In recent years, major supermarkets have watched on as budget stores, like Aldi and Lidl have grown majorly in popularity.
Now Tesco are set to delve into the budget supermarket industry, launching their own outlet in an attempt to compete with the already established names.
The new outlet is expected to be named ‘Jack’s’, named after Jack Cohen, the founder of a grocer in 1919 that went on to become Tesco.
The first store set to open in Chatteris, a civil parish and one of the four market towns in the Fenland district of Cambridgeshire. For anyone else who didn’t know who or what a Chatteris was.
Creating a new brand is a very bold move and not without its risks, 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.”
“The only way to compete with the discounters is by becoming one.”
Tesco have made a previous attempt to break into the budget market, in the 1980s it launched it’s ‘Victor Value’ brand – which ultimately became a failed attempt.
It’s not yet clear how many of these discount stores that the supermarket chain plan on opening, though suggestions are that Tesco may want to rebrand between 50-100 of its Metro style stores.
Analysts at Bernstein think Tesco will not directly copy the Aldi/Lidl model but opt for a “cross over between a cash and carry and a discounter”, with at least 20 stores to be announced initially.
“Tesco has about 3,400 stores in the UK: we would expect some unused sites, a collection of Metro stores and some smaller supermarkets to be converted,” they said.
“If successful, this new retail format is likely to put material pressure on all other UK retailers.”
Aldi and Lidl currently own just over 13% of the UK grocery market, less than half of what Tesco currently holds. Though the rapid growth of the German chains is a worrying sign for the big four supermarkets that have traditionally dominated the market.