UK retailer Sainsbury's is to attempt to gain market share against Aldi and Lidl as it opens the first of 15 stores with Danish discount chain Netto in Moor Allerton, Leeds.
A nationwide rollout will be effected if the endeavour proves successful.
Sainsbury's customer base is largely in the south of England, where it is perceived as a middle-market supplier – somewhere in between the discounters and the increasing competitive, high-end chain, Waitrose.
Analysts have questioned the undertaking as the discount stores could undercut Sainsbury's own ranges. On the other hand, the Netto stores are to be placed initially in the north of England where Sainsbury's is relatively weak; the risk is thus reduced.
Andrew Stevens, retail analyst at Verdict, said Sainsbury's possesses less room to slash prices than rivals Tesco and Morrisons:
"Sainsbury's shoppers are traditionally happy to pay a little bit more money for better quality food, it is hard for [Sainsbury's] to lower their prices and sacrifice the margins or to cut the quality. Teaming up with Netto is a good move."
© 2014 European Supermarket Magazine – your source for the latest retail news. Article written by Peter Donnelly
