The British multinational grocer, Tesco reportedly aims to launch a new retail format to challenge German counterparts Aldi and Lidl. If sources are to be believed, the retail giant is planning to set up 60 stores named Jack’s, after founder Jack Cohen.
As suggested by the reports, Tesco is targeting to win back some of market share captured by rivals Aldi and Lidl. Meanwhile, the German duo has employed some cost-saving methods that will be introduced at their budget-friendly supermarkets. Their methods include maintaining a condensed amount of stock, displaying goods on retailer pallets, and more than one barcode so customers can check out more quickly. Moreover, their sales approach uses cost cuts for storage, staff, and transport, leading to lowered product prices.
As per sources, both Aldi and Lidl have always aimed to provide low-priced products to people of lower or average incomes but have earned a huge customer base among wealthy masses as well. Recently, Aldi scored an edge over Waitrose, Britain’s biggest employee-owned retailer, in an annually held supermarket satisfaction survey.
According to retail analyst Thomas Brereton, Tesco’s discount fascia against the German discounters seems like a bold move. However, to execute the emergence of a new brand without disrupting the existing brand image will be a meticulous process, he claims
Brereton went on to add that currently, there are two problems Tesco must confront – firstly, the endurance of the project given the efforts necessary to make such a format profitable, and secondly, the disturbance of sales with the main brand due to the loss of brand image.
According to Brereton, Tesco’s chief executive, Dave Lewis seems to believe that the price-led customers of 2018 will not be as discriminating as shoppers were against own-label products 30 years ago.
Incidentally, Tesco is also aiming for a strategic alliance with France’s Carrefour to cut costs and improve the choice of products available to customers.