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Sainsburys and Netto team up


Sainsburys is set to open 15 discount stores in partnership with Danish discount chain Netto.

The first Netto store opened today in Moor Allerton, Leeds. Sainsburys will not be taking on rival discount stores Aldi and Lidl, who’s share of the market is increasing at a substaintial rate.

New-look Netto is launching as a joint venture between parent company Dansk Supermarked and Sainsbury’s, four years after the company sold its 193 stores to Asda for £778m.

The company has been re-launched due to the rise in discount retailing coupled with the changing shopping habits of the UK. In recent times shopping habits have moved away from the traditional “big weekly shop” in one of the “big four” supermarkets (Sainsburys, Asda, Morrison’s and Tesco) to smaller shops throughout the week using both the “big four” supermarkets and discounted shops, such as Aldi and Lidl. These discount stores are on average 15% cheaper.

Both Sainsburys and Netto have invested £12.5m a piece into the joint operation, but they are expecting to make losses of up to £10m until March 2015. Netto believes that it will eventually be a success as more customers look to get the cheapest possible deal.

Per Bank, chief executive and managing director at Dansk Supermarked, the company that has teamed up with Sainsburys to bring the supermarkets back to the UK, said:

“We want to add something different to the discount market. It’s a new discounter, it’s a new-look Netto and it’s a Netto with a Scandinavian twist developed closely together with Brits and Danes.”

“Together with Sainsbury’s, there’s a great potential for a third player in the discount market.”

The Leeds launch will be followed by openings in Manchester, Sheffield and Ormskirk by mid-November. A Doncaster store will open later in the month, with an additional 10 in 2015. All stores will be located in the North, with a distribution centre in Scunthorpe.

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