Tesco is readying the launch of Jack’s, its much-anticipated discounter that will challenge Aldi and Lidl. Will it take the shape of its rivals or burrow into the identity of its parent brand?
Tesco declined to comment on any rumours regarding its new format, however the Guardian all but confirmed it would be called Jack’s after sending reporters to peek through the tarpaulin of the first store in Chatteris, Cambridgeshire. Other than the name, it’s unclear what shape the brand will take.
The name is a nod to Tesco’s founder, Jack Cohen, and represents its thoroughly British heritage on the European battleground against Aldi and Lidl. The two German stalwarts both feature bright and arguably dated branding that rejects the flat and minimalist logo designs of modern brands; Tesco’s branding, while evolved, dates back to 1996.
A crucial question surrounding Jack's launch is how far it will align itself with its parent's branding. For Mike Dodds, global president at Proximity Worldwide, Jack’s could reap rewards from borrowing from the Tesco brand book – namely, the immediate customer trust and comfort that well-known colours and lettering can bring.
“But borrow too much and you potentially have a negative impact on Tesco’s reputation just as it’s starting to recover well,” he added.
Rob Sellers, the managing director of Grey Shopper, reckons Jack’s visual language will be derived more from the ‘basics’ lines of supermarkets such as Waitrose than from its parent brand. As the shopping experience will be simple, he believes, so will the branding.
He added that the marketing team would be unwise to “dress things up as something special” especially when the business has the potential to cannibalise its own parent brand.
“My sense is it will be a simple, straightforward brand,” said Sellers. “That doesn't mean to say it hasn't been thought about, but it won't allow branding to get in the way of making things easy to choose.”
In any case, he added, “brand is a smaller function of success for this kind of business than it is for other kinds of business”.
In order for Jack’s to compete with Lidl and Aldi, its prices will have to be cheap. Tesco’s options for driving down price will be plentiful, but a more spartan shopping experience – and back-end operation – will certainly play a part.
“The reason they can't simply reduce prices [in mainline Tesco stores] is because operating those stores costs money,” explained Catherine Shuttleworth, chief executive of founder of retail and shopper marketing agency. “So [Jack’s] should be a really, really simple, easy to shop operation.”
Shuttleworth predicts a retail experience very similar to Aldi and Lidl’s. She imagines a store with no counters, no homeware department and certainly no F&F clothing line. It will sell fresh, frozen and chilled food and non-edible products will be limited to beauty and healthcare. There might be special buys, there might not. And staffing levels will be slimmer, with roles less defined.
The latter point is evidenced in the job ad Tesco has put out in Chatteris for ‘new store format’ roles. It states: ‘No two days are the same, so if you like a varied role where you are in control of the customer experience, whether it be baking bread, filling the shelves, or making sure the store is a safe place for colleagues to work and customers to shop, wed [sic] love to hear from you.’
It adds: ‘Were [sic] looking for people who are happy to roll their sleeves up and work together in a small team’ and ‘Youll [sic] be expected to ... make quick and effective decisions with both customers and the stores operation in mind.’
Sellers agrees the product offering will be much smaller than a regular Tesco. He also believes the parent brand may leverage its experience in digital and tech development more than Aldi and Lidl have done so far in order to drive operational costs down further.
“If they've got a way of using tech that makes it really universally easy to shop there and stops them from having to invest in other spaces, they'll do it,” he predicted.
It’s unlikely that household brands such as Heinz and Walkers will appear on the shelves on Jack’s. Shuttleworth believes Tesco can may lean on its ‘strategic alliance’ with French retailer Carrefour in order to source the cheapest goods that it can while utilising its merger with wholesaler Booker to offer customers large quantities at reasonable prices.
She adds it’s unlikely we’ll see Tesco products – even from its ‘Everyday Value’ range – in Jack’s stores.
“It's no good me going to Jack's and buying Tesco frozen chips for 60p when I buy those at Tesco for 80p,” Shuttleworth explained. “So they've got offer different products – a reason why I don't think [Jack’s] will be full of branded products.
“Which in itself begs the question: what does that mean for brands?”
Sellers believes Jack’s will develop its own line of goods without branding them as such – much like Tesco’s low-cost (and controversial) ‘farm’ brands. He envisages shelves filled with original brands that are very similar in substance to well-known names, much like Lidl’s Pringles dupe in ‘Stackers’.
Cambridgeshire’s Chatteris – a place not many people could pin on map – could provide a clue to Jack’s store opening strategy. Rumours abound that Tesco will open up to 60 of the new format shops but it would be unwise for the retailer to launch them near strong-performing main brand sites.
“They will have done a deep dive into every postcode in the UK and they will have analysed where they're underrepresented or under-performing, or where they've lost a lot of sales to discounters,” said Shuttleworth.
Chatteris’ £22m purpose-built Tesco never opened after the supermarket’s profits took a hit in 2014. Both a Lidl and Aldi currently serve shoppers in the area.
“I think [Jack’s will open in] smaller towns where [Tesco] haven’t got big superstores,” said Shuttleworth. “I can't image they would be in London, Leeds or Birmingham, for instance.
“They will be in different towns around the UK that have the population to service the stores, where people are looking for real value and where they've lost market share quite heavily to the discounters."