In Brief

Jack’s: Tesco to launch new discount stores to rival Lidl and Aldi

New no-frills stores are set to compete with the two German discount supermarkets, but will the gamble pay off?

Tesco is preparing to launch a new discount chain called Jack’s in an attempt to compete with the rise of retailers such as Aldi and Lidl.  

After months of speculation, the first of the stores will be unveiled next week in Chatteris, Cambridgeshire, according to The Guardian.

The stores, named after Tesco founder Jack Cohen, will seek to rival the two German chains, which currently occupy more than 13% of the UK grocery market.

Tesco’s plans are “another symptom” of the pressures exerted by Aldi and Lidl’s rapid growth since the 2008 financial crisis, Bloomberg reports.

Their arrival on the British supermarket scene triggered a wave of damaging price wars and forced traditional retailers to rethink their business models.

But creating a new brand is a “very bold move and not without its risks” for Tesco and its shareholders, says Natalie Berg of NBK Retail.

“It's no easy feat to establish in a crowded and cut-throat market, but it's now so competitive that retailers are being forced to think outside the box,” she told the BBC. “The only way to compete with the discounters is by becoming one.”

The Daily Telegraph’s Matthew Lynn agrees, arguing that although chief executive Dave Lewis has done a “fantastic job” of restoring Tesco’s fortunes in the last year, the new plan is a major gamble.

“It’s very hard for a traditional giant to make a completely new model work,” he says.

But Bruno Monteyne, from Bernstein, believes that Tesco is perhaps unique in having “the scale and power” to develop and deliver such a project.

If successful, this new format “is likely to put material pressure on all other UK retailers”, he argues.

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