Tesco unveils new budget supermarket chain

Chief executive Dave Lewis said the chain would sell 80 per cent British produce.
Chief executive Dave Lewis said the chain would sell 80 per cent British produce.
0
Have your say

A new budget supermarket chain owned by Tesco has been unveiled in a bid to take on German discounters Aldi and Lidl.

The new format Jack’s, named after Tesco founder Jack Cohen, was set to open in two locations in England tomorrow and is due to roll out to around 15 more UK-wide over the next six months. Tesco refused to comment on whether any branches will be located in Scotland but said it would not rule out sites north of the border.

Products grown or manufactured in the UK are set to make up 80 per cent of all items sold, the firm said, while 1,800 of the 2,600 brands will be under Jack’s own label. Unlike the main Tesco stores, checkout staff will wear their own clothes with a branded apron over the top, rather than a uniform.

Tesco boss Dave Lewis said the prices will be “the cheapest in town” at each location.

“We leverage the size and expertise that’s available to Tesco and Tesco partners and we bring that capability to Jack’s in an operating model that is lower and we pass that benefit on to our customers,” he said.

He added that the move, which has been under discussion at the supermarket for more than two years, is in response to consumer desire for a “smaller, simpler range at shops. The stores to follow will include a mix of entirely new sites, sites adjacent to existing Tesco stores, and a small number of converted Tesco stores.”

In addition to the Jack’s brand, Jack’s will stock some familiar grocery brands and a range of general merchandise on a “When it’s Gone, It’s Gone” basis.

The budget retailer will not offer an online shopping facility, but will allow customers to self scan through the Jack’s Shop Smart app on their phones.

Leigh Sparks, professor of retail studies at Stirling University said: “It is an interesting move. This has been on the cards for some time. The thing that surprises me is that they’re putting an own brand label on Jack’s it is basically a copy of Aldi and Lidl.”

He added: “This reflects the strength of Aldi and Lidl and the volume of their market share.”

He said plans to sell 80 per cent British produce could prove a point of debate north of the border.

“It will be interesting to see how this plays in Scotland, if they open here,” he said. “Aldi and Lidl play very heavily on Scottisdh produce, so they might have to try to replicate that.”

The first two stores are set to open on Thursday in Chatteris, Cambridgeshire, and Immingham at formerly “mothballed” Tesco sites.

The latest figures by Kantar Worldpanel, for the three months to 9 September found that Aldi and Lidl had grown their respective market shares to 7.6 per cent and 5.5 per cent respectively, while Tesco remains the biggest player with 27.4 per cent.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “With its heavy Union Jack branding and promises on provenance Jack’s is clearly looking to make its name as a solid British retailer. Nearly half of shoppers try to buy local produce when they can so it could be a savvy move, though it’s still very early days.”

A proposed merger of Asda and Sainsbury’s is under investigation from the Competition and Markets Authority.