Discount wars! Tesco takes on Lidl with budget chain
TESCO has begun a major fightback against its low- cost rivals with a new discount chain stocking mostly British produce.
Jack’s, named after Tesco founder Jack Cohen, opens its first two branches today and ten to 15 more are planned over the next year.
In a direct challenge to German-owned rivals Aldi and Lidl, Tesco has pledged that Jack’s will be the cheapest store in town and that eight out of ten products will be grown, reared or made in Britain.
The launch is a bold move by Tesco chief executive Dave Lewis, 53, to restore the company’s image following a major accounting scandal in 2015 that wiped £2billion off the chain’s market value.
Five of the new stores were Tesco branches left empty after the scandal forced it to row back on openings.
Branches of Jack’s will stock only 2,600 product lines compared to 35,000 in an average Tesco – and 1,800 of them will be the new chain’s own-label food and drink. Bosses say they can charge lower prices thanks to this limited range and by using cheaper packaging.
Jack’s will not offer online shopping and its customers will not be able to use Tesco Clubcards in the stores.
Tesco, 100 years old next year, is the largest store chain in Britain, but along with other established chains has been losing market share to lower-priced Aldi and Lidl.
As shoppers increasingly demand home-grown produce, Jack’s will stock potatoes from Cornwall, craft beer from Derbyshire and lamb from Hertfordshire. All UK produce will carry a Union Jack and name the exact region it comes from. Products shipped from overseas will be clearly labelled ‘imported by Jack’s’ with details of the country of origin. Jack’s will also sell big brands such as Bovril, Heinz baked beans, Diet Coke and Cadbury chocolate. Mr Lewis said: ‘The intention is for us to be cheapest in town.’
Prices range from 59p for six Cox’s apples to £2.49 for a sirloin steak. The stores will also sell discounted products such as vacuum cleaners and laptop computers, available for a limited time.
The two stores opening today are in Chatteris, Cambridgeshire, and Immingham, Lincolnshire. Each branch of Jack’s will employ 20-25 workers and have more selfcheckouts than staffed tills. Staff will be paid £9 per hour against
‘Aldi and Lidl aren’t going anywhere’
Tesco’s new rate of £8.42. However, Jack’s employees will not get Tesco staff’s bonuses and 10 per cent discount in stores.
Jack Cohen launched his first business on a market stall in 1919 in London’s East End, taking the name from a tea supplier and the first two letters of his surname. Bryan Roberts, a grocery expert at TCC Global, said ‘Aldi and Lidl are also very strong on British goods, so this is by no means a unique selling point to Jack’s.’
And Natalie Berg of analysts NBK Retail, said: ‘Tesco couldn’t pay the discounters a greater compliment. This launch is an admission that the likes of Aldi and Lidl have fundamentally changed the way we shop.
‘So what’s next? At best, Tesco will have regained some share. At worst, Jack’s becomes a distraction. Either way, Aldi and Lidl aren’t going anywhere.’
A £15billion merger between Sainsbury’s and Asda is to be probed by the Competition and Markets Authority amid fears it could push up prices. The two store giants, which together take £1 of every £3 spent on groceries in Britain and operate 617 fuel forecourts, insist the deal will help them to cut prices.