The news we have all been waiting for (well those of us working in the food and grocery industry!)…the first two Jack’s stores opened this week, generating much excitement and media attention. Tesco’s new discount format is set to become the challenger in the discount channel, competing on price with Aldi and Lidl, but what will shoppers think of this new value retailer?
Jack’s is well positioned to meet the needs of British shoppers by promising to deliver on three key areas:-
1) Providing the best value in town
Jack’s commits to providing the best value in town by price checking against local competitors. This will be a key selling point for shoppers, with saving money being a priority in the current economic climate. 80% of British grocery shoppers anticipate that the price of food and groceries will increase over the next twelve months, so they’re looking for ways to save on their overall grocery bill.
One way that shoppers are saving money is by shopping in the discounters; low prices are the main reason that two thirds of British shoppers claim to regularly shop in Aldi and Lidl.
Source: ShopperVista. Base: 914 food discoutn grocery shoppers, Apr-Jun'18
2) Keeping shopping simple
Like Aldi and Lidl, Jack’s will have a smaller range of 2,600 SKUs, to make product selection simpler and create efficiencies. Many shoppers prefer having less choice, however having the right products to meet their needs is crucial for success.
Source: IGD Research
Ease and speed of getting through the checkouts is one area that food discount shoppers are less satisfied with. We found 30% claim to have been very satisfied with this on their last trip vs 43% of supermarket shoppers. Jack’s has addressed this issue by offering mobile payment via the Jack’s Shop Smart app, as an alternative to self-service or traditional checkouts.
Source: IGD Research
3) No compromise on provenance
Again, like Aldi and Lidl Jack’s is dialling up provenance and British throughout its stores. Eight out of ten food and drink products in Jack’s store will be grown, reared or made in Britain. This commitment will help to build trust amongst shoppers, many of whom prefer to buy British products.
Source: ShopperVista, Jan'18. Base: 1,700 British grocery shoppers. IGD Research
With its cheap prices, efficient stores and focus on British, we anticipate that Jack’s will be a welcome addition to the market by shoppers. However, there will be some challenges that Jack’s will need to overcome.
Gaining trust amongst brand-loyal shoppers
Approximately 70% of Jack’s range is private label. The inability to buy specific brands is one of the main reasons that food discount shoppers buy certain categories elsewhere. These include health and beauty, crisps, alcohol, hot drinks and pet food, according to our report ‘UK discount: factors influencing future growth’.
To capture more of their shoppers’ food and grocery spend, Aldi and Lidl range high-loyalty brands in categories where brands are most important to shoppers. They are also building awareness and trust in their private label ranges e.g. Lacura and Mamia. For Jack’s to succeed and build loyalty with shoppers, its private label products will need to consistently deliver on quality.
Currently, Jack’s only plans to open 10-15 stores throughout 2019, so it won’t be accessible to most shoppers. Competition from discounters will grow as they step up their store opening programmes. Aldi is on track to have 1,000 UK stores by 2022. Lidl last year doubled its store opening plans to 50-60 per year and is also refurbishing many older stores.
Source: ShopperVista. Base: 914 food discounter shoppers Apr-Jun’18
London is a priority for both retailers; they’re now often willing to also develop housing schemes to secure high-quality locations. Improving access to discounters is likely to fuel sales, particularly for Londoners and younger shoppers.
Making Jack’s into a challenger to established discounters will require substantial resources and commitment. However, it is important to remember that Jack’s is a strategic play for Tesco and will give the retailer a deeper understanding of the discount channel that can inform strategy across the main estate.
You can read more about Jack’s in our report ‘Jack’s: Tesco’s new discount format’.
If you want to find out more about discount shoppers then visit our discount page on ShopperVista, or contact our discount expert Nicola, [email protected].
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