Sainsbury's has decided to step up its battle against discount retailers such as Aldi and Lidl. The UK supermarket is to open 10 new Netto stores in the North of England. It confirmed that the planning applications required for the launch has already been filed.
Apart from discount retailers, online retailers like Amazon have hurt Britain's big four supermarket chains. Sainsbury's is the only company of the big four that has until date attempted to enter into the discount sector and this move will further strengthen its position by taking the total Netto stores in the UK to 25 from the current 15.
Sainsbury's connection with Netto goes back to 2014, when the former had tied up with Danish retailer Dansk Supermarked to re-launch Netto, which once had a portfolio of 200 stores before getting sold to Asda for £778m (€1.03bn, $1.13bn) in 2010.
Sainsbury's and Dansk Supermarked initially invested £12.5m each into the joint-venture. At the time, Mike Coupe, chief executive at Sainsbury's had said that Netto would take on Aldi and Lidl "toe-to-toe".
Per Bank, chief executive at Dansk, said that Netto had learnt from battling it out with Lidl and Aldi in mainland Europe and these lessons would help it fight better in the UK. He added that the new version of stores would be a different concept.
A Sainsbury's spokesman said, "It's early days but we are learning a lot about the important discount market and customers are responding well."
The supermarket was recently in the news for having approached Argos owner Home Retail Group over a possible takeover. Sainsbury's had then said that it believed the possible tie-up would create "an attractive proposition for the customers and shareholders of both companies, establishing a platform for long-term value creation". Argos has, however, rejected the initial £1bn cash and shares bid offer.