Sainsbury’s and Dansk Supermarked Group have announced plans to shut 16 Netto stores around the country, putting 400 jobs at risk.
The stores were launched from June 2014 on a trial basis as Sainsbury’s looked to take on discount rivals Aldi and Lidl. Following a strategic review, Sainsbury’s boss Mike Coupe cited ‘changing dynamics’ including customer feedback and expansion costs as reasons to wind the operation down.
A Sainsbury’s spokesman confirmed that among the stores due to close are the Netto sites on Queens Road and at Kilner Way Retail Park in Sheffield.
The Netto store on Thorne Road Retail Park in Doncaster is also shutting, along with its New Edlington shop.
The stores are due to continue trading this month but are due to shut in August.
Mike Coupe, chief executive of Sainsbury’s, said: “Netto is an excellent retailer with talented leaders and colleagues and we have learnt a great deal about the discount grocery retail market from this trial venture.
“To be successful over the long-term, Netto would need to grow at pace and scale, requiring significant investment and the rapid expansion of the store estate in a challenging property market.
“Consequently, we have made the difficult decision not to pursue the opportunity further.”
The value of the £20 million joint venture will be written down to zero and Sainsbury’s is also expected to incur cash costs of around £10 million to wind the business down. Staff will go through a consultation in the coming weeks, with Sainsbury’s attempting to find new roles for affected staff.