Sainsbury’s enters discount market with Netto JV

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Nina Pullman

BY NINA PULLMAN

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Sainsbury’s enters discount market with Netto JV

Discounter Netto will return to UK this year through £25m partnership between Sainsbury’s and Dansk Supermarked

Sainsbury’s enters discount market with Netto JV

Coupe: This is an opportunity to gain exposure to the high growth discount market for the first time

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Sainsbury’s has partnered with Danish retailer Dansk Supermarked to relaunch discounter Netto in the UK.

The joint venture will be trialled in 15 Netto stores to be opened in the UK by the end of 2015, with the first few opening their doors in northern England later this year. If successful, there are plans to roll-out the new format across the rest of the UK.

It will be headed by Morten Mberg Nielsen, ex-managing director of Netto International in Germany who has worked for Dansk Supermarked for 14 years.

The new Netto format, said to be “a complete departure” from the chain’s previous format in the UK, will emphasise fresh food and highlight seasonal products with a “when it’s gone it’s gone” offer. It will also provide Danish bread and pastries from an in-house bakery.

Sainsbury’s and Dansk Supermarked have both invested £12.5 million in the project, and a statement said that as a result of start-up costs, each partner expects a post-tax loss of between £5 and 10 million up to 31 March 2015.

"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," said Mike Coupe, Sainsbury’s CEO designate.

“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.”

Per Bank, CEO of Netto’s parent company Dansk Supermarked said: “It’s great to be bringing a new twist to the rapidly-growing UK discount sector.

“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.”

The UK discount sector is currently worth around £10 billion and is forecast to double in value to approximately £20 bn in the next five years, according to the IGD.

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