Tesco’s new discount chain ‘Jack’s’, which opened its doors to customers this week, was trumpeted as the supermarket’s answer to fast-growing, cut-price grocers Aldi and Lidl.
It was anticipated that Tesco would leverage its scale and retail prowess to launch a supermarket that could go head-to-head with its formidable German rivals on both price and value.
And Tesco put on a good show – revealing a broad range of Jack’s-branded goods in its new smaller, wide-ailed store, complete with the sort of ‘when it’s gone, it’s gone’ baskets you get in Aldi and Lidl, and a smattering of popular brands like Coca-Cola and Cadbury.
Tesco boss Dave Lewis (above) unveiling its new Jack’s brand to media in Chatteris
The store is low cost with wide aisles for easy replenishment and just 2,600 products
80 per cent of the 2,600 products for sale are made in Britain, the retailer said
With a carefully honed, low-cost operating cost model, including a dramatically curated range of 2,600 items (compared with the tens of thousands you’d usually find in a Tesco store) boss Dave Lewis claimed that Jack’s could afford to be ‘the cheapest in town’.
What’s more, Lewis boasted that 80 per cent of the 2,600 products on offer will have been ‘grown, reared or made in Britain’ – an effort to appeal to provenance-conscious shoppers.
The stores’ name a nod to Tesco’s founder Jack Cohen. But the shop is also plastered with Union Jack’s and signs that read ‘made in Britain’.
It’s impressive. Tesco’s new and exclusive Jack’s range in particular is nothing to be sniffed at with 1,800 items developed secretly with 350 suppliers.
But, as it stands, this is far from being an assault on Aldi and Lidl.
Jack’s won’t faze the discounters because, despite an urgent need to face the threat head on, Tesco has committed to opening just 10 to 15 Jack’s stores in the coming year.
To echo the thoughts of Fraser McKevitt, Kantar Worldpanel’s head of consumer insight, Jack’s isn’t going to make an immediate dent in the competition’s market share – ‘not at the rate of openings announced today’.
He points out, for context, that there are already over 1,300 Aldi and Lidl stores across the country and the indomitable duo have a combined market share of 13.1 per cent.
Investors were seemingly unmoved by Tesco’s big reveal too – Tesco shares nudged up just 1 per cent yesterday, perhaps because Lewis confessed that the venture was not designed to ‘move the dial’ in terms of Tesco’s financials.
So what is Jack’s all in aid of then?
Perhaps it’s all just fabulous PR, aimed to draw the media’s attention to Tesco’s roots and core values as it recovers from a tumultuous accounting scandal and celebrates being in business for 100 years.
Or maybe Jack’s is simply a smart (and relatively inexpensive at circa £25million) way to fill a few ghost stores, re-purpose some struggling Tesco Metros and use up a bit of extra car-park space.
Or is there more to it than Tesco is letting on?
The first Jack’s store is in a ‘ghost’ unit that has stood empty since 2014 when Tesco hit financial problems and had to row back on its expansion plans
Given Tesco’s recent history with ill-advised ventures, would Lewis really risk launching a new fascia without a significant game plan?
Despite Lewis’s protestations and his unwillingness to be drawn on the brand’s future, I like Mckevitt believe that Tesco is ‘playing a longer-term game’ with Jack’s, and suspect it is holding its cards close to its chest until the time is right for an all-out assault.
With the pending mega-merger between Asda and Sainsbury’s – arguably a bigger threat to Tesco than the discounters – right around the corner, the time to take Jack’s out of the box in earnest may come sooner than we think.
Either way, by welcoming a handful of Jack’s shops into the 1000-unit Tesco family, what the supermarket giant has done has quietly reminded its rivals who’s boss.
Tesco clearly has the scale, power and the agility to defend itself. It has loaded the gun now and will fire when the time is right.
Lewis said Jack’s will strive to be the ‘cheapest in town’, so pricing will vary from town to town
Ten key Jack’s facts
1. The first two stores are in Chatteris, Cambridgeshire, and Immingham, Lincolnshire
2. Other locations earmarked for Jack’s stores include St Helen’s and Edge Hill in Merseyside, Rubery and Castle Bromwich in the West Midlands, and Middlewich, Cheshire
3. Stores will measure around 25,000 sq ft and hold 2,600 SKUs
4. They will each have around 25 staff, who will not receive the same discounts or bonuses as Tesco staff do
5. There is no Jack’s uniform – staff are able to wear their own clothes
6. Branded products in store include Marmite, Lea & Perrins, Oxo Cubes and Cadbury
7. 90 per cent of its stock comes shelf-ready for easy shelf replenishment
8. Lewis claims Jack’s has been three years in the making and therefore has ‘nothing’ to do with Brexit
9. Tesco has named Lawrence Harvey – a former Aldi employee – to be Jack’s managing director
10. Tesco founder Jack Cohen was nicknamed ‘Slasher Jack’ on the back of his pile it high, sell it cheap approach to retailing