Tesco launches new discount chain Jack’s
The value chain is named after the founder of Tesco, Jack Cohen, who in 1919 started selling armed forces surplus stock from his market stall in Well Street, Hackney. With nothing more than £30 demob money and an intuition for what customers needed, he built a business renowned for making food available to everyone at a time when many families simply couldn’t afford the food sold in shops.
Tesco CEO David Lewis, pictured above, says Jack’s will deliver customers great-tasting food at the lowest possible prices, with eight out of 10 food and drink products grown, reared or made in Britain.
“Jack Cohen championed value for customers and changed the face of British shopping,” said Lewis, announcing the brand. “He’s an inspiration for all of us and that same spirit still drives Tesco now.”
The company will open between 10 and 15 Jack’s stores in the UK during the next six months. The subsidiary will operate a low-cost business model designed to keep costs low and prices down. It will offer a smaller range of products than Tesco stores, and deliver what the company describes as a “no fuss approach” to grocery retailing, with “no fancy fixtures or fittings, and no added extras, just good quality at low prices”.
The first two stores open today in Chatteris, Cambridgeshire and Immingham, Lincolnshire, on sites which make use of excess Tesco space. Stores to follow will include a mix of entirely new sites, sites adjacent to existing Tesco stores, and a small number of converted Tesco stores.
Jack’s “idolises” Aldi
Commenting on the launch, Patrick O’Brian, UK retail research director at GlobalData, says if imitation is the sincerest form of flattery, then Jack’s must leave Aldi and Lidl “feeling idolised”.
“Less choice, cheaper own-label goods in a convenient, shoppable supermarket format, Jack’s is the first time Tesco has made a serious attempt to limit the impact of the discounters. Jack’s focus on British products gives it a point of differentiation, as does the consolidating of its own-label products into the Jack’s brand,” said O’Brian.
“Sainsbury’s tried something similar in 2014 with its Netto joint venture, only to close two years later having only opened 16 stores. The secrecy and fanfare surrounding Jack’s launch points to a much more ambitious attack, but its plans to open 10-15 stores next year are surprisingly tame.”
O’Brian says as Tesco targets a return to a 4 per cent profit margin by 2020, opening at a faster rate would make this more difficult and also risk cannibalising sales.
“After years of battling accounting scandals and pulling back from some international markets, Tesco is at least back on the front foot and taking the battle to the discounters. But we expected a more aggressive store opening schedule and Aldi and Lidl are unlikely to be too concerned about this opening salvo.”
This story first appeared on sister site Inside Retail Asia.
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