Welcome back to the UK. How long have you been thinking of making a return?
PB: Thanks, it’s great to be back! It’s a fresh start, as although the brand is the same, the new Netto will be a markedly different proposition to the estate we sold to Asda in 2010. The UK discount sector has moved on a great deal since, and our stores will reflect that with a much wider range and an emphasis on great seasonal produce, British meat, an in-store bakery and an easy shopping experience. It’s a proper discounter format with prices to match, but with a Danish twist. We’ve been seriously considering this for a year or two. It was a happy coincidence that Sainsbury’s was having the same thoughts at the same time but that was just the first of the many pieces of the puzzle that fell quickly into place.
Did Netto leave at the wrong time and is it coming back too late?
PB: No, we left at the right time - Asda made a great offer for the old Netto. And no, it’s not too late at all. The UK discount sector is growing strongly and it feels like exactly the right time to come back with a Scandinavian discounter offer for UK customers.
Netto means price. Where does Netto plan to position itself in the UK on price? Will it benchmark against Aldi and Lidl or does it plan to be cheaper?
PB: Netto will be competitive to the discount sector. We’re not going to give away our pricing strategy now, but it will have a very strong price position.
Should Aldi and Lidl be worried?
PB: I hope so! We compete hard with them and win in other territories, so there’s no reason we can’t do that here. It’s what this trial is all about.
There is much more focus on fresh food this time around. What else has changed?
PB: Well the whole market has changed. We’re not going to give too much away to our competitors but there’ll be a real emphasis on making the shopping trip as easy as possible - easy park, easy shop, easy pay. Then of course there’ll be a Scandinavian twist to what we do, which we think will offer a refreshing alternative to the German discounters.
The 15 stores are planned for the North of England. Would the 16th be further South, or is the North the focus for the foreseeable future?
PB: We’ll talk about that when the time comes. The focus for now is the trial in the North of England - the stores will be located in areas with an interesting demographic mix of mixed-affluence households, which will tell us a lot about the viability of the concept across different regions of the country. But we think we can make a success of this wherever we go.
With the discount market expanding the way it is, would you put a total figure on your ideal-sized estate in the UK?
PB: I don’t think that would be meaningful right now. There are just too many variables and we haven’t opened a single store yet!
Mike, is this a case of ‘if you can’t beat them, join them’?
MC: No, it’s a case of ‘not only, but also.’ Sainsbury’s has a great business across UK supermarkets, convenience, online and non-food; this lets us test the potential for a clearly differentiated offer in the growing discounter market with a clear brand and a complementary partner. [In a conference call on Friday, Coupe told journalists he wasn’t worried about cannibalising his own business: “Discount is a significant and growing sector, but ultimately it is a different sector. We must not lose sight of the fact that even in the foreseeable future somewhere around 90% of groceries will be sold through conventional convenience, out-of-town superstores and online… The reality is that because of our relative geographical spread we’re less impacted by the discounters.”]
What were the attractions of working with Netto?
MC: A great cultural and values fit, a brilliant concept and proven expertise. And Danish pastries. What’s not to like?
What exactly is Sainsbury’s role in this? What will it be providing to the joint venture?
“We compete hard with Aldi and Lidl and win in other territories”
MC: We reckon we know the UK consumer better than anyone. That’s a good start, and on top of that we can offer support in areas like property acquisition and product sourcing that can help the venture hit the ground running.
Will any Sainsbury’s staff be seconded to Netto and vice versa?
MC: The jv’s management team is roughly half and half - with marketing, logistics, HR and property coming from Sainsbury’s and the MD, supply chain, and sales from Netto’s international parent Dansk Supermarked. But it’s important to remember that this is an independent joint venture and it will primarily be sourcing its own colleagues.
Will Netto sell Sainsbury’s products? And will Sainsbury’s sell Netto products?
MC: No and no. It will be an entirely separate retail operation that we have a 50% stake in. It’s also a completely different model that requires different logistics, different sourcing and different ranging.
Why has Sainsbury’s chosen to go down the jv route rather than open your own discount format?
MC: Discount is a new channel for us. Our expertise in supermarket retail is as good as it gets, but we’re not a discounter and it makes perfect sense for us to find a partner that offers such a great cultural and operational fit as well as a brand that clearly has resonance as a discounter. We could probably have had a go ourselves, but this is better.
How will the decision-making process take place? Will you have a joint management team with representatives from Netto and Sainsbury’s?
MC: There’s a supervisory board on which both I and Per sit, along with John Rogers and Helen Buck from Sainsbury’s and Claus Juel-Jensen and Chris Nicholas from Netto. The leadership team will be employees of Netto UK, led by Morten Moberg Nielsen, an experienced retailer who most recently headed Netto in Germany.
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