google-site-verification: googled3ad79e48fba1031.html New Tesco discount chain could launch as early as September | Business – Raidar Gist
Saturday , September 22 2018
Home / Business / New Tesco discount chain could launch as early as September | Business

New Tesco discount chain could launch as early as September | Business

Tesco is preparing to launch a new discount chain as early as September, as the supermarket ramps up its battle with the discounters Aldi and Lidl.

Retail insiders say Tesco may name the chain Jack’s after a division of the grocery group recently attempted to register the name as a retail trademark. It was reported on Sunday that up to 60 stores could be launched by the UK’s biggest retailer.

The retailer is advertising for staff for a new format in Immingham, Lincolnshire, and Chatteris, Cambridgeshire, both mothballed sites Tesco has sat on for about four years, as well as in Wandsworth, south London.

The company has confirmed that a medium-sized Tesco Metro in St Helens in Merseyside will reopen under a new name while the Guardian understands workers at a Tesco Metro in Edge Hill, Liverpool, which is set to close, have also been promised potential jobs at a new store set to open within five weeks.

Online job ads for some of the sites state: “The new retail format will be operated separately from the core Tesco business and as such benefits offered will be different from those offered at Tesco.” Workers at closing Tesco Metro stores are being made redundant and have to reapply for the new jobs.

Bryan Roberts, an analyst at the retail marketing firm TCC Global, said: “If Tesco puts some proper welly behind it in terms of infrastructure and store openings it could stand a decent chance of success.”

Tesco executives have been combing through thousands of potential sites to examine which might be appropriate, according to the Mail on Sunday, which reported that up to 60 could be transformed initially.

Traditional supermarkets have been searching for a way to get into the fast-growing discount market, having seen the German rivals Aldi and Lidl win over their shoppers since the last recession, when rising food prices encouraged Britons to shop around for their groceries.

The discounters’ smaller, locally based stores are also cashing in on a shift towards buying less but more often, as driving to large, out-of-town stores for a weekly or fortnightly big shop falls out of fashion.

Tesco graphic

As well as Aldi and Lidl, general discounters including B&M, Wilko and Poundland have also increased the amount of food they sell, stealing sales away from traditional chains.

Sainsbury’s partnered up with the Danish chain Netto in 2014 to launch a UK discounter, but the venture closed its 16 stores two years later after struggling to make a profit.

Tesco last tried the discount route in the 1980s – under the Victor Value brand – but the move was abandoned after four years because the management team at the time feared it might undermine the main brand.

Aldi and Lidl now control nearly 13% of the grocery market, according to Kantar Worldpanel data, compared with less than 9% four years ago. They are increasing sales by more than 8% a year while sales at the big four supermarkets – Tesco, Sainsbury’s, Asda and Morrisons – are barely keeping pace with the rising price of food.

Rumours have been circling about Tesco developing a discount chain since it promised shareholders in February that it would “develop new formats to better serve customers”. It was said to have drafted in Lawrence Harvey, a former Aldi executive, to help develop the concept and sought advice from Boston Consulting Group. It asked a number of key own-label suppliers to sign non-disclosure agreements before contributing to a new project.

The new format is also a key part of its acquisition of Booker, the UK’s biggest wholesaler, which has prompted rumours that the stores might be more akin to Costco, the cash-and-carry business. Tesco has already tried stocking bulk-buy items from the Bookers range in its stores.

Roberts said the size of the stores Tesco was looking at converting and its note to potential job applicants that they would be part of a small team, suggested a discounter or pared-down format similar to Colruyt in Belgium, which is a hybrid between a cash-and-carry and a discounter. Tesco declined to comment on the potential new format.


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