Aldi and Lidl - the Teutonic twins - have the UK’s biggest supermarkets in a spin.
The German discounters were largely ignored when they launched here in the 1990s, but in the last 10 years they have expanded at pace and largely at the expense of the established players.
Tesco has a wheeze to reclaim lost customers.
It’s launching Jack’s, a discount chain that bears the name of Tesco’s founder.
Jack Cohen fought in the First World War and used his £30 demob money to start out in business.
He stacked things high and sold them cheap with considerable success and it’s that spirit that Tesco is aiming to channel.
- Take a look inside Tesco's first budget store Jack's
Tesco promises the “lowest prices in town” at the 10-15 locations where Jack’s will be rolled out.
Cheaper than Aldi and Lidl, cheaper than Tesco.
The plan is that Jack’s will undercut everyone.
Shoppers should expect lower prices but also less choice.
Jack’s first store in Chatteris, Cambridgeshire, will carry 2,600 food and drink lines.
Tesco’s larger supermarkets carry more than 35,000.
Most of the products will be own label because the margins are plumper and not all the big brands will be on the shelves.
Jack’s business model is low-cost, with fewer staff than the average Tesco, and there’s also no online operation.
Workers will earn more per hour than at Tesco (£9 an hour compared with £8.42) but won’t get a staff discount or an annual bonus, unlike Tesco employees.
Overall the package is less generous.
But this is an experiment and may not work.
Sainsbury’s tried something similar in 2014, but its Netto adventure lasted two years and ended with every store being closed down.
Aldi and Lidl have demonstrated there’s considerable appetite for no-frills shopping.
It will be fascinating to see how Jack’s fares.
Tesco is betting small.
The investment cost of £25 million is tiny - the scale is “toe in the water” not a big splash.
Tesco says Jack’s will source British when possible.
It’s wrapping itself in the Union Jack but then all the supermarkets do these days.
Tesco insists the decision has nothing to do with Brexit but its pledge to lower prices will be hard to keep if Britain leaves the EU abruptly and without a deal in March.