Netto teams up with Sainsbury's for return to the UK

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Danish discount grocer Netto is to return to Britain as part of a joint venture with Sainsbury’s.

Netto, which left the UK in 2010 after selling its stores here to Asda, will pilot a new format in the UK representing “a complete departure” from the format it previously ran in this country.

The first stores will open in the North of England later this year and 15 will open by the end of next year.

The deal comes as discout grocers such as Aldi and Lidl grow apace, disrupting the power of the estabished big four grocers.

The tie-up will combine Netto parent company Dansk Supermarked’s systems, infrastructure and operations with Sainsbury’s UK grocery, product sourcing and property expertise.

If the pilot proves successful, the new-look stores will be rolled out across the country.

Netto and Dansk Supermarked will initially ploughing £12.5m each into the trial. As a result, both expect to incur a post-tax loss on it of between £5m to £10m up to 31 March 2015.

The new Netto UK business will be headed by Morten Möberg Nielsen, formerly managing director of Netto International in Germany.

Dansk Supermarked chief executive Per Bank said: “It’s great to be bringing a new twist to the rapidly-growing UK discount sector. We’ll offer market-leading value to customers with the freshness and innovation that customers rightly associate with Denmark.

“The discounter experience, operating model and systems of the Dansk Supermarked group, combined with Sainsbury’s UK market insight, property expertise and logistics excellence will help deliver a discounter format we think UK customers will love.”

Sainsbury’s chief executive designate Mike Coupe said: “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.”