Clive Black, a retail analyst at Shore Capital, says: “Tesco’s proposition has moved on and into the mainstream of the business.
“The two phases of the Aldi price match are a much bigger commitment to facing down the core challenges of the German discounters on price.”
In January, Aldi threw down the gauntlet to its larger rivals and vowed to offer the lowest prices this year “no matter what”. Four days later, Tesco’s chief executive Ken Murphy said he wanted to keep prices “keen” as consumers face mounting pressures on their finances.
Mr Murphy said: “All I can tell you is that we’re committed to manage and mitigate [inflation] to the best of our ability and to keep prices as keen as possible. We have an unwavering commitment to value and we’re going to persist.”
Recent industry data has shown that Murphy’s efforts are paying off, with more shoppers choosing Tesco over rivals.
Tesco has continued to outperform its Big Four rivals, Sainsburys, Asda and Morrisons, according to Kantar data published on Tuesday, holding a 27.9pc slice of the grocery market and maintaining its highest share since Jan 2018.
“Tesco has been trading at similar momentum to Aldi and Lild, without opening stores, while the discounters are,” says Black.
Jack’s is not Tesco’s first attempt at selling cut-price items. In the 1980s, it re-branded smaller, town centre stores to Victor Value branches, before eventually ditching the concept as it was too complex to grow at scale.
Sainsbury’s, too, tried to take the fight directly to Aldi and Lidl, with similar results. It struck a joint venture with Denmark’s Dansk Supermarked in 2014 to bring the Netto discount brand back to the UK, but it closed its 16 stores two years later. It blamed the project’s failure on high costs associated with expanding the chain.
Black believes that Jack’s added unnecessary complexity to Tesco’s UK business as it seeks to be a leaner operation.
But Tesco missed an opportunity by not expanding Jack’s more widely and decisively, says Bryan Roberts, an independent retail analyst at Shopfloor Insights, who also worked for Tesco during the pandemic.
“They should have done a bit more with it in terms of having Jack’s areas in stores, or selling the range through the main estate as well,” he says.
“Obviously they wanted to keep it separate, but they felt it was fine to sell it in the wholesale channel and convenience.”
Tesco confirmed that the Jack’s branded products, however, will live on and be available to Booker customers, including corner shop chain Londis. The grocer struck a deal to buy the cash-and-carry chain Booker for £3.7bn in 2017.
