Netto MD Claus Juel-Jensen today (27 May) spoke of his “heavy heart” at the discounter’s imminent exit from the UK – but hinted the chain’s business had failed to win over local consumers.
Asda, the UK’s second-largest retailer, has agreed to buy Netto’s local stores for GBP778m (US$1.13bn) as part of its bid to run smaller stores in the country.
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Netto will turn to focusing on Denmark, Sweden, Germany and Poland, where it runs over 190 outlets.
“We have big opportunities in central Europe and Scandinavia and we have a chance to focus on that,” Juel-Jensen told just-food.
The Netto chief suggested that the retailer’s stores were better suited to its European markets and revealed the company had been opening around 75 outlets a year on the continent.
“We have been doing very well in the UK and I’m actually very proud of how the team has been doing,” Juel-Jensen said.
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By GlobalData“The UK is a very tough market … but with our small market share and small number of stores we have been doing very well.”
However, Netto failed to match the sales growth seen at Aldi and Lidl at the height of the economic crisis, when cash-strapped shoppers were lured by the prospect of saving money at discount chains.
Juel-Jensen said Netto had not opened stores at the same rate as Aldi and Lidl and suggested his company’s business model had not proven as attractive to UK consumers as it had on the continent.
“The UK consumer has not been so close to this model of a limited-range discounter,” he said. “I think this format is very well suited for [our European] markets. It’s working very well and consumers know this model.”
However, he insisted: “We had a good business and we have been making a profit almost all the years we have been in the UK. Even last year, when we were struggling, we made a profit.”
