All eyes in the retail sector will be on a small market town in eastern England on Wednesday as Tesco unveils its latest weapon in the war against the discounters.
Britain's biggest retailer has chosen Chatteris in Cambridgeshire for the launch of its new discount format, which it hopes will give Aldi and Lidl a taste of their own cut-price medicine.
The new discount chain will trade under the name Jack's, in tribute to Jack Cohen, the man who founded Tesco in east London 99 years ago. In many ways, Jack's will be taking Tesco back to its roots – Cohen gloried in the nickname "Slasher Jack", such was his dedication to the "pile it high, sell it cheap" business model.
The current Tesco boss, “Drastic Dave” Lewis (after the thousands of jobs he has cut), is doing the honours in Chatteris and analysts and the financial press are eager to get their first look at the pilot store.
The urgency of finding a way to fight the discounters was underlined Tuesday by the latest market share data from industry research firm Kantar Worldpanel. This showed all four of Britain's largest supermarket chains – Tesco, Sainsbury, Morrisons and Asda – had surrendered further market share to Aldi and Lidl over the past 12 weeks.
Together, the German discounters now have a 13.1% share of the UK market after posting sales gains of 13.9% for Aldi and 8.3% for Lidl
Together, the German discounters now have a 13.1 per cent share of the UK market after posting sales gains of 13.9 per cent for Aldi and 8.3 per cent for Lidl. Tesco’s sales rose by 1.9 per cent but its market share slipped to 27.4 per cent.
The German chains had only a modest impact when they first entered the UK market some 25 years ago, but their growth has been rapid in recent years. In the five years to September 2013, their combined market share rose by 2.4 percentage points to 6.8 per cent; in the last five years it has virtually doubled.
With some analysts suggesting they could ultimately double their share again, Tesco clearly felt it needed to act. But will Jack’s be the game-chnger that many predict?
Other supermarket groups have tried, unsuccessfully, to take on the German discounters in recent years and Tesco itself has a chequered history of ventures outside its core UK stores chain. Another risk is that Jack’s could cannibalise sales of existing stores, something the group will be taking into account when it chooses its locations.
For these reasons, Tesco followers are hoping the group will build its new chain at a steady pace, which will limit its immediate impact on the market. Lewis will reveal full details Wednesday but analysts say Jack’s could ultimately be expanded to 100 outlets, a number of which are likely to be conversions of some of its more poorly performing Metro outlets.
The opening of Jack’s is expected to attract quite a crowd in the Cambridgeshire town this morning, including, no doubt, the management team of the Aldi store just around the corner.
Marmite’s maker
You can’t get much more British than Marmite, the savoury yeast spread with the distinctive taste that is loved and loathed in equal numbers.
Opinions on Marmite's maker, Unilever, are similarly polarised at the moment as the consumer goods giant attempts to persuade shareholders to back its plans to switch headquarters from London to Rotterdam.
It wants to simplify its dual Anglo-Dutch corporate structure and have a single class of shares, which the group says will make it more “agile”. There’ll be no jobs lost in London as a result and Unilever insists the move is nothing to do with Brexit.
The choice of Rotterdam over London has obviously been well received in the Netherlands but less so in the UK, where it will result in Unilever’s ejection from the prestigious FTSE 100 index, the FTSE 350 index and the FTSE All-Share indicies.
And that’s the real problem for the group’s institutional shareholders, whose funds tend to track these indicies. Although Unilever would still have a UK listing, many funds would be forced to sell their holdings.
A number of major shareholders have made their displeasure known, including Aviva, which says it will vote against the plan and urges others to follow its lead.
Investors will vote on the scheme next month, in Rotterdam on October 25th and in London the following day. A 50 per cent majority is needed in the Netherlands but 75 per cent support is required in the UK.
Unilever says it has already held more than 150 meetings with shareholders to explain why they should support the move. It would be wise to schedule many more in the weeks ahead if it wants to avoid an embarrassing defeat.
Fiona Walsh is business editor of theguardian.com
