Speculation mounts over Tesco discount launch

Speculation is mounting that Tesco is set to launch a new discount format amid ever-increasing market share gains by German discounters Aldi and Lidl.

The UK’s biggest retailer has invited reporters to join chief executive Dave Lewis at its site at Chatteris in Cambridgeshire on September 19.

The supermarket giant simply said it will be “sharing some exciting news” but did not give any further detail.

In July, Tesco advertised for staff for a “new store format” in Chatteris, seeking to recruit retail assistants, retail customer service assistants and retail managers.

Media reports in July said Tesco was close to launching a chain of discount stores in Britain called “Jack’s” after Jack Cohen, who founded a business in 1919 that became Tesco.

Tesco is Britain’s grocery market leader with a share of 27.4% while Aldi and Lidl have increased their combined share to 13.1%, according to the latest Kantar Worldpanel data.

Earlier this year Tesco announced it would form a “strategic alliance” with French retailer Carrefour as part of efforts to cut prices.

The long-term deal will be covered by a three-year framework and see the two companies form a “strategic relationship” when dealing with global suppliers.

In June, Tesco reported its 10th consecutive quarter of sales growth, boosted by its acquisition of wholesaler Booker.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Aldi and Lidl account for over 13% of take-home grocery sales and are growing at 10% each year.

“Strategically, it makes sense for Tesco to consider its own discount chain and try to capture some of that growth.

“The big four now make up less than 70% of grocery sales – down from 76% a decade ago. The proposed Sainsbury’s-Asda merger acknowledges this decline, as did Tesco’s own acquisition of Booker, which gave it access to wholesale and out-of-home sales.

“The opening of a new discount chain would be further recognition of this shift.”