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.”
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