19 Sep 2018
Posted in Retail
Tesco back on the front foot with Jack’s in battle with discounters, but a more aggressive store opening schedule expected
On Tesco’s attempt to tackle the rise of the discounters with the opening of discount store Jack’s,
Patrick O’Brien, UK Retail Research Director at GlobalData, a leading data and analytics company, offers his view:
“If imitation is the sincerest form of flattery, then Tesco’s new Jack’s venture must leave Aldi and Lidl feeling idolised. Less choice, cheaper own-label goods in a convenient, shoppable supermarket format, Jack’s is the first time Tesco has made a serious attempt to limit the impact of the discounters. Jack’s focus on British products gives it a point of differentiation, as does the consolidating of its own-label products into the Jack’s brand.
“Sainsbury’s tried something similar in 2014 with its Netto joint venture, only to close two years later having only opened 16 stores. The secrecy and fanfare surrounding Jack’s launch points to a much more ambitious attack but its plans to open 10-15 stores next year are surprisingly tame.
“As Tesco targets a return to a 4% profit margin by 2020, opening at a faster rate would make this more difficult and also risk cannibalising sales. After years of battling accounting scandals and pulling back from some international markets, Tesco is at least back on the front foot and taking the battle to the discounters. But we expected a more aggressive store opening schedule and Aldi and Lidl are unlikely to be too concerned about this opening salvo.”