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Tesco's new discount chain Jack's takes on Aldi and Lidl Tesco's new discount chain Jack's takes on Aldi and Lidl
(about 1 hour later)
Tesco has unveiled its new discount chain called Jack's that aims to tackle the rising threat posed by German rivals Aldi and Lidl.Tesco has unveiled its new discount chain called Jack's that aims to tackle the rising threat posed by German rivals Aldi and Lidl.
The first store is in a mothballed former Tesco store in Chatteris, Cambridgeshire.The first store is in a mothballed former Tesco store in Chatteris, Cambridgeshire.
Another outlet in Immingham, Lincolnshire also opens on Thursday.Another outlet in Immingham, Lincolnshire also opens on Thursday.
Between 10 and 15 stores are planned for new locations, next to existing Tesco stores, and a small number of converted Tesco stores.Between 10 and 15 stores are planned for new locations, next to existing Tesco stores, and a small number of converted Tesco stores.
Chief executive Dave Lewis claimed that Jack's - named after Tesco founder Sir Jack Cohen - would be cheaper than Aldi or Lidl.Chief executive Dave Lewis claimed that Jack's - named after Tesco founder Sir Jack Cohen - would be cheaper than Aldi or Lidl.
"We have been thinking about what customers want, and bringing it to them in the most cost-effective, value-orientated way possible," he told the BBC. "The objective is to be the lowest cost for customers.""We have been thinking about what customers want, and bringing it to them in the most cost-effective, value-orientated way possible," he told the BBC. "The objective is to be the lowest cost for customers."
Jack's stores will sell 2,600 products - far fewer than the 35,000 carried by a Tesco supermarket - with 1,800 branded "Jack's".Jack's stores will sell 2,600 products - far fewer than the 35,000 carried by a Tesco supermarket - with 1,800 branded "Jack's".
Fraser McKevitt at Kantar Worldpanel said Jack's would have little immediate impact on its German rivals: "There are already over 1,300 Aldi and Lidl stores across the country and the two have a combined market share of 13.1%, so Jack's is clearly playing a longer-term game.Fraser McKevitt at Kantar Worldpanel said Jack's would have little immediate impact on its German rivals: "There are already over 1,300 Aldi and Lidl stores across the country and the two have a combined market share of 13.1%, so Jack's is clearly playing a longer-term game.
Like its two rivals, Jack's will also have a central aisle offering food and non-food bargains called WIGIG - When It's Gone It's Gone.Like its two rivals, Jack's will also have a central aisle offering food and non-food bargains called WIGIG - When It's Gone It's Gone.
Jack's will also have a Fresh Five fruit and veg offer that echoes Aldi's Super Six.Jack's will also have a Fresh Five fruit and veg offer that echoes Aldi's Super Six.
How prices at Jack's compare with Aldi and Lidl
Granny Smith applesJack's £1.25 (x5)Aldi £1.19 (x6)Lidl £1.39 (x7)
White sliced breadJack's 45pAldi 40pLidl 49p
Baked Beans Jacks 29pAldi 23pLidl 29p
Pork sausagesJack's £1.29 (x8)Aldi £1.09 (x12)Lidl £1.09 (x12)
Nicholas Carroll, senior retail analyst at Mintel, said: "Aldi and Lidl can take much solace in that their new rival takes much inspiration from their own stores. Jack's is a format that has been built to compete with the stores which have disrupted much of Tesco's core business over the past decade."Nicholas Carroll, senior retail analyst at Mintel, said: "Aldi and Lidl can take much solace in that their new rival takes much inspiration from their own stores. Jack's is a format that has been built to compete with the stores which have disrupted much of Tesco's core business over the past decade."
Mintel expected the food discounter sector to growth by almost 12% this year. "Both Aldi and Lidl have plans for 250 to 300 new stores in the UK in the medium term, highlighting that there is still much room for Tesco to make its dent in the market," Mr Carroll said.Mintel expected the food discounter sector to growth by almost 12% this year. "Both Aldi and Lidl have plans for 250 to 300 new stores in the UK in the medium term, highlighting that there is still much room for Tesco to make its dent in the market," Mr Carroll said.
"Whether Tesco can make the numbers add up, and prices stack up for consumers will be the real test on whether this is a viable format to slow Aldi and Lidl's growth.""Whether Tesco can make the numbers add up, and prices stack up for consumers will be the real test on whether this is a viable format to slow Aldi and Lidl's growth."
Tesco is investing between £20m and £25m in Jack's, which Mr Lewis described as "very, very modest".Tesco is investing between £20m and £25m in Jack's, which Mr Lewis described as "very, very modest".
Although Jack's is "part of the Tesco family", Lawrence Harvey, the former Aldi UK executive in charge of Jack's, said it will not issue or accept Clubcard points. Neither will there be any online operation.Although Jack's is "part of the Tesco family", Lawrence Harvey, the former Aldi UK executive in charge of Jack's, said it will not issue or accept Clubcard points. Neither will there be any online operation.
As well as the discounters, Tesco faced being overtaken as the UK's biggest supermarket chain by a combined Sainsbury's and Asda.As well as the discounters, Tesco faced being overtaken as the UK's biggest supermarket chain by a combined Sainsbury's and Asda.
The £15bn merger will be the subject of an in-depth competition investigation, the Competition and Markets Authority announced on Wednesday.The £15bn merger will be the subject of an in-depth competition investigation, the Competition and Markets Authority announced on Wednesday.
Mr Lewis said that beyond the initial 15 stores, more could follow, but that was "not a calculation we're currently making".Mr Lewis said that beyond the initial 15 stores, more could follow, but that was "not a calculation we're currently making".
One Jack's store will be set up next to a larger Tesco supermarket to see how consumers shop.One Jack's store will be set up next to a larger Tesco supermarket to see how consumers shop.
The Tesco boss said he was not worried about the new chain cannibalising sales from Tesco outlets.The Tesco boss said he was not worried about the new chain cannibalising sales from Tesco outlets.
Five will be rebranded Metro stores, which are larger than an Tesco Express but smaller than its supermarkets.Five will be rebranded Metro stores, which are larger than an Tesco Express but smaller than its supermarkets.
Only two will come from stores mothballed in 2014-15 when Mr Lewis took over as chief executive, while the remainder will be new.Only two will come from stores mothballed in 2014-15 when Mr Lewis took over as chief executive, while the remainder will be new.