Tesco is planning to launch a new discount chain to compete against rivals Aldi and Lidl, it is being claimed.

The supermarket is said to be developing a separate brand that would match the German discounters on price and offer a smaller range than average Tesco stores, a report in The Sunday Times said.

Tesco has reportedly hired advisers from Boston Consulting Group to work on the plans. It is believed to have asked own-label suppliers to sign non-disclosure agreements before contributing to the new project.

Tesco declined to comment on the report. 

However, announcing Booker boss Charles Wilson’s new role as Tesco’s head of retail and wholesale in the UK and Ireland last week, the company said it planned to “develop new formats to better serve customers”.

The report added that the new discount brand would run separately from the One Stop convenience chain, which has about 900 stores.

Growth at discounters Aldi and Lidl has continued to rise over the last few years, with Aldi overtaking the Co-operative Group in 2017 to become the UK’s fifth-largest grocer (Kantar Worldpanel).

A report by The Guardian has also speculated that Tesco has been considering a second option, which would involve a new “Costco-type bulk purchase brand”, similar to a business the supermarket already runs in Thailand.

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