Supermarket giant Tesco is set to launch a new discount store that will rival Aldi and Lidl, it's been reported.
Britain's biggest grocer, which has several branches in the Chester area, is looking to win back some of Aldi and Lidl's market share and will introduce the same cheap and cheerful methods used by the German supermarkets in their new budget-friendly supermarkets.
These include keeping a reduced amount of stock, displaying goods on pallets, and multiple barcodes so customers can get through the checkouts more quickly, reports Birmingham Live.
The sales tactics used by Aldi and Lidl cut costs for storage, transport and staff, meaning prices can be kept low.
Tesco, which has a 28% share in the UK grocery market - compared to Aldi's 6.9% and Lidl's 5% - has not yet commented on the report.
Both German stores began life aiming to provide cut-price products to families on lower incomes, but have since earned a big customer base among better-off people.
Aldi has recently knocked Waitrose off the top spot in an annual supermarket satisfaction survey.
Thomas Brereton, retail analyst at GlobalData, said: "The possibility of Tesco opening a discount fascia in a bid to neutralize the growing threat posed by German discounters Aldi and Lidl looks a bold move, but orchestrating the emergence of a new brand without damaging the reputation of the main Tesco image will require pinpoint precision to succeed.
"Since 2008 Aldi and Lidl have increased their combined market share from 2.9% to 9.4%, at the expense of Tesco and the rest of the Big Four, who have all struggled to respond.
"There are two issues Tesco must consider carefully: the longevity of the project given the scale necessary to make such a discount fascia profitable, and disrupting sales at the main brand through an erosion of brand image.
"Sainsbury’s attempted a similar concept in 2014 through a partnership with Netto, and its closure two years later came as a result of their failure to expand quickly or sizeably enough.
"Tesco could face a similar issue down the road; reports of an initial 60 stores would be a promising start, but expanding this to the couple of hundred or more needed for viability (without taking too many sales from existing Tesco locations) will be challenging.
"With its relationship with Booker and new association with European giant Carrefour, Tesco will feel that the buying power it now wields will be enough to make this a success.
"Tesco last tried the discounter approach in the mid-80s under Victor Value. As with Sainsbury’s-Netto it was eventually abandoned – blamed on the undermining of the main Tesco brand."
