Tesco launches budget store Jack's to head off German discounters
Tesco launched its new cut-price brand on Wednesday as the first of its Jack's stores was unveiled in the Cambridgeshire town of Chatteris.
Food & Drug Retailers
3,978.69
17:05 30/04/24
FTSE 100
8,144.13
17:04 30/04/24
FTSE 350
4,476.48
17:05 30/04/24
FTSE All-Share
4,430.25
17:14 30/04/24
Tesco
296.30p
16:45 30/04/24
The new brand, which will welcome the public for the first time on Thursday morning, is intended to compete with German discount supermarket chains Lidl and Aldi, who have seen their market share nearly double to 13.1% over the past five years.
Tesco chief executive Dave Lewis said the company plans to open between 10 and 15 Jack’s in the next six months, half of which will be converted from old Tesco stores.
A statement from the company said the low-cost business model will see shops operating on a 'no-frills' basis, offering a simplified range of products, including a Jack's own-brand range, and fewer "fancy" fixtures and fittings.
Eight out of ten food and drink products on the shelves will be grown, reared or made in Britain.
The stores themselves are named after the chains founder, Jack Cohen, who built the business up from a market stall opened in Hackney just after the end of the First World War.
"Jack Cohen championed value for customers and changed the face of British shopping. He’s an inspiration for all of us and that same spirit still drives Tesco now. It’s fitting that today, we mark the beginning of Tesco’s celebration of 100 Years of great value by launching a new brand, and stores bearing his name: Jack's," said Lewis.
Competitors Sainsbury's and Asda have also attempted budget iterations in the past but their respective Netto and Asda Essentials chains struggled to turn profits and ended as little more than experiments.
Clive Black, market analyst at Shore Capital, said: "Jack's is born amidst ongoing reset work by Tesco of its supply chain and offer, notably around exclusive brands, building upon the farm brands already introduced across the estate. Where will any Jack's private label fit into the Tesco product portfolio? Is Jack strategically significant?"
"We shall be interested to see if Jack's rests within a wider perhaps more strategic context, so the relationship between this new fascia and Tesco's stores - there has been much written about Jack's taking up residence at c60 ex-Metro outlets with a further thirty to close - the core value credentials of Tesco UK, perhaps incorporating some of the good work undertaken in Ireland and if Jack's could be exported to say Central Europe."
Tesco’s shares were down 0.81% at 233.20p at 1019 BST.