Tesco’s secret plans to launch its own discounter model store chain could rival soon-to-be Tesco-owned symbol group Family Shopper.
The new brand, leaked by The Sunday Times, is aimed at combatting the rise of Aldi and Lidl by offering fewer lines but at a lower price. It is rumoured to include an offering of around 3,000 lines, far below the current 25,000 stocked in Tesco’s large-format supermarkets.
Like the new concept, Family Shopper stores are also limited to a small number of lines and focus on a low price, high volume model. When it launched, Booker sales director Steve Fox said it was an opportunity “to do a discount format in the independent sector”.
Experts including Clive Black, CEO of investment group Shore Capital said it would be difficult for Tesco to launch a discounter without damaging its existing stores, which includes independently-owned One Stop franchises, and is soon to include Booker’s symbol groups Budgens, Family Shopper, Londis and Premier.
“What Tesco and Booker said they would do when they announced the merger is totally different from what is happening,” said Sunita Kanji, owner of Family Shopper in Little Hulton, Manchester.
“What does it mean for convenience stores when Tesco are looking to launching new brands that will compete with its own portfolio?”
Nick Varsani was the first London retailer to join the Family Shopper fascia. “If it’s an option for Family Shopper stores to be a part of then I’m all for it, but if not I’d be very disappointed,” he told Retail Express.
Avtar Sidhu from Budgens Kenilworth, Warwickshire, added: “This will be under the stewardship of Charles Wilson. His mandate has changed, will our wholesale partner now become our biggest threat?”
A Londis retailer told Retail Express: “If a powerful discounter was to open in my vicinity then I would consider selling the store. More local rivals only devalue the business.”
However, some retailers disagreed. “Hopefully it will help One Stop learn how to respond to discounters. Competition is like rain, it’s necessary and you can’t control it. The important thing is for independent retailers to focus on what they can change,” Shelley Goel from One Stop Gospel Lane in Birmingham, said.
According to the Guardian, Tesco is also considering a “Costco-type bulk purchase brand”.
Though it declined to comment on the leaks, last week Tesco said it was working to develop new formats to better serve customers.