Jack's: Will you really get the best deal at Tesco’s new discount stores?

Alanna Petroff
Senior Economics Correspondent at Yahoo Finance UK

Britain’s leading grocery chain, Tesco (TSCO.L), is fighting back against the discounters Aldi and Lidl with its new Jack’s branded stores.

But shoppers may have a difficult time discerning whether they’re truly getting a better deal at Jack’s.

Tesco CEO Dave Lewis said this week, “the intention is for [Jack’s] to be the cheapest in town”. The company has promised Jack’s stores would have “great-tasting food at the lowest possible prices”.

But Jack’s is not making all its prices available online, only listing deals on roughly 30 items including apples, clothes hangers and some electronics. The limited list makes it difficult to make meaningful like-for-like comparisons unless shoppers make separate trips to each store.

Retail analysts at the financial firm Jefferies reviewed a range of product prices at Jack’s and found that they were, on average, between 3% to 7% lower than Aldi and Lidl prices.

But Aldi maintains that it will not be beaten on price.

“Our customers will always pay the lowest grocery prices in the UK every time they shop with us,” an Aldi spokesperson told Yahoo Finance UK. Further Aldi price cuts could come soon.

Lidl declined to respond to Jack’s entry into the market.

Tesco has the largest share of the £165bn ($217bn) UK grocery market, according to research firm Euromonitor International. The company’s 22% market share dwarfs Aldi’s 6% and Lidl’s 4% share. But they have steadily chipped away at the lead held by Tesco, Sainsbury’s (SBRY.L), Asda and Morrisons (MRW.L) since the 2008 financial crisis.

For now, Jack’s is a small initiative by Tesco. It opened just two stores this week – in Chatteris, Cambridgeshire and Immingham, Lincolnshire – and plans to roll out up to 15 more over the next six months. Tesco boasts over 3,400 outlets across the country.

It’s also looking to beat its discount rivals with its focus on quality British goods.

“Eight out of 10 food and drink products will be grown, reared or made in Britain,” said a Jack’s press release.

Aldi and Lidl, by contrast, are German-owned chains.