Tesco is reportedly working on plans for a chain of discount supermarkets to rival Aldi and Lidl.
According to The Sunday Times, the brand will match the prices of the German stores as it tries to win back shoppers that it’s lost over the past decade.
It is thought that the new brand will run separately from Tesco’s convenience chain, One Stop, which has about 900 shops.
Read: the amazing rise of Lidl
The smaller Tesco chains will reportedly offer a more limited range of 3,000 products, compared to the 30,000 products stocked in your typical Tesco Extra.
There has been word of a possible second option involving a "Costco-type bulk purchase brand", similar to a business that the supermarket already has in Thailand.
Tesco declined to comment to loveMONEY about the plans.
It's worth noting that the supermarket has considered a move like this before, but it fell through because of fears that it would undermine the main stores.
Sainsbury’s also tried something similar with Danish discount chain Netto back in 2014 – however, the stores were dropped two years later and eventually sold to Asda.
Flocking to Aldi & Lidl
The German discounters pose a genuine threat to Britain's established 'big four': Aldi and Lidl now account for £1 out of every £8 spent at UK supermarkets, according to research from Kantar Worldpanel.
What's more, the latest quarterly sales figures show that Aldi and Lidl's sales rose by 16.2% and 16.3% respectively compared to Tesco’s 2.6%, so it's not hard to see why Tesco might be eyeing a bold new strategy to tackle the threat head on.
Watch this space as we'll be providing more details as we get them.
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