While unlikely to immediately affect the UK retail market, Jack’s was clearly being positioned as a British retailer emphasising local produce, according to Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.
“With its heavy Union Jack branding and promises on provenance, Jack’s is looking to make its name as a solid British retailer,” McKevitt said. “Nearly half of shoppers try to buy local produce when they can, so it could be a savvy move – though it’s still very early days.”
On unveiling the first two of its stores today (19 September), Tesco pledged that 80% of Jack’s food and drink products would be grown, reared or made in Britain.
Each of the 10-15 stores proposed over the next months would stock an own-label range, also named Jack’s. In addition, the stores would stock some familiar grocery brands and a range of general merchandise on a ‘When it’s Gone, It’s Gone’ basis.
While being “quite small beer” for suppliers right now, Shore Capital head of research Clive Black acknowledged that UK suppliers had played an important role in the Jack’s concept.
‘Integral to Jack’s development’
“Suppliers, and British suppliers at that, have been integral to Jack's development given the high participation of Jack’s private-label and c80% home-grown produce,” said Black.
“How the trail goes, and the onwards rollout, will be an important factor behind future relevance.”
When it came to branded products, Black cautioned that a limited range discount offer was “clearly going to prioritise key brands and so secondary and tertiary lines may not have the room to be listed”.
In launching Jack’s, Tesco is taking on the hard discounters Aldi and Lidl, which have a combined UK market share of 13.1%, according to the latest Kantar Worldpanel data.
McKevitt warned: “There have been plenty of comparisons to Aldi and Lidl and it’s worth remembering that despite their ‘discounter’ moniker they aren’t particularly downmarket retailers – there’s a real demographic mix among their shoppers.
“Plenty of people buy from Aldi and Lidl – around 60% of all households shop in each of the discounters at least once a year. However, they spend just £1 in every £10 there and don’t shop at the discounters as frequently as at the big four – given the Jack’s model is so similar, we would expect to see shoppers behaving the same way in its stores.”
Playing the discounters at their own game
John Perry, managing director of logistics provider Scala, said Jack’s represented Tesco playing the discounters at their own game.
“The habits of customers in the grocery sector are also changing, with an increasing move towards ‘little and often’ purchasing,” he claimed. “In response, Tesco seems to be further developing its Metro and Express models to incorporate customer demand for convenience and competitive pricing.
“Only time will tell as to whether Tesco’s discount venture takes off. However, it is undeniably an innovative move that’s sure to apply further pressure to the other mainstream retailers.”
Jack’s is named after Jack Cohen, who founded the Tesco business from his market stall in Hackney, north London, in 1919.
Dave Lewis, Tesco group chief executive, said: “Jack Cohen championed value for customers and changed the face of British shopping.
“It’s fitting that, today, we mark the beginning of Tesco’s celebration of 100 Years of Great Value by launching a new brand, and stores bearing his name. Great-tasting food at the lowest possible prices with eight out of 10 products grown, reared or made in Britain.”
The first two Jack’s stores are scheduled to open tomorrow (20 September) in Chatteris, Cambridgeshire and Immingham, Lincolnshire, on sites that make use of excess Tesco space.
The stores to follow would include a mix of entirely new sites, sites adjacent to existing Tesco stores, and a small number of converted Tesco stores, the retailer stated.