

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