Tesco is considering to introduce a new discount grocery chain to take on the likes of Aldi and Lidl, reported The Sunday Times quoting senior industry insiders. The company is tight-lipped about the development.

Britain’s biggest supermarket is working on a separate brand that would match the price of the budget retailers, and offer limited range of products when compared to average Tesco store, said the paper. It added that Boston Consulting Group is understood to be advising Tesco on the new discount chain.

Though Tesco recorded sales growth of 2.6 percent in the 12 weeks to the end of January, both German firms increasingly poach market share from the big players. They now control a combined 11.9 percent, putting them ahead of Morrisons.

The report comes in the wake of a recent consumer survey that rated Aldi as the most favourite supermarket in the country. Tesco was placed in the bottom rung among nine supermarkets surveyed.

Tesco has already announced plans to merge with the wholesaler Booker, creating a retail giant with sales of more than £60 billion.

Meanwhile, Morrisons is expected to announce an agreement with Sandpiper CI, to supply its food and drink to a network of Channel Island stores. Sandpiper CI runs 40 stores under brands such as Checkers Xpress, some of them might be rebranded as Morrisons Daily over time.