The UK retail sector has been rocked by rumours that Tesco could be working on a new discount retail concept that would 'match or beat the German discounters' on price.
Now, more details have emerged about this potential development.
The Times reports that the new move is being led by former Aldi executive Lawrence Harvey, who worked at the German discount giant for over eight years, and now has 'dozens of people helping him to draw up a workable concept' for Tesco.
The report adds that Harvey and his team have already identified two potential locations for the new concept to be trialled - Immingham, Lincolnshire, and Chatteris, Cambridgeshire.
Tesco currently owns unused sites in both of these locations.
Growing Competition
It was first reported that Tesco could be working with Boston Consulting Group on a new discount grocery brand earlier this month, as the retailer aims to compete with growing competition from Lidl and Aldi.
Although Tesco has yet to make a statement on the rumours, some of the UK's top analysts have examined what such a move could mean for the industry.
"The concept of the limited-assortment discounter is not a complex one," Clive Black of Shore Capital said in a briefing note. "In fact, it is very simple."
"However, the concentration and consolidation of Aldi and Lidl in the UK reflect the imposition of a quite defined business model, from root to branch," he continued. "Whether such a division, therefore, could be meaningfully created within a business like Tesco UK remains to be seen."
The latest market share figures from Kantar Worldpanel show that Tesco remains the largest grocer in the UK, with 27.8% share, however, the German discounters are its fastest-growing rivals.
In the most recent quarter, Lidl and Aldi posted sales growth of 16.5% and 16.2%, respectively, gaining a combined market share of 11.9%.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
