Can Tesco “crack the discount market” with Jack’s concept?
Wednesday 19th September 2018
Tesco has unveiled its own discount chain this week, with the opening of two Jack’s stores to shoppers on Thursday (September 20). The supermarket group’s move into the discount grocery sector has been rumoured for months and it’s an interesting strategy.
Like the rest of the ‘big four’ UK supermarkets, Tesco has looked at the recent success of Aldi and Lidl with interest as the German discounters grew from a combined market share of 6% in December 2012 to more than 13% in the latest figures.
Whilst that is still less than half of Tesco’s market share, their continued growth is enough to get the big four thinking about how to protect their profits in what remains a difficult retail climate.
On paper, the idea makes sense. Tesco has a strong team in place with valuable experience of the grocery sector, huge retail knowledge and of course the added wholesale power provided by the recent acquisition of Booker.
It won’t be easy to crack the discount market though, even for a brand of Tesco’s size. We all witnessed Sainsbury’s attempt to do the same with Netto, which ultimately ended in failure despite looking like a masterstroke at the outset.
It goes without saying, but Tesco will have to find a way to attract customers from the likes of Aldi, Lidl and Iceland, rather than convert existing Tesco customers into discount shoppers through brand association.