Tesco is allegedly planning to open a discount grocery chain to compete with Aldi and Lidl as the German discounters continue to gain market share.
The UK retail giant has allegedly hired advisers from Boston Consulting Group to draw up plans to expand into the discount market, according to the Sunday Times.
The company's own-label suppliers have also reportedly been asked to sign non-disclosure agreements concerning any upcoming projects. Tesco has so far refused to comment on the reports.
Aldi and Lidl have significantly disrupted traditional retail models since arriving from Germany, and are growing much faster than the big four, with another 16 per cent sales increase in the past three months, according to Kantar Worldpanel.
Sainsbury’s notoriously pulled out of its own discount store efforts in 2016 under the brand Netto, citing a lack of required investment.
City analysts have already given wildly different assessments of the move, with The Telegraph suggesting it may be “disastrous”, while Bernstein’s retail analyst Bruno Monteyne said: “it could take oxygen away from the discounters.”
Tesco remains the fastest grower of the big four with 2.6 per cent sales increase in the past 12 weeks, but they are losing ground to the German brands. Aldi and Lidl now make up a combined 11 per cent of market share, larger than Morrisons.
Last week it was announced that Booker CEO Charles Wilson will take over as Tesco UK retail and wholsale boss. Under Wilson's tenure Booker opened their own discount chain called Family Shopper in 2014.