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Steve Dresser @dresserman
, 18 tweets, 3 min read Read on Twitter
There will be lots of noise tomorrow re: Jack's. Rome wasn't built in a day and I sense this is a longer term play.
Rumours galore already; we do know that there will be Jack's branded lines in the range. Whether that means some of the tertiary discount value lines are also in, or instead of, remains to be seen.
BUT by offering the tertiary discount brands and also Jack's (in Jack's) Tesco smooth the path for comparatives / differential pricing to be nullified.
Which is absolutely the primary aim of this exercise. There will be negatives regardless. See 'Farm Brands' for lower priced Produce / Meat lines, good for the customer but jumped upon as a 'con trick' by the Mail et al.
Therefore; think of the customer first. This is the key and often one that is all too easily forgotten. What does the customer think of this strategy and indeed; will it make them return to Tesco(?) via Jack's(?)
Most likely, yes. If we think about the locations such as Immingham and Chatteris (two mothballed sites) where Tesco were viewed very negatively for building then not opening.
A new store alongside a value based competitor will clearly help sales. Interestingly it shows just how skewed the Tesco 'hurdle rate' for opening new stores was, given it's taken 4 years for Tesco to take the space and only then it's with 40% of the store sub let........
The other locations that we know of, old superstores or old Metro sites are typically (as things stand) formerly Kwik Save, or Somerfield. So you can imagine a) what they were like when they were acquired and b) the demographic in which the stores trades in....
Incredibly value pressed; which means that price is very important and that is difficult to pass on within the Metro / Superstore format as it's part of a wider range... Indeed, Metro tend not to stock many Value lines at all.
Therefore you are literally caught with your pants down in these ares when Aldi opens up (as they have done in St Helens).
Metro just can not defend itself, the model isn't set up for it and clearly profits are being looked at in this area - see the Banana price change (from per kg to each)...... Older superstores are the same.
So a new format, for a brave new world is necessary. Otherwise there is no alternative other than the limp along and either close these stores or sell them to a rival who may want the space. But that is not a long term play, at all.
Given precious little innovation or risk in the UK market at the minute; this move is great news! It's a trial / new world so many things seen won't roll out to everyone, everywhere and things change over time.
The only real challenge for Netto with Sainsbury's was that they couldn't get to scale with the sites quickly enough. There was also a bun fight over Netto moving South but Sainsbury's not being keen on that.
Store, offer, experience etc were all positives. Aided by a customer base (and indeed a new generation) of recession proofed shoppers who both a) accepted discount and b) didn't mind shopping there either.
Tesco / Jack's doesn't appear to have an immediate issue with scale, at all. Indeed, the one thing we circle around to, time and again is their vast store estate and what they are planning to do with all the space.
So fair play to them. I look forward to meeting the world's press tomorrow. I look a degree older on my picture as my PR team won't allow me to change the profile picture.
*thus endeth the sermon* (this isn't your blog Steve etc).
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