Tesco launches discount store Jack's to take on Lidl and Aldi

Irving Hamilton
September 22, 2018

The retailer, which has around 50 stores in Northern Ireland, is establishing the brand in a bid to fight off the challenge of German discounters Aldi and Lidl.

Private-label products, featuring a red Jack's logo and sometimes adorned with British flags, make up more than half the total range.

Tesco boss Dave Lewis said the prices would be "the cheapest in town" at each location.

"We only have plans for 10-15".

Some Tesco investors were, however, thrilled.

Commenting on the announcement, John Perry, managing director of SCALA, a leading provider of management services for the supply chain and logistics sector, said, "With discount retailers Lidl and Aldi reported to control around 13 per cent of the United Kingdom grocery market, it's no surprise that retail giant Tesco has launched its own discount chain, Jack's".

"I wanted to see the different bargains that they've got and to have a good look", she said.

Tesco said eight out of 10 Jack's food and drink products will be "grown, reared or made" in Britain and stores will stock an own brand range, also branded Jack's.

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The tie-up between Tesco's two nearest competitors, which regulators said would be scrutinised in depth, is also driven by the rise of the discounters.

Head of retail and consumer insight at Kantar, Fraser Mckevitt, said that just £1 out of every £10 is now spent at discounters, with United Kingdom consumers shopping at "the big four" more frequently.

The growth comes after a turbulent period for Tesco. It is a significant move by Lewis, who has rebuilt Tesco after a 2014 accounting scandal capped a dramatic downturn in trading.

Unlike Tesco, Jack's will not have an online offering and customers will not be able to use their Tesco clubcard.

The German discounters continue to make inroads, with Aldi's share of United Kingdom grocery sales rising to 7.6% in the 12 weeks through Sept 9 from 7% a year earlier, according to Kantar. Next is Co-op with 6.6%, then Lidl at 5.5% followed by Waitrose at 5.1%.

Tesco plans to open between 10 and 15 branches over the next year in the United Kingdom, investing at least £20m (€22.5m) in the project and creating 250 jobs.

"If a standalone discount store isn't making money in cash, I would imagine they would shut it", said Alasdair McKinnon, investment manager at Tesco shareholder Scottish Investment Trust, in a phone interview.

Cheap it might be, but Jack's will struggle to be the best discounter in its sector.

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