Nicholas Carroll
Senior Retail Analyst, Nick Caroll, has a particular flare for the grocery industry but analyses and writes in-depth reports on a range of UK and European retail markets.

Tesco has unveiled its new discount chain Jack’s in a move to take on competitors Aldi and Lidl, which have been taking market share over the past few years. Nicholas Carroll, Senior Retail Analyst at Mintel, analyses what the launch means for Tesco and the UK discounter sector overall.

“Much of the rumours have served to be true about Tesco’s new format, aptly named Jack’s after its founder Sir Jack Cohen. If they say imitation is the best form of flattery, then Aldi and Lidl can take much solace in that their new rival takes much inspiration from their own stores. From the emphasis on private label, to the middle aisle non-food WIGIG (When It’s Gone, It’s Gone) special buys, 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.

Credit: Tesco PLC

“There are some more modern touches, such as a scan-as-you-shop app, and it is notable that Tesco is putting the claim that 8 out of 10 products are British right above the door, outdoing Lidl’s own claim that 61% of its products come from Britain. As highlighted by Mintel’s upcoming report on food and non-food discounters, the food discounter sector is still growing strongly with sales up 14.5% in 2017 and forecast growth of 11.9% in 2018. Both Aldi and Lidl have plans for 250-300 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.

Credit: Tesco PLC

“However, as rival Sainsbury’s knows through its failed Netto relaunch, finding the sites and prices to take on the world’s leaders in this sector is no mean challenge. Tesco has one advantage on the former in that many of the 15 stores to open before the end of the year will be reusing under-performing sites. As such Jack’s is almost a free hit for Tesco – a new venture to try in under-performing areas, with a 15 store trial a very minor addition to the 3,435 wider Tesco store estate. 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.”

Credit: Tesco PLC

Emma Clifford, Associate Director – Food & Drink at Mintel, adds:

“A sense of national pride is deeply ingrained among British consumers. There are major opportunities for supermarkets and discounters to capitalise on this feeling, as latest Mintel research highlights that 47% of British food shoppers would like to see more British produce at food retailers, rising to 60% of consumers aged 55+. This is especially the case for private label, where ranges supporting British farmers and food producers rank as the number one demand sought by consumers. With shoppers bombarded with information in stores, it makes sense to help them identify at a glance which purchases enable them to support Brand Britain.”

Credit: Tesco PLC