Netto is to return to the UK in partnership with Sainsbury’s four years after selling its stores here to Asda. Retail Week looks at what the analysts said.
The discounters have real momentum in the UK, with lots of column inches and air time given to their improving offer. That Sainsbury is capitulating to this format rather than competing effectively will only add to that momentum, in our view.
We find this move by Sainsbury perplexing, and it will help further highlight how expensive the supermarkets are relative to the discounters.
This was a problem in France for many years and it is only recently that the hypermarkets there have realised that the way to win is not by imitating the discounters with their own chains but by being more price competitive - Dave McCarthy, HSBC
We see this combination as a potentially astute one because it possibly solves a particular problem for Sainsbury.
Accordingly, we believe that Mike Coupe, Sainsbury’s soon to be chief executive, has showed a good appreciation of the limitations and virtues of Sainsbury’s brand, and yet engineered a potential mechanism to gain access to the discount channel.
We see the trial as being potentially complementary to Sainsbury’s core business - Clive Black, Shore Capital
The rapid growth of the discount segment in the UK has prompted many questions as to whether existing players might set up their own discount chains.
This would not necessarily be difficult from a practical perspective, but it could potentially confuse customers or muddy the main brand – especially if the existing brand is in some ways transplanted into a discount store.
The plan of Sainsbury and Netto seems to be cognizant of those risks, with no apparent intention to feature the Sainsbury brand in the new Netto concept - James Anstead, Barclays
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