Tesco says it’s going to turn some of its stores into super-cheap supermarkets to compete with Lidl and Aldi.
What it means: We all eat, so we all care about how affordable food is. (About 10% of everything we earn goes on food and drink.) So it seems like it should be good news that a big supermarket like Tesco is turning sixty of its shops into super-cheap discount stores. (It's going to call these stores Jack's so we don’t get confused).
But of course things are never that simple. Tesco wants to lower prices to match cheap and popular Aldi and Lidl, but one way those companies keep costs low is by not hiring a lot of employees, so people are worried that Tesco’s staff at the stores it’s converting are going to lose their jobs. They also think Tesco might try to haggle for lower prices with its suppliers, which could cause those businesses to lose money.
Tesco also stocks a load more stuff than Lidl and Aldi do, and sells a lot more branded products. This makes it harder for Tesco to discount prices, because they have to pay for bigger stores and because branded products are more expensive. But it also makes Tesco attractive to customers who want more choice or prefer specific products to own-brand versions. If Tesco’s new stores aren’t any different from Aldi and Lidl customers may wonder why they should bother switching.
