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Lidl v2.0 or Retail Reinvented? Jack's explained

Lidl v2.0 or Retail Reinvented? Jack's explained

Tesco made their much-anticipated entry into the discount channel with the opening of the first Jack’s stores in Chatteris and Immingham last month. This was quickly followed by two further locations on Merseyside, with plans for 11 more in the pipeline. Amid strong interest from the trade and public alike, ESA Retail have taken a closer look at the first Jack’s stores to understand how Tesco is responding to the challenge of the European discounters.

A familiar feel…

As you might expect, our in-store audits revealed a number of key similarities between Jack’s and the leading discount grocers – Aldi & Lidl.

Jack’s stores are clean and bright, with wider aisles than most traditional convenience outlets, while shelf edge labels are simple, clear and easy to read.

Store layouts broadly follow the successful template established by the European discounters. A prominent central aisle of bin cages offering “When it’s gone it’s gone” (WIGIG) general merchandise products, combined with a front of store fresh bakery section will make Jack’s feel familiar to regular Lidl customers.

The range of products on sale also mirrors their more established rivals, with a greater emphasis on Non-Food and Health & Beauty products than seen in Tesco Express, and almost two thirds of all products being own label alternatives to the leading brands.

Price is likely to be where any future battle for customers is won, and in this area Jack’s sits broadly in-line with the competition. An analysis of each retailer’s prices revealed that Jack’s, Lidl and Aldi each sell roughly 40% of their range for less than £1 – compared to only 19% in Tesco Express.

Despite offering fewer products than Lidl and Aldi within the key price bracket of 75p-99p, Jack’s came out top when we compared the cost of a typical grocery basket.

Jack’s were the cheapest of the four retailers that we compared, with Lidl and Aldi each 3% more expensive, and customers at Tesco.com and Tesco Express paying 12% and 29% more respectively.

In fact, direct comparison reveals that Jack’s, Aldi and Lidl are price matched to one another across many common products, including the following staples:

Promotions are another area of similarity between Jack’s, Aldi and Lidl. In addition to offering general merchandise and homewares products on WIGIG promotions, Jack’s advertise a weekly “Fresh Five” product selection across fruit & veg, clearly mirroring the long running “Super Six” and “Pick of the Week” campaigns of their rivals.

With a difference…

However, Jack’s is not simply a clone of Lidl or Aldi. There are a number of important differences which provide clear signs that Tesco have been careful to draw on their strengths to make Jack’s stand out from the crowd.

While it’s true that Jack’s stock significantly fewer branded products than existing Tesco stores, they still offer more than double the number found in either Aldi or Lidl. At c.2,400 per store, the total number of products available in Jack’s is also around 15% smaller than their rival discounters, with an emphasis on everyday staples.

Tesco appear to have identified heritage as a way to make Jack’s stand out from the competition. By naming the chain after Jack Cohen, founder of Tesco, and placing emphasis on the British origin of the majority of products within its range, Jack’s is clearly distinguished from key competitors, with their German heritage and greater reliance on European products.

Banners and signage around store remind shoppers that “8 out of 10 products are grown, reared, or made in Britain” and that “100% of [Jack’s] fresh meat is British.” The message is reinforced by extensive use of Union Jack symbols across fresh produce sections and a large UK map detailing which area of the country common grocery products are sourced from.

Another important difference between Jack’s and existing discounters is in the use of technology within store. Jack’s have eschewed the traditional staffed-till approach in use at Lidl and Aldi, opting for more than half of all till points to be self-service. Furthermore, Jack’s customers are invited to use free Wi-Fi to download the “Shop Smart” app – allowing them to scan items as they move around store and pay without rescanning at the tills.

One to watch…

Our audits show that Jack’s represents an attempt from Tesco to combine the best features of existing discount operators with their own heritage and brand buying-power.
It remains to be seen if combining familiar discounter low prices with more branded products, greater use of technology, and an appeal to Britishness can prove a winning combination for Jack’s. However, with more Jack’s stores scheduled to open on a regular basis over the coming months, the influence of this new entrant is only likely to grow.

For access to a full summary of our findings and further information about how ESA Retail can help you understand the discount channel, please call 01727 847572 or email mellissa.lam@esa-retail.co.uk.

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