New front in the war against Aldi and Lidl

Tesco and Sainsbury’s plan store shake-up

BriTAin’S largest supermarkets have announced a change of tack in the battle to fend off discounters Aldi and lidl.

Sainsbury’s will close 125 stores to cut costs and shift focus on to convenience stores as a plan B after its failed merger with Asda.

Amid struggling sales, it hopes to find £500m of savings over five years by knitting the food business more closely to Argos, which it owns.

At the same time Tesco said it was converting one of its experimental Jack’s branded stores back to a Tesco.

The Jack’s stores, named after Tesco’s founder Jack Cohen, were launched to much fanfare a year ago as a potential challenger to discounters.

But the outlet in rawtenstall, east lancashire, is now being turned back into a Tesco, which said it was pressing ahead with the new format elsewhere, opening three more Jack’s stores by Christmas, taking the total number to 12.

Both Tesco and Sainsbury’s are under enormous pressure by the march of lidl and Aldi, who last week posted record sales.

Aldi is to expand to 1,200 stores by 2025, just 200 fewer than Sainsbury’s, and launch an assault on the convenience store market. The move opens a new front in the war with Tesco and Sainsbury’s, who have both suffered from lacklustre sales growth.

Sainsbury’s yesterday reported a 0.2pc fall in like-for-like sales in the 12 weeks to September, excluding fuel.

Chief executive Mike Coupe said the 125 store closures and running Argos and Sainsbury’s operations together would help find £500m of savings and boost profits by £20m per year.

up to 70 Argos stores, 15 supermarkets and 40 convenience stores will close, to be replaced by ten new supermarkets and 110 convenience stores.

Around 80 Argos outlets will open inside existing Sainsbury’s supermarkets. Sainsbury’s has owned Argos since a £1.4bn takeover in September 2016. The cost of the closures will be between £230m to £270m.

Coupe refused to say how many staff would be made redundant or forced to move to a new location or job. He also declined to say he would be in post beyond 2020, stoking rumours that a replacement is being sought.

The companies’ profits before tax have fallen from £548m in 2016, to £239m last year.

Sainsbury’s will no longer provide mortgages but it plans to grow the number of store and credit cards it hands out.

its shares rose 1.6pc to 216.5p.