Tesco is opening the first store under its new Jack’s brand on Wednesday, with the retailer due to outline the scale of its ambition.
It emerged from job adverts in July that the UK’s largest retailer was to launch a “new retail format” but it refused to give further information until that time.
It has been widely reported that Jack’s – a salute to Tesco’s founder Jack Cohen – will be a no-frills discount brand to challenge the meteoric rise in market share enjoyed by Aldi and Lidl since the financial crisis.
Tesco is expected to initially open up to 60 stores in the coming months – many of them converted from convenience stores in city centres.
The group’s chief executive, Dave Lewis, will be attending the opening of the first – in Chatteris, Cambridgeshire.
His move towards the no-frills side of the market is likely to have been tipped by Tesco’s purchase of wholesaler Booker and its “strategic alliance” with France’s Carrefour – both aimed at bringing down costs and driving value for customers.
Competition at the top of the UK supermarket sector has continued to intensify since the initial price wars to attract customers and protect market shares in the stampede to the discounters.
The latest industry figures produced by Kantar Worldpanel show market share growth for all the major grocery brands in the UK – a consequence of essential spending holding up well amid a BBQ summer.
But the data, covering the 12 weeks to 9 September, showed Tesco’s slice of the overall action was 0.5% down on the same period last year.
In contrast, Aldi and Lidl had grown their respective market shares to 7.6% and 5.5% respectively.
Tesco remains the biggest player by some margin on 27.4%.
However its dominance is also threatened by another big deal as ‘Big Four’ rivals Sainsbury’s and Asda plan a £15bn merger that would make a combined company the biggest supermarket chain by share.
Neil Wilson, chief market analyst at Markets.com, said of the launch: “I think having a separate brand is really interesting as it allows it to offer different products at different price points without affecting its core Tesco brand.
“It lets Tesco take the fight to the discounters on a level playing field – no need to dilute margins at core Tesco, just offer something different to the more value-conscious customers.
“Question is can it do it as cheap – Lidl/Aldi operate with limited choice and the temptation is for Tesco to offer more.”
He added: “Worth remembering this is also to do with boosting a number of poor-performing stores rather than shuttering them – not sure if this really will result in a significant recapturing of market share from discounters.”