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Tesco to launch new discount chain next week

| International retailers

Tesco looks set to unveil its new discount chain next week following months of speculation about the move.

First flagged back in February, reports have suggested that up to 100 of the new format stores, aimed at winning back shoppers from Aldi and Lidl, could be launched under the name Jack’s – a reference to Tesco’s founder Jack Cohen.  Tesco began advertising for staff to work in the new stores a couple of months ago.

The group has now invited journalists to an event being attended by Chief Executive Dave Lewis at a previously mothballed Tesco site in Chatteris, Cambridgeshire, on Wednesday next week, where it will be “sharing some exciting news”.  Whilst Tesco gave no further details, The Guardian said it had visited the Chatteris store and found Jack’s branding over the door and visible inside.

A floorplan of the Chatteris site published by trade publication Retail Express last monthsuggested that the size and the layout of the 20,000 sq. ft. store is similar to an Aldi or Lidl outlet, with Tesco displaying goods very differently from anything its done before.

Analysts believe that a large chunk of the Tesco’s 172 Metro stores are likely to be converted to the new format, with under-performing sites in areas such as St Helens and Liverpool among those destined to be converted to the Jack’s brand.

Highlighting that Aldi and Lidl are growing at 10% each year in the UK, Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Strategically, it makes sense for Tesco to consider its own discount chain and try to capture some of that growth.”

He added: “The big four now make up less than 70% of grocery sales – down from 76% 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.”

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