Sainsbury’s has announced a partnership with Netto as part of a joint relaunch trial for the Danish discount grocer.
The trial will see 15 Nettos opened by the end 2015, with the first being opened in Northern England this year. If successful the venture will be expanded nationwide.
Netto, who will compete with German retailers Aldi and Lidl, will operate differently from Sainsbury’s to attract a different type of consumer. The CEO of Sainsbury’s said that Netto will expand with Sainbury’s and not instead of it.
Sainsbury's, who announced a 16 per cent rise in profits earlier this year, will give ten per cent of its 100,000 sq ft Heaton Park store to the discount grocer. However the store will have its own entrance and product range.
The UK discount sector is currently worth an estimated £10bn in annual sales and is forecast to double in value to approximately £20bn in the next five years, according to research by IGD.
Per Bank, CEO of Netto parent company Dansk Supermarked, said: “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.”
Mike Coupe, CEO designate of Sainsbury’s, 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.”
Netto will be led by Morten Möberg Nielsen who was previously managing director of Netto International in Germany.