Tesco set to open discount chain store to compete with budget supermarkets Lidl and Aldi

Tesco will open a new discount chain in order to better compete with budget supermarkets. The grocer could launch the brand as early as September, with the likes of Aldi and Lidl in its sights.

Retail insiders say Tesco might name its new brand Jack’s – a nod to founder Jack Cohen – after a division within the group tried to register it as a retail trademark. There will be as many as 60 stores, according to the Mail on Sunday.

Tesco is currently advertising for staff for new format supermarkets in Immingham, Lincolnshire, and Chatteris, Cambridgeshire. Both sites are owned by the company but have been unused for some time.

The brand also said two medium-sized Tesco Metro shops in St Helens, Merseyside, will soon open under a new name. The Guardian said workers at a doomed Tesco Metro in nearby Edge Hill have been told of potential new jobs at a new supermarket set to open within weeks.

Another reported location for Tesco’s new-style supermarket is in Wandsworth in South London. Online job adverts for Tesco’s discount supermarkets say: “The new retail format will be operated separately from the core Tesco business and as such benefits offered will be different from those offered at Tesco.”

Workers at closing Tesco Metro stores are being made redundant and will have to reapply for the new jobs. Apparently the new positions will pay £9 an hour – more than Tesco stores. Both Aldi and Lidl are known to pay more than the minimum wage.

Analyst Steve Dresser, of market researcher Grocery Insight, said: “It’s difficult to take on Aldi and Lidl, but if Tesco can get it right this could run and run.” According to Mr Dresser, Tesco, the UK’s biggest supermarket group, has been looking through its 3,400 stores in order to identify which should be transformed.