Tesco Group CEO Dave Lewis has opened Tesco’s first cut-price outlet under the new Jack’s banner in the Cambridgeshire town of Chatteris. This is the first of an anticipated 10-15 initial Jack’s outlets planned for the next six months, with an aim of reaching 60 by the end of next year. This move is viewed by many as Tesco’s attempt to challenge the growth of two leading discounters in the market, Aldi and Lidl.

What do we know?

The first two outlets (Immingham in Lincolnshire will open on Thursday) use existing company sites with excess space. Ensuing outlets will open across a mix of new sites, sites adjacent to existing Tesco stores, and converted Tesco locations. Job adverts posted by Tesco indicate that the West Midlands and the North-West are particular focus regions.

On launch, Tesco highlighted that 80% of the range is UK-sourced. This is reinforced by instore messaging that stridently reinforces this ethos, with prominent wall displays proclaiming that “8 out of 10 products are grown, reared or made in Britain”.

The strong focus on British sourcing, and the fact that the first stores are opening in catchments where sizeable local majorities voted to leave the EU, raised questions as to whether Jack’s was positioned for a possible post-Brexit recessionary climate. However, Lewis said this was not the case from Tesco’s perspective. He also declared Jack’s rationale was to be a “food-oriented store aiming to be the cheapest in the marketplace”. In this regard, the first view suggests the concept has promise, and may be an effective way to repurpose underperforming stores in Tesco’s portfolio.

The strong influence of former Aldi executive Lawrence Harvey, brought on board to oversee the Jack’s project, is clear from the moment you enter the store. The limited assortment compared to Tesco’s usual 35,000 SKU range is the most immediately obvious discount feature.

1,800 of the 2,600 SKUs will be under the own-brand Jack’s label. A-brands from the likes of Kellogg’s, Walkers, Cadbury etc. enjoy a limited presence. The emphasis, Lewis stressed, is on “keeping costs low and prices down". Even Tesco value sub-brands are absent to allow greater room for the eponymous private label. The store also mimics the discounters’ weekly bargain hunt baskets with WIGIG (When It’s Gone, It’s Gone) displays in the middle of the store. Similarly, Jack’s Fresh Five remind us of Aldi’s Super 6 and Lidl’s Pick of the Week. A fresh bakery offer is also available. Unlike Aldi, Jack’s will not boast an online operation, but does offer Shop Smart, a scan & pay app.

Jack’s is best described as Tesco’s take on a well-tested concept, backed by a century of experience in their home market.

What do we expect?

The German discounters’ basic value proposition centres on a high-quality, low-price offer that is convenient to reach and to shop. At first glance, this seems “easy” to replicate and Tesco is certainly borrowing from the Aldi playbook. However, the model’s magic and the underlying fundamentals that have made Aldi and Lidl so successful, are harder to replicate, especially with UK shoppers now being so familiar with the discount concept.

The discounters’ mission has long focused on convincing British consumers to switch from their traditional grocery formats, especially big-box shoppers. Discounters disrupted the full basket, causing mission fragmentation, and creating a nationwide wave of range resets, store refurbishments, and new value propositions across the Big Four.

In the UK market, Aldi and Lidl will continue to outspend their peers on marketing to reinvent their brands. Over the years, they have proven themselves ‘British’ enough to sponsor the national football team (Lidl), and the Olympics team (Aldi). Jack’s emphasis on local sourcing may not prove to be a big differentiator in this regard.

Jack’s initial concept may resonate with shoppers looking to fill any void created by the ‘supermarketisation’ of the two German chains. As they diversify their assortment with new hero categories such as baby and HBC, and expand their offer with new brand listings and premium options, their messaging has evolved from ‘best value’ to ‘best quality’.

For purely price-focused bargain hunters, Jack’s claim to be the cheapest in the market may prove attractive. Similarly, the UK is also seeing the growth of high street discounters which are successfully attracting bargain hunters, and steadily expanding their offer to capture new missions.

One interesting aspect of Jack’s is staffing. Lewis reportedly revealed that staff will receive base-level pay, rather than enjoying the full pay or benefits package of regular Tesco workers. This stands in contrast to Aldi and Lidl’s approach; both offer the highest wages to attract the best young staff. Their belief is that the incentives, rewards, and promise of future career opportunities, give them the hardest-working and most efficient staff in UK grocery retail.

Since 2008, both Aldi and Lidl have exerted huge efforts around innovating in their stores, adding new services, improving staff expertise and enhancing the assortment to stay ahead of the competition, especially as the Big Four have invested heavily in pricing and promotions. When the rest of trade reacted to their growth, they responded with a counter reaction. In the case of Jack’s, though, we do not expect it to trigger a similar reflex from the German duo.

Future outlook for Jack's success

Jack’s ultimately needs to be positioned as a complementary offer to Tesco’s core supermarket offer, not one that overlaps. Germany’s Rewe Group should act as inspiration for Tesco in how to successfully reinvent the core business while implementing a discounter offer.

Several years ago, Rewe identified reinvention of its supermarket offer and the differentiation of its discounter format Penny as a prime strategy to win back market share from Aldi and Lidl in an increasingly cross-shopping environment. This saw Rewe launch new convenience formats, further improve its price positioning, relaunch value private label ranges that matched Aldi and Lidl on price and finally strengthen its regional and local credentials.

Key to Penny’s success has been the repositioning of its small-store offer towards a proximity-led offer that differentiates from both its core supermarket offer as well as Aldi and Lidl. While investing in upgrading stores to a more open and easier to navigate store environment, Penny also focused on the roll-out of unique private label lines catering to rapid changes in food consumption in Germany, namely the desire for fresh foods, organic, on-the-go and for now and for tonight missions. Alongside its higher proportion of brands versus Aldi and Lidl and its eponymous ranges, Penny to go and Penny heat & eat, shoppers do not view Penny as an extra trip, but instead as a unique destination for convenience-driven missions.

Jack’s should be different to both convenience operators and to Aldi and Lidl. Alongside the right locations, investment in a more mission-led assortment will certainly be a big step in driving a unique and value-orientated convenience offer.


Whether a test format to win in the north, or a potential safety plan for a post-Brexit crisis, Jack’s will have limited presence in the market, and Tesco clearly expects this. The expansion plans are conservative, aiming to use idle locations first. Tesco is aware of the pressures and competition, and will watch the test stores closely to fine-tune its offer in both products and services. With the right positioning of the new format as complementary to Tesco’s core grocery operations, Jack’s may yet prove to be a success.

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