Tesco launches new budget supermarket to rival Aldi and Lidl

Roman Schwartz
September 22, 2018

The budget store, in Fenland Way, opened to shoppers today after the Jack's brand was launched yesterday by Tesco chief executive Dave Lewis.

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.

"It's fitting that we mark the beginning of Tesco's celebration of 100 Years of Great Value by launching a new brand, and stores bearing his name: Jack's".

"This is first and foremost about how we celebrate the centenary", Lewis told reporters at the Chatteris store, which was built as a Tesco supermarket but mothballed in 2015 when the group was in crisis.

"Prior to the rumoured launch of Jack's, Tesco said it would remove up to 30% of its product lines as part of its Project Reset".

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

Tesco said that the chain will "operate a low-cost business model" that aims to keep costs low and prices down.

Jack's stores will be a mixture of entirely new sites, sites adjacent to existing Tesco stores, and converted Tesco stores.

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John Perry, managing director of SCALA, added: "With discount retailers Lidl and Aldi reported to control around 13% of the United Kingdom grocery market, it's no surprise that retail giant Tesco has launched its own discount chain, Jack's".

Tesco said that 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.

"It lets Tesco take the fight to the discounters on a level playing field - no need to dilute margins at core Tesco, just offer something different to the more value-conscious customers".

According to Kantar Worldpanel, in the 12 weeks ending 9 September 2018, Tesco has a 27.4% share of the United Kingdom grocery market. "Great-tasting food at the lowest possible prices with 8 out of 10 products grown, reared or made in Britain".

A second Jack's store was opened in Immingham, to be followed by another 13 over the next six months.

Sainsbury's, which confirmed its merger with Asda earlier this year, has a 15.4% share of the market, while its Walmart-owned partner has 15.3% share.

Sainsbury's tried a similar tactic in 2014, opening a number of Netto stores which where subsequently closed two years later. 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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