Sainsbury's has launched the first of 15 Netto stores in the UK through its new partnership.
The supermarket has teamed up with Scandinavian retailer Dansk Supermarked to bring Netto back to the UK after a four year absence. The north of England is set to be the main focus of the campaign with Moor Allerton in Leeds boasting the first outlet. This venture is Sainsbury's way of competing with discounters such as Aldi and Lidl.
Both of these retailers have been gaining market share on the more traditional names such as Asda, Tesco and Morrisons ramping up competition. Aldi recently announced a huge pre-tax profit boost recording a 65.2 per cent increase over the past 12 months.
Sainsbury's move into the discount sector, currently worth around £10 billion in annual sales, is aimed taking on Aldi and Lidl. Analysts IGD believe the sector will double in value to £20 billion over the next five years.
Sainsbury's plan for Netto will include the opening of 15 stores by the end of 2015. They will be situated close to the M62 corridor between Liverpool and Hull as a test run. Five have been earmarked for Sheffield, Ormskirk, Doncaster, Manchester and Leeds. If successful they will be rolled out further across the country.
Per Bank, chief executive of Dansk Supermarked, is hopeful for the future and believes that reappearance of Netto will help to "set new standard for discounters in the UK". However, he was cautious in his approach believing that the move could be a "big risk" but one that Netto can tackle.
Speaking about the location of the new stores, Mr Bank said: "We hope to come to a decision fast. If we can’t meet the needs of customers then we will come to a point where we say it doesn’t work and we will have invested a limited amount of money. But we are confident it will work.”
Find up to date information on the FTSE 100 and spread betting strategies at City Index.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.