Bryan Roberts: Tesco isn’t putting Jack’s back in the box

As we enjoy the spectacle of lowly Colchester knocking Champions League finalists Tottenham Hotspur out of the Rumbelows Cup (or whatever it’s called these days), there is also a hint of glee around concerning the first high-profile setback in Tesco’s nascent Jack’s operation.

The conversion of Jack’s in Rawtenstall back into a Tesco is being seen by some as a harbinger of failure for the broader chain – a signal that the public is not reacting well to the Jack’s formula.

I think that is wide of the mark. Rawtenstall was a unique pilot concept within the Jack’s operation. Owing as much to Booker as it did to Lidl or Aldi, the ‘more you buy, the more you save’ proposition was well received by some, but other shoppers were less convinced by the merits of purchasing gigantic quantities of stuff in order to save a few pence here and there.

“By positioning Jack’s as a centenary celebration, Tesco has fashioned itself a very elegant ejector seat should it decide not to proceed”

Indeed, the likes of Carrefour and Unilever discovered many years ago that shoppers who are really value-conscious can be reluctant to try and generate savings by buying in bulk. Why would economically stretched households invest scarce disposable income in building up domestic inventory?

The solution for less affluent shoppers, it turns out, is often smaller packs, not cases of product.

The Jack’s stores I’ve been to recently have been moderately busy. Not queuing around the shop busy, but not tumbleweed quiet either. Some punters have clearly been keeping an eye on the ads – darting in for the general merchandise specials – but others are completing full trolley shops and pretty much getting everything they need.

So, Rawtenstall is obviously a wobble but also a reassuring sign of humility from Tesco – shoppers were not best pleased with the transition and Tesco is remedying that quickly.

But I wouldn’t read too much into the decision – there is still a healthy pipeline of forthcoming Jack’s stores in Liverpool, Sheffield and Wakefield, plus others that might be on the way in locations such as Kettering.

Noble venture

I’m still fairly impressed with the Jack’s concept: the design, look and feel, range, merchandising and provenance angle are all good stuff. Whether it is good enough to stand the test of time remains to be seen. A handful of stores dotted around the country doesn’t bring Jack’s scale or momentum, or the opportunity for a concerted marketing campaign of any great significance.

There might be scope for other ways to generate scale and placate suppliers that might be frustrated by small order sizes, such as online, shop-in-shops or the reintroduction of Jack’s lines to bigger Tesco stores, but arguably the only real way to achieve scale is by opening dozens more stores.

I’m not sure that Tesco, or its investors, have the appetite for a massive capex splurge on Jack’s and – by positioning the venture as a centenary celebration – Tesco has fashioned itself a very elegant ejector seat should it decide not to proceed.

Either way, Jack’s is a noble venture – an example of proactive self-defence rather than resignedly accepting a dwindling slice of a fiercely contested grocery pie. It’s that which should be celebrated, rather than its U-turn in Rawtenstall.