Tesco is understood to be developing a new discount store in order to take on industry disruptors Aldi and Lidl.
According to The Sunday Times, UK’s biggest retailer is set to launch a separate brand that aims to match the German stores on price as it aims to regain some of the market share it has lost to them in the past decade.
Tesco will reportedly offer a more limited range of products than a standard store, keeping prices as low as possible.
This comes amid an increasingly costly price war in which the country’s largest grocers are attempting to absorb as much of the rising import costs as possible in order to stay competitive.
Aldi and Lidl have made this all the more difficult for the Big 4, offering prices they have struggled to match and slowly chipping away their share of the market.
This was demonstrated in the latest quarterly sales figures across the sector, with Aldi and Lidle seeing sales rise 16.2 and 16.3 per cent respectively compared to Tesco’s 2.6 per cent.
Tesco would not comment on the plans but it is not the first time it has considered the move, having reportedly been pitched under Terry Leahy’s leadership but scrapped due to fears it could undermine Tesco’s main stores.
Industry sources estimate around 3000 would be stocked, around a 10th of a usual Tesco Extra store, and that it would be run separately from its One Stop convenience chain.
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4 Comments. Leave new
Isn’t this a story from 1989?’ Tesco to launch value chain to counter entry of Aldi to UK’. It was called Victor Value and failed. This will too unless its done with real drive, scale and commitment – in which case it will cannibalize the main Tesco chain. The solution should be to address the fact that prices are consistently far higher that Adi / Lidl across around 1000+ lines due to fat margins needed to service existing operating costs. (its unlikely to be due to inferior buying terms). Cannibalising main chain sales won’t address this.
Greed greed and more greed
If Tesco didn’t demand 35% margins for themselves then they would be able to compete. They screw the suppliers into the ground, mess them about with decision making and pay slow. Aldi or Lidl treat suppliers respectfully.
Anything which keeps prices low -Aldi and Lidl have done a fantastic job for customers!