Danish discount grocery retailer Netto is returning to the UK.
Netto will open 15 stores of circa 12,000 sq ft by the end of 2015. The first opening is planned for later this year in the North of England. If the trial proves successful, the new format will be rolled out across the country.
Netto will be led by Morten Möberg Nielsen, previously managing director of Netto International in Germany, whose track record spans 18 years in retail including 14 years with Dansk Supermarked.
The chain is a joint venture between Netto’s parent company Dansk Supermarked and Sainsbury’s. Each partner will invest an initial £12.5m and, given start-up costs, they each expect to incur a post-tax loss in the region of £5m-£10m up to 31 March 2015.
Sainsbury’s said that the new Netto stores would represent a “complete departure” from the format that left the UK market in 2010. They would offer value and ease of shopping and feature a fresh food offer as well as an in-house bakery offering fresh Danish breads and pastries, it added.
The UK discount sector is currently worth an estimated £10bn in annual sales and is forecast to double in value to around £20bn in the next five years, according to IGD.
Mike Coupe, chief executive designate of Sainsbury’s, said: “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.”
Per Bank, chief executive of Dansk Supermarked, 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 to deliver a discounter format we think UK customers will love.”
annabel.dixon@estatesgazette.com
