Tesco: A Jack’s of all trades

Forget red carpets, retail launches are where the excitement’s at. So when we heard about the imminent launch of Tesco’s new discount venture, we hit the road (Jack) and headed straight up the M180 to get ourselves a piece of the action.

Hot on the heels of their maiden voyage in Chatteris, the Immingham store is only the second of up to 100 named after Tesco’s frugal founder, Jack Cohen, an enterprising market trader who liked to “pile it high and sell it cheap”.

First Impressions

Jack’s is the latest in a long line of bold moves from Tesco this year. The Booker deal saw them take greater strides towards becoming ‘the UK’s leading food business’. And with their eyes now fixed on the ‘discount’ prize, they’ve taken strategic steps to reposition their business model to align more closely with the needs of today’s value shopper, bringing down the axe on Tesco Direct and their Brand Guarantee scheme in the process.

But as we queued for two hours amongst Immingham’s finest bargain-hunters, we pondered whether moving from a tried & tested strategy that’s dominated the retail scene for over 80 years would be a step too far in the wrong direction?

The inspiration behind the store’s look and feel would come as no surprise to Aldi aficionados. Simple, straightforward branding; a scaled back range; a spartan, streamlined shopping experience; slimmer staffing; and more importantly, cheaper prices than Tesco could ever manage.

The Price is Right

For a decade now both Aldi and Lidl have been making significant inroads into the UK grocery market, growing 10% each year and claiming almost £7bn Big 4 annual shopper spend[1].

The price war is the first and most obvious battle to be won. Jack’s #foodbankchic style makes no apologies in its appeal to the ‘everyday basics’ thrifty shopper.

Tesco may exploit its strategic relationships with Carrefour and Booker to source the cheapest goods and sell in bulk at reasonable prices. But while these longstanding business relationships may work in their favour, the relationship between Jack’s ‘brands’ and the shopper is one that’s only just begun.

Will 49p bread and 23p beans be enough to defend against the discounter threat & sustain growth for the long term?

Quality is King

Price is only the fourth biggest driver behind shoppers’ choice of retailer[2], and discounters have proven that shoppers are prepared to put up with a cutback in service and a reduction in choice as long as quality remains consistent.

Do Jack’s have what it takes to deliver on quality expectations? With 1,800 Own Label lines (70% of their range) – and without Tesco’s legacy to lean on – they’ll have to earn their reputation from scratch.

But with ‘8/10 products proudly made in Britain’, they scored 10/10 for effort. Their commitment to quality shone through. It was refreshing to see their ‘Fresh Five’ produce lines for under 60p; a ‘Fresh from Immingham’ instore bakery; and an eagerness to sample their fresh food offering – the tasty cupcakes were a big hit!

A Race to Differentiate

So far, so Aldi. Jack’s need a sure-fire way to keep promiscuous shoppers coming back for more. Step forward WIGIGs.

Rule 1 of ‘How to be a German Discounter’ dictates that time-limited, multi-category iconic lines at unbelievable prices will pull in incremental demand and steal a greater share of total grocery spend.

And with laptops for £100, 49” TVs for less than £200, and (our personal favourite) must-have Hatchimals for just £16, the ‘When It’s Gone It’s Gone’ lines certainly didn’t stick around for long.

A Master of None?

Jack’s is a plug to a major leak for Tesco but at what cost?

They’ve seemingly abandoned their much-hyped ventures into digital and convenience. And while they’re now busy trying to out-Aldi Aldi, they’re taking their eyes off the prize and enabling the ASDA/Sainsburys behemoth to steal a march on total retail share.

Is this the dawning of a new age of multiple retail channels under the Tesco umbrella or are they facing a future which sees them becoming a ‘Jack’ of all trades and a master of none?

If you’ve got Jack’s in your sights but can’t get to a store, let us be your eyes & ears. From assisted shops to category audits, we’ll help your brand win in this new era of the discounter format. Call us on 0161 833 4300 to find out more.

[1] Kantar – Discounters Making Inroads – August 2018
[2] Newton Europe – Beating the Discounters – 2017