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Can Tesco beat Aldi and Lidl at their own game?

Written by RetailWire Staff

Photo: Aldi

Concern over increased competition from grocery discounters like Aldi and Lidl seems to be a big factor pushing Tesco to open its own low-price concept.

Tesco plans to open a discount chain, possibly to be called Jack's, as soon as September, according to The Guardian. There may be as many as 60 stores in six different U.K. cities. In some cases, Tesco appears to be closing existing stores that will reopen as Jack's locations, as well as opening stores in properties it has owned for some time but not utilized. And with the recent acquisition of Booker, the UK’s largest wholesaler, there has been speculation that the new concept may have elements resembling Costco.

Tesco currently operates four formats in Britain — a big box superstore, a smaller version of the superstore called the compact format, a metro store with product catering to urban shoppers and an express convenience store.

Despite having added new formats over the years to meet new shopper need and habits, the last time Tesco attempted a discount concept was back in the 1980s, according to The Guardian, when the company launched a chain called Victor Value, which closed after four years.

While Tesco has been successful with its other various concepts in the U.K. in recent years, the company has also hit some roadblocks.

A decade ago Tesco launched its U.S. convenience store concept, Fresh & Easy, to high expectations. But in 2013 Tesco sold off the floundering chain. Two years later, the new owners, Yucaipa Companies, closed Fresh & Easy's doors for good. 

Tesco faces other big competitive challenges, as well. In April, its two major traditional grocery competitors, Sainsbury's and Asda, agreed to a merger that would result in a supermarket chain larger than Tesco. 

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