Sainsbury’s resurrecting Netto to fight discounters

Supermarket group Sainsbury’s today announced a surprise move to bring the Netto brand back to the UK as it seeks to fight off the challenge from discount rivals Aldi and Lidl.

The group, headed by new chief executive Mike Coupe, is forming a joint venture with the retailer’s Danish parent Dansk Supermarked and aims to open its first stores in the north of England this year, with 15 planned by the end of 2015.

Netto disappeared from the UK after Asda bought the firm’s 193 British stores for £778 million in 2010.

Sainsbury’s and Netto will each invest an initial £12.5m in the joint venture, and expect to incur pre-tax losses of between £5m and £10m each up to 31 March 2015 given start-up costs.

Coupe said: “We are very excited about helping to bring the new Netto to British shoppers. This joint venture provides a great opportunity for us to gain exposure to the high growth discount market for the first time in partnership with Dansk Supermarked, whose expertise and values are a strong complement to our own.

“If successful, this trial has the potential to open up a new long-term growth opportunity for us complementing our fast-expanding convenience, online and non-food businesses, as well as our existing supermarket estate.”

Dansk Supermarked boss Per Bank added: “It’s great to be bringing a new twist to the rapidly-growing UK discount sector. We’ll offer market-leading value to customers with the freshness and innovation that customers rightly associate with Denmark.

“The discounter experience, operating model and systems of the Dansk Supermarked group, combined with Sainsbury’s UK market insight, property expertise and logistics excellence will help deliver a discounter format we think UK customers will love.”