SAINSBURY’S is to bring discounter Netto back to the UK in a surprise move that will enable it to compete head to head with popular German discounters Aldi and Lidl.
Sainsbury’s said that the Danish grocer, which pulled out of the UK in 2010 when Leeds-based Asda bought its stores for £778m, will “bring a fresh Scandinavian flavour to the UK discount sector”.
The trial will consist of 15 Netto stores in the north of England. Five will open before Christmas and another 10 will open by the end of next year.
Mike Coupe, who takes over as chief executive next month, said the North is a natural place to start the new enterprise as it has a wide range of customers.
He added that the property opportunities in the North are very strong. The new stores are also less likely to cannibalise Sainsbury’s existing stores, which are predominantly based in the South.
At a time when Sainsbury’s rivals are spending billions of pounds on price cuts to reduce the price differential with the discounters, Sainsbury’s move will allow it to benefit from the exodus to its cheaper rivals without having to reduce its prices.
The new-look Netto, a joint venture between Sainsbury’s and Netto’s Danish parent company Dansk Supermarked, promises to be very different from its last incarnation, which struggled to compete against Aldi and Lidl.
Shoppers will walk in to find fresh produce and meat alongside Danish pastries and Danish bread produced by an in-store bakery.
Sainsbury’s said that if the trial proves successful, the new format will be rolled out across the country. Mr Coupe declined to say how many could be opened.
Both Sainsbury’s and Dansk will make an initial investment of £12.5m in the joint venture.
Per Bank, CEO of Dansk, said: “The new Netto stores will represent a completely changed format to the one that left the UK in 2010.”