Tesco expected to launch new discount stores to compete with Aldi and Lidl

In July the company advertised for staff for a ‘new store format’ in Cambridgeshire

Tuesday 11 September 2018 23:31
Supermarket has had 10 consecutive quarters of sales growth
Supermarket has had 10 consecutive quarters of sales growth

Speculation is mounting that Tesco will launch a new discount store to compete with rivals Aldi and Lidl.

The UK’s biggest retailer said it would be “sharing some exciting news” on 19 September at its site at Chatteris in Cambridgeshire.

No further details were provided but in July the company advertised for staff for a “new store format” in Chatteris, seeking to recruit retail assistants, retail customer service assistants and retail managers.

Media reports said Tesco was close to launching a chain of discount stores in Britain called “Jack’s” after Jack Cohen, who founded a business in 1919 that became Tesco.

Tesco is Britain’s grocery market leader with a share of 27.4 per cent while Aldi and Lidl have increased their combined share to 13.1 per cent, according to the latest Kantar Worldpanel data.

Earlier this year Tesco announced it would form a “strategic alliance” with French retailer Carrefour as part of efforts to cut prices.

The long-term deal will be covered by a three-year framework and see the two companies form a “strategic relationship” when dealing with global suppliers.

In June, Tesco reported its 10th consecutive quarter of sales growth, boosted by its acquisition of wholesaler Booker.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Aldi and Lidl account for over 13 per cent of take-home grocery sales and are growing at 10 per cent each year.

“Strategically, it makes sense for Tesco to consider its own discount chain and try to capture some of that growth.

“The big four now make up less than 70 per cent of grocery sales – down from 76 per cent a decade ago. The proposed Sainsbury’s-Asda merger acknowledges this decline, as did Tesco’s own acquisition of Booker, which gave it access to wholesale and out-of-home sales.

“The opening of a new discount chain would be further recognition of this shift.”

Agencies contributed to this report

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