Tesco will not, however, be taking on Paperchase's more than 100 stores across the United Kingdom and Ireland, putting about 820 jobs at risk.
Paperchase entered administration, a form of protection from creditors, after failing to secure a rescue deal.
'No Viable Offers Received'
"Unfortunately, despite a comprehensive sales process, no viable offers were received for the company, or its business and assets, on a going concern basis," said joint administrators Begbies Traynor.
They will continue trading Paperchase's operations in the short term with all stores remaining open and trading as normal.
"Paperchase is a well-loved brand by so many, and we’re proud to bring it to Tesco stores across the UK," Jan Marchant, the group's managing director of home and clothing said.
Commenting on the announcement, Zoe Mills, lead retail analyst at GlobalData, said, “This acquisition will enable Tesco to enhance its non-food categories outside of homewares, however, bedding in the brand is unlikely to be smooth sailing. Paperchase’s target audience is younger than Tesco’s and it appeals to a more affluent shopper.
"While Tesco may be able to encourage existing Paperchase shoppers to its stores, persuading its existing customer base to trade up will be a challenge. Tesco must utilise its Clubcard prices to encourage spend and should also considering introducing a value range to ensure it does not alienate its existing customers.
"Over the past few years, Tesco has partnered with the likes of AO and Homebase to develop its non-food offer, though it ultimately ended its partnership with AO in July 2022. With 2023 set to be challenging, if this acquisition proves successful, Tesco may have further opportunities to bring other complementary brands into the fold.”
Store Manager Shake-Up
Separately on Tuesday, Tesco announced a shake-up of its larger stores, impacting 2,100 jobs.
Tesco said a new structure will see it introduce about 1,800 'shift leader' roles in its larger Superstores and Extra stores and also realign its store manager roles.
At the same time it will reduce the number of 'lead' and 'team managers' in its large stores.
Tesco said the workers affected will have the option of moving to shift leader vacancies or taking redundancy.