The Netto stores average 8,000sq ft more than twice the size of most local shops and will operate as smaller versions of the group's 374 hypermarkets, selling some 10,000 lines, including clothing and household goods.
Unlike its competitors Tesco and Sainsbury's, Asda does not operate a convenience format and its 2006 venture into the sector, Asda Essentials, was abandoned after just two trial store openings. However, while its supermarket rivals charge higher prices in their convenience outlets, Asda's announcement of a single-price policy suggests it will absorb the higher costs of smaller stores.
Asda chief financial officer Judith McKenna said the new locations would not be top-up or convenience stores. "You can do a weekly shop in them and that is the key to the economics of making this work from our perspective," she said.
Independent retailers fear the acquisition, should it be approved by the Office of Fair Trading, would add to the power of the 'big four' supermarkets. Saqib Ghafoor, who is due to open a store close to a Netto branch in Gateshead, said the move would put the squeeze on independents. "It's alarming that Asda is attempting this as supermarket consolidation has already left little room for smaller retailers like us," he said. "We'll have to wait and see if it actually goes ahead given that there's an Asda supermarket nearby, but it's something that the OFT should examine closely."
His views were echoed by Association of Convenience Stores chief executive James Lowman, who said: "The OFT needs to address choice and competition in each local market and at a national level".
Ken Parsons, chief executive of the Rural Shops Alliance, added: "This highlights how the market often moves faster than government policy and emphasises the urgent need for a strong grocery ombudsman to ensure fair play as the balance of power tilts still further in supermarkets' favour".
Asda intends to convert the stores to its fascia by next summer if the OFT gives the deal the go-ahead.