Tesco will unveil its new discount chain Jack’s next week as the UK’s biggest supermarket throws down the gauntlet to the German discounters Aldi and Lidl.
The first of the stores, named after the Tesco founder, Jack Cohen, will be unveiled by the supermarket’s chief executive, Dave Lewis, in Chatteris, Cambridgeshire, on Wednesday.
Tesco has forced staff and suppliers working on the project to sign non-disclosure agreements and the retailer is saying little about its plans. But when the Guardian visited the Chatteris store on Tuesday a Jack’s sign could be seen over the door, albeit covered with a blue tarpaulin, and branding was also clearly visible inside.
Mainstream supermarkets have been searching for a way to get into the fast-growing discount market, having seen Aldi and Lidl steal their shoppers since the recession, when rising food prices encouraged Britons to shop around for groceries.
The German chains control more than 13% of the UK grocery market, according to Kantar Worldpanel data, compared with less than 9% four years ago.
Since taking the helm, Lewis has launched the low price “farm” brands to take on the discounters. The brands, with fictitious names like Redmere, Woodside and Willow, are expected to be sold in Jack’s.
More recently it has replaced its cheapest “Everyday Value” brand with generic names like Bay Fishmongers, Ms Mollys and Butcher’s Choice, which would also fit the bill.
There is also a new Jack’s branded grocery range. In Chatteris it was possible to see Nestlé and Cadbury’s chocolate on the shelves.
Shore Capital analyst Clive Black expects the Jack’s chain to encompass 100 stores, including around 60 of its small “Metro” supermarkets, some of which are struggling.
“Tesco has a cohort of problem stores where the traditional Tesco offer is a square peg in a round hole,” he explained. “They have got low footfall and low income hinterlands and Aldi and Lidl are taking everyone’s legs away.”
During the summer months, Tesco started recruiting staff for a “new store format” in Chatteris. The premises have been empty for four years since Lewis put the brakes on openings when he took charge in 2014.
Tesco has 2,659 stores in the UK, a sprawling estate that includes 172 Metros. It is thought that Tesco Metros in St Helens and Edge Hill, Liverpool are among those destined to be converted to the Jack’s brand.
It is not the first time one of the mainstream supermarket chains has tried to fight back with a discount chain of its own.
Sainsbury’s joined forces 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. In the mid-noughties Asda experimented with the Asda Essentials chain but gave up after less than a year.
Tesco previously tried the discount route in the 1980s with Victor Value , but the move was abandoned after four years because the management team at the time feared it might undermine the main brand.
