Tesco enters the discount store wars

TESCO is taking the fight back to Aldi and Lidl by creating its own version of a no-frills supermarket under the brand name Jacks, named after the company’s founder, Jack Cohen.

Supermarkets have already had a foray into the convenience store sector, which has long been saturated by independent shopkeepers and cooperatives.

But will Tesco win this new fight against the German discounters?

Lower prices and scale will be the answer to this question and this will only become apparent when we know how many new stores are rolled out throughout the UK and become established.

In the short-term it is expected that up to 15 stores will be opened in the next six months.

The idea is similar to the model of Kwiksave, Aldi and Lidl in that it will be smaller in size and carry a more limited product range under its own label of Jacks.

The shopping habits of UK consumers have changed as a result of the arrival of Aldi and Lidl, in that brand appeal within shops has been outweighed by value for money.

In order to keep costs down, the Jacks stores will not be aesthetically pleasing but more basic and functional.

Is there place in the discount sector for another player to come in and take on the established German discounters?

Is this Tesco taking on Aldi and Lidl at their own game rather than trying to adopt the historic tactics of attracting customers by cheaper petrol, 3-for-2 offers and loyalty schemes?

Sainsburys has taken a different route by trying to add new dimensions through its takeover of Argos and potentially Asda in the New Year, subject to getting regulatory approval.

That is not to say Tesco has not tried to conquer the food sector in different ways as it was not so long ago that it took over the Booker’s cash and carry.

It will be interesting to see next year what happens when figures are published about consumer spending in the sector how much of every £1 spent continues to go to Aldi and Lidl and how much is taken by Jacks. Colin Rodrigues is head of the corporate team at Hawkins

Hatton