They're bringing Netto back

Dansk Supermarked has formed a joint venture with Sainsbury’s which will see its Netto brand return to these shores. The pair are teaming up for a trial consisting of 15 Netto stores to be opened by the end of 2015, with the first opening their doors in the North of England later this year. If this proves successful, the next stage will see a roll-out across the country.

Each partner’s initial investment in the joint venture will be £12.5 million, and given start-up costs, they both expect to incur a post-tax loss in the region of £5-10 million up to 31 March 2015. Morten Möberg Nielsen, previously managing director of Netto International in Germany, will head up the venture.

Netto's previous attempt to crack the UK ended in 2010 when it sold its stores to Asda. Dansk Supermarked and Sainsbury’s say that the new incarnation will be a complete departure from the format that left the UK market, focusing on great value for money but also featuring a fresh food offer as well as an in-house bakery offering Danish breads and pastries.

The announcement comes as Planet Retail’s Western European Trends Report shows that Lidl owner Schwarz Group will become the region’s number one grocery retailer by 2018. Mike Coupe, CEO designate at Sainsbury’s, says that the 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."

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