Sainsbury’s is set to enter the UK discount market after agreeing a joint venture with the parent company of Danish grocery retailer Netto.
An initial trial will see 15 new-look Netto stores launched by the end of 2015, with the first opening in the North of England later this year. If the trial proves successful, the new format will be rolled out across the country.
The new-look Netto will combine parent company Dansk Supermarked’s “excellent in systems, infrastructure and low-cost operations with Sainsbury’s UK grocery, product sourcing and property expertise,” the companies said.
Each partner’s initial investment in the joint venture will be £12.5m, with both expecting to incur a post-tax loss of between £5m to £10m for the next financial year.
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.”
At the end of the last quarter (12 weeks to 7 June 2014), Sainsbury’s had more convenience stores than supermarkets, at 638 and 592 respectively.