Value retailers have shrugged off Tesco’s plans to go head-to-head with them by introducing ‘pound zones’ in its stores and insist it is not a threat.
Tesco has introduced pound zones to 60 stores and it plans to increase it to nearly 300 over the next few weeks as it aims to take back sales from the value retailers.
Despite the plans from the UK’s largest retailer, discounter retail chiefs remained undaunted. Poundworld trading director Chris Edwards Junior told Retail Week that it does not view Tesco’s pound zones as a threat.
A Poundworld spokeswoman added: “We have a strong retail proposition with stores at key high street locations and a huge product range which the supermarkets will find it difficult to compete with.”
Another discount boss said: “It smacks of desperation. Tesco is saying it is having a hard time because of us but really it should be concentrating on competing with Aldi and Lidl.
“Customers will just end up going straight to the £1 aisle and other products in the store will suffer.”
Discount food retailers Aldi and Lidl have been gaining market share and have widely been blamed for impacting supermarket sales.
“I’m not worried at all,” the source added.
The source believes Tesco’s plans could impact supplier relationships if they ask for the same deals as pound shops. Supermarkets already demand more than value retailers from their suppliers, the source claimed, usually asking for marketing support and imposing penalty fines for late deliveries.
Another discounter said that Tesco is following in the footsteps of Asda, which tried to take on the pound shops two years ago with their ‘Pound Shop’ aisles.
Tesco’s plans come as Morrisons, Asda and Tesco embark on a new price war, cutting prices to boost lacklustre sales.
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