Sainsbury’s announcement that it is to close the 16 Netto stores it operates in a joint venture with Dansk Supermarked Group, is unsurprising given the competition posed by arch rivals Aldi and Lidl, according to Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.
McKevitt said: “British consumers are eager and willing to shop with discount retailers but even with Sainsbury’s help, Netto couldn’t match the competition it faced from the likes of Aldi and Lidl. Operating in its ‘trial’ format prohibited Netto from achieving the economies of scale that have generated such success for its rivals.
“Aldi and Lidl have each had a rapid programme of new store openings matched with huge advertising and marketing spend to keep themselves front and centre in consumers’ minds. Despite a 20-year history predating this joint venture, Netto lacks this brand awareness and credibility in its latest incarnation, and any retailer looking to learn from this experiment should note that this isn’t something which can be achieved without significant investment.”
Sainsbury’s teamed up Dansk Supermarked in June 2014 to open the trial stores. At the time, the retailers said the Netto stores would represent a complete departure from the format that left the UK market in 2010.