Tesco to take on discount rivals with new low cost brand

Several Tesco stores on Merseyside are believed to be part of a new drive by the supermarket giant to take on cut-price rivals Aldi and Lidl.

The chain is expected to unveil a new discount chain, Jack’s, next week, named in tribute to founder Jack Cohen.

A store in Chatteris, Cambridgeshire, is believed to be the forerunner and will be opened by chief executive Dave Lewis.

But sources claim that several Tesco Metros in St Helens and Edge Hill, in Liverpool, will be among those to be converted to the Jack’s brand.

Across the UK Tesco operates 2,659 stores, including 172 Metros.

German chains Aldi and Lidl have been eating into the market share of the UK’s big supermarket operators, and today account for more than 13% of the UK grocery market, compared with less than 9% four years ago.

Mr Lewis has sanctioned the launch of low price ‘farm’ brands, including Redmere, Woodside and Willow, in a bid to counter the discounters, and these are expected to feature in Jack’s stores.

Clive Black, an analyst with Shore Capital, believes the Jack’s brand could be taken on by around 100 Tesco stores, including around 60 of the smaller Metro outlets.

“Tesco has a cohort of problem stores where the traditional Tesco offer is a square peg in a round hole,” he said.

“They have got low footfall and low income hinterlands and Aldi and Lidl are taking everyone’s legs away.”

This latest ploy by the big players is not the first. In 2014 Sainsbury’s and Danish chain Netto introduced a discount option, but its 16 stores closed within two years having struggled to make a profit.

Tesco also had a brief foray into discounting in 1980s with its ‘Victor Value’ brand, but this was ditched after four years amid fears it could impact the main brand.