However its dominance is also threatened by another big deal as "Big Four" rivals Sainsbury's and Asda plan a £15billion merger that would make a combined company the biggest supermarket chain by share.
Jack's is named after Jack Cohen, who in 1919 founded the business that became Tesco.
The store in Chatteris, Cambridgeshire, was unveiled on Wednesday and opened its doors to the public on Thursday alongside a second store in Immingham, north-east Lincolnshire. He's an inspiration for all of us and that same spirit still drives Tesco now.
Jack's will carry 2,600 lines compared with tens of thousands in Tesco.
The stores will also stock some familiar major brands, such as Coca Cola, as well as a range of general merchandise on a "When it's Gone, It's Gone" basis. "Great-tasting food at the lowest possible prices with 8 out of 10 products grown, reared or made in Britain".
Over the next six months Tesco will launch between ten and 15 Jack's stores in the United Kingdom, with a mix of entirely new sites, sites adjacent to existing Tesco stores, and a small number of converted Tesco stores.
The latest industry figures produced by Kantar Worldpanel show market share growth for all the major grocery brands in the United Kingdom - a effect of essential spending holding up well amid a BBQ summer.
Britain's biggest retailer Tesco is going head-to-head with fast-growing German discounters Aldi and Lidl on price with a new grocery store it says will be the cheapest in town.
Over the next six months Tesco will launch 10 to 15 Jack's stores in the UK.
"It lets Tesco take the fight to the discounters on a level playing field - no need to dilute margins at core Tesco, just offer something different to the more value-conscious customers".
The comments came after Britain's biggest grocer announced the launch of its new highly-anticipated discount chain Jack's yesterday.
Sainsbury's tried a similar tactic in 2014, opening a number of Netto stores which where subsequently closed two years later.
"It won't be easy to crack the discount market though, even for a brand of Tesco's size", said Gordons law firm partner and head of retail Andy Brian.
"Tesco will have to find a way to attract customers from the likes of Aldi, Lidl and Iceland, rather than convert existing Tesco customers into discount shoppers through brand association", he told the news agency Reuters.