Tesco PLC (LON:TSCO) has unveiled its new cut-price supermarket chain, aimed at heading off the challenge of Aldi and Lidl.
As widely anticipated, the chain is called Jack’s, in homage to Tesco founder, Sir Jack Cohen.
READ: Tesco to launch new discount chain called Jack's next week - reports
The first outlet is in Chatteris, Cambridgeshire in a store that was originally intended to be a regular Tesco branch, before “Drastic” Dave Lewis joined as company boss and put a halt to the overstretched company’s expansion drive.
A second branch will open tomorrow in Immingham, Lincolnshire. The group plans to open 10-15 Jack’s stores over the next six months, some of which will be converted Tesco outlets.
That sort of expansion will not put the frighteners on Aldi and Lidl; together they have more than 1,300 stores in the UK and are planning to open a further 250 to 300 over the medium-term.
Don’t bother taking your Tesco Clubcard along, however, if a branch of Jack’s opens near you; the stores will not accept them.
Don’t bother looking for a Jack’s online, either, as it will not be offering online ordering – and small wonder when some of the same products will be available in Tesco’s at a much higher price.
Lewis claimed that Jack’s would be cheaper than Aldi or Lidl, both of which have been voraciously eating into the market share of market-leader Tesco and the rest of the big four – Sainsbury’s, Asda and Morrisons.
A standard Tesco store stocks around 35,000 products whereas a typical Jack’s shop will carry around 2,600 lines, of which 1,800 will be own-brand products.
The company is also playing up the strong presence of British goods among the product lines, with eight out of 10 food and drink products grown, reared or made in Britain.
"#Jacks will proudly support Britain's food producing communities. 8 out of 10 food and drink products at Jack’s will be grown, reared or made in Britain and stores will stock a unique own brand range, also named Jack’s as a mark of quality and value." says Lewis pic.twitter.com/qJRUmpU8WZ
— The Grocer (@TheGrocer) September 19, 2018
Having said that, the company is not above borrowing some ideas from the German discount chains and, like Aldi and Lidl, will have a central aisle offering a bewildering rag-bag collection of food and non-food bargains that Tesco is referring to WIGIG – when it’s gone, it’s gone.
It has come up with some semi-original ideas, however, such as the facility to scan and pay for their shopping with a mobile app.
Great quote from Tesco CEO on whether new Jack's stores will eat into Tesco's market share: "I’d rather cannibalise myself than have somebody else cannibalise me”https://t.co/noqA0933Ll
— George Ryan (@GeorgeMRyan) September 19, 2018
The new format marks a return to Tesco’s “pile ‘em high and sell ‘em cheap” philosophy of its eponymous founder.
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It’s also not the first time Tesco has tried to carve-up both ends of the market; in 1968 it bought the Victor Value chain, and although many of the chain’s outlets were converted to the Tesco format, many remained to serve the bottom end of the market until the chain was sold to frozen foods specialist Bejam (which was subsequently taken over by Iceland) in 1989.
It’s also not the first member of the Big Four supermarkets to try to take on Aldi and Lidl at their own game, as Sainsbury’s teamed up with Danish hard-discounter Netto in 2014 to open up several stores, only to abandon the experiment in 2016.
In the preceding decade, Asda’s Essentials chain also failed to last the course. It remains to be seen whether Jack’s will hit the jackpot.