The deal will see 300 non-perishable grocery products from Tesco’s in-house line be available at The Reject Shop stores.
A new deal between UK grocer Tesco and Aussie discount retailer The Reject Shop is promising to deliver huge savings for consumers as COVID-19 clamps down on household budgets.
The deal will now see 300 non-perishable grocery products from Tesco's in-house line be available at The Reject Shop stores.
Because of the sheer volume of products brokered in the deal, The Reject Shop said it has been able to slash prices – meaning it can offer lines such as toothpaste for 50 cents, 100 bandages for 50 cents and bulk nappies for under $10.
READ MORE: Aussie retail spikes almost 3 per cent in June 2020 as online shopping booms
The Reject Shop's Chief Operations Officer Dani Aquilina told A Current Affair that bulk merchandise deals allowed the retailer to strip out costs normally associated with middlemen and logistics.
"What we do specifically that's different is we make sure we find the best-selling products, we buy them in big volumes so we can get the best prices and then we pass those savings onto our customers," Ms Aquilina said.
"It's everything from pantry staples – oil, vinegar, we've got things like rice pouches, snacks and treats -and then we've also brought in a great baby range so everything from formula to baby wipes and nappies."
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While it may appear that Tesco is dipping its toes in the Australian market, industry experts believe the deal is part of a strategy by The Reject Shop to capitalise on consumer trends towards discount shopping.
"Panic buying at the height of the COVID-19 pandemic boosted sales across the board for supermarkets and discount chains," IBISWorld Senior Industry Analyst James Thomson told 9news.com.au.
"Woolworths and Coles exhibited record sales growth. We also saw strong sales growth for some discount retailers, such as The Reject Shop.
"The Reject Shop's sales grew 7.1 per cent over the first half of 2020, which supported a return to profitability for the company."
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Mr Thomson said a key component of the deal could be enticing new customers – such as expats from Britain – who are shopping with The Reject Shop for the first time.
"The agreement with Tesco should provide a further avenue for The Reject Shop to attract customers, particularly if they can continue to provide products at an attractive price point and are able to attract price-conscious consumers," Mr Thomson said.
The move by Australians downmarket is a trend that Mr Thomson believes was in motion prior to the pandemic hitting our shores.
"Prior to the outbreak of COVID-19, we were already seeing a bit of a shift in consumer habits, with low-cost retailers, such as Aldi and Kmart, exhibiting strong growth relative to their competitors," Mr Thomson said.
"Aldi's expansion of store numbers and increased consumer acceptance has seen it outperform Coles and Woolworths and take an increasing share of the supermarkets and grocery stores industry in Australia.
"Kmart's focus on low prices has also seen it take a greater share of the discount department stores industry in Australia, while traditional department stores, such as Myer, have struggled."
READ MORE: Aussie retailers forced online as consumer spending changes during COVID-19
WHAT IS TESCO?
Tesco is multinational grocery and homewares retailer which bases its operations out of the United Kingdom.
Originally founded as market stalls in London, Tesco today now boasts almost 3500 outlets in the UK alone and has diversified into petrol stations, banks and even telecommunications.
It is Britain's largest supermarket retailer – and indeed biggest retailer overall.
Of the UK groceries market, Tesco operates an approximate 30 per cent share – meaning that Tesco sales account for one pound in every ten spent in British shops.
Tesco's largest competitors are Sainsbury's and Asda, who both operate a rough 14 per cent share of the UK grocery market.
Retail experts believed that a strong component of Tesco's enduring success is its ability to target all market segments – from artisan and quality conscious foodies to budget-minded shoppers.
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Source: 9News https://www.9news.com.au/national/the-reject-shop-tesco-deal-will-see-300-low-cost-british-products-sold-in-australia/720066ae-2dbb-4214-9a16-bbac16fadbc2