Discount supermarket Netto has returned to the UK thanks to a partnership spearheaded by Sainsbury's.
The retailer has teamed up with Dansk Supermarked to bring Netto back to British soil in a bid to take on discounters Aldi and Lidl. Today (November 6th) marked the opening of the first Netto store in four years with Moor Allerton in Leeds being the site for the landmark moment. Sainsbury's and Dansk Supermarked has also earmarked several locations for other outlets in the coming months.
Plans are in place to open a total of 15 stores as part of a test run by the end of 2015. Sainsbury's and Dansk Supermarked is targeting the north of England and aims to launch outlets close to the M62 corridor between Liverpool and Hull. The supermarket announced that Netto stores will be launched in Sheffield, Ormskirk, Doncaster, Leeds and Manchester by the end of the month.
The 'traditional' supermarkets such as Sainsbury's, Morrisons, Tesco and Asda have faced increased competition thanks to the rise of both Aldi and Lidl. The two companies have been gaining market share across the sector.
Sainsbury's plan with Netto is to help it tap into the grocery market industry which is currently worth an estimated £10 billion in annual sales. Analysts IGD expect this to grow substantially over the coming years double its value to around £20 billion in the next five years alone.
Speaking to the BBC, Andrew Stevens, retail analyst at Verdict, said: "Sainsbury's shoppers are traditionally happy to pay a little bit more money for better quality food, it is hard for [Sainsbury's] to lower their prices and sacrifice the margins or to cut the quality. Teaming up with Netto is a good move."
Netto and Sainsbury's are investing £12.5 million into the project and have conceded that they will make a lose of between £5 million and £10 million up to March 31st 2015.