When Tesco unveiled its first Jack’s discount store yesterday (19 September) one thing chief executive Dave Lewis made very clear was that Jack’s is part of the Tesco family, which is evident through it’s blue and red branding and its slogan.
Another thing Lewis was eager to emphasise is Jack’s strong emphasis on “Britishness”. Advertising in-store and on pack will highlight that eight out of 10 products available in Jack’s are grown, reared or made in Britain, which it claims is a higher proportion than any other grocer.
On top of this, Jack’s has also promised to be the “cheapest in town”.
Lewis says these decisions stem from listening to what consumers say they want when it comes to discount shopping. However, there are conflicting views on whether it’s the right way to go.
Resonating with shoppers
Bryan Roberts, global insights director at TCC global, says Tesco has taken a distinctive stance against it continental cousins, suggesting a strong emphasis on provenance as well as price “should play well with customers”.
However he acknowledges Aldi and Lidl also have a strong stance toward British goods.
“[Championing Britishness] is by no means a unique selling proposition (USP) to Jack’s, but its ability to lean on Tesco’s status as a British institution might resonate more in shoppers’ minds,” he adds.
One of the fundamentals behind Aldi and Lidl’s success across the world has been their ability to blend “chameleon-like” into the various markets in which they operate, according to Roberts, who notes that both retailers were early movers in terms of transitioning to 100% British meat.
“Both Aldi and Lidl stores are awash with Union Jacks and graphics championing their support of British suppliers. Aldi claims to be the market leader in the amount of fresh produce it sells which is British, while Lidl states that two-thirds of what it sells is sourced here,” Roberts explains.
“So, Jack’s has probably clinched the high ground with its eight out of 10 boast, but local sourcing isn’t really a USP compared to Aldi and Lidl.”
[Championing Britishness] is by no means a unique selling proposition to Jack’s, but its ability to lean on Tesco’s status as a British institution might resonate more in shoppers’ minds.
According to data from YouGov’s BrandIndex, Tesco ranks well below Lidl and Aldi on value with a score of 16.4 points compared 50.5 and 43.7 respectively, which hints at why a discount store may be necessary if Britain’s biggest supermarket has any hope of competing with the German giants.
When it comes to quality, it’s an entirely different story, though. Tesco ranks fifth on 25 points behind Marks & Spencer (58.7), Waitrose (50.8), Sainsbury’s (45.7) and Morrisons (26.8) but ahead of Aldi (21.3) and Lidl (15.8).
Data provided by YouGov suggests 72% of budget shoppers believe there isn’t much of a difference between leading brands and supermarket own-labels, compared to 59% of consumers that don’t class themselves as discount shoppers, which YouGov classifies as ‘big four’ shoppers.
Meanwhile, 60% of budget shoppers agree that they tend to stick to brands they like, compared to 74% of big four shoppers.
When asked whether they believe well-known brands are better than supermarkets’ own brands, just 21% of budget shoppers agree compared to 38% of big four shoppers, suggesting Jack’s own brand products are likely to better resonate with budget shoppers.
The danger of appearing downmarket
Justin Cernis, founder of strategic and creative brand development agency The Cernis Collective, questions Tesco’s move to take inspiration for Jack’s in-store branding from the market environment the supermarket giant’s founder Jack Cohen started selling in.
“I wonder if that visual identity, while romantic, is actually a powerful or relevant reference point,” he says before suggesting that perhaps Jack Cohen’s spirit and brand values could have been brought to life in other ways.
“Though, I think Jack’s is a central reference point for the overall Tesco business and something that is probably hard to ignore.”
According to Cernis the danger lies in whether Jack’s could appear too downmarket with its visual branding.
While he agrees the simple stencil-like design could play well on the market environment within the discount store space, he believes it lacks creativity.
“It might feel visually differentiated against Lidl and Aldi, but I’m not sure it’s right,” Cernis says. “Basic [branding] has a great opportunity to shine in today’s multi channel, visually driven world but it doesn’t have to be as basic.”
He believes Tesco’s attempt to win back market share “can’t be faulted” .
“It’s a hellishly competitive category, but the brand positioning and tone of voice might not do the strategic job Tesco actually needs doing in the long run,” he says.
Jack’s ‘won’t make a dent’
On the other hand, Kantar Worldpanel’s head of retail and consumer insight, Fraser McKevitt, has deemed Jack’s strong British brand positioning as a “savvy move” but says the venture may struggle to steal marketshare given it only plans to open 10 to 15 stores across the UK during the next six months.
Given there are already more than 1,300 Aldi and Lidl stores across the country with a combined market share of 13.1%, it’s clear Jack’s is playing a longer-term game, he explains.
“There have been plenty of comparisons to Aldi and Lidl and it’s worth remembering that despite their ‘discounter’ moniker they aren’t particularly downmarket retailers – there’s a real demographic mix among their shoppers,” McKevitt says, adding that about 60% of all households shop in one of the discounters at least once a year.
“However, they spend just £1 in every £10 there and don’t shop at the discounters as frequently as at the big four. Given the Jack’s model is so similar we would expect to see shoppers behaving the same way in its stores.”
Allyson Stewart-Allen, chief executive at International Marketing Partners has a similar stance.
She says Tesco would do well to learn some lessons from its US foray Fresh & Easy, a small format store aiming to offer Americans a budget proposition that “failed famously” for a number of reasons.
“They didn’t listen to the extensive market research data they obtained and thought they would change American shopping habits in many ways, but learned the hard way that they couldn’t,” she explains.
According to Stewart-Allen, Jack’s will only be successful in stealing market share if it’s treated as a stand alone business in order to minimise the backlash Tesco will experience if it goes badly.
“If Tesco is wanting to lend its reputation to Jack’s, then which bit of it is it lending? Clarity around that needs to be precise,” she says.
“Given Aldi and Lidl now offer good prices for good quality, without patronising their shoppers by telling them they’re on a limited income and should feel shame for not being wealthy, Tesco will have to do the same with Jack’s. Only if Jack’s is focused on a clear, specific angle on this budget grocery market sector will it win.”
Tesco’s chief customer officer Alessandra Bellini will be appearing on the Customer Experience stage at The Festival of Marketing 11 October. For more information and to buy tickets go to festivalofmarketing.com