Kantar Worldpanel's head of retail and consumer insight, Frazer McKevitt, has given his prognosis on the decision by Sainsbury's and Dansk Supermarked to cease the planned rollout of Netto stores in the UK, saying the discount operation was likely to struggle against rivals Aldi and Lidl.
“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," McKevitt said. "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."
McKevitt noted that despite Netto's 20-year history in the UK predating this joint venture, the operation "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.”
Some 15.7 million UK shoppers have visited a discount grocery retailer in the past 12 weeks.
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. To subscribe to ESM: The European Supermarket Magazine, click here.
