Hard discounter Netto UK is moving upmarket in a bid to exploit the potential of the British market.
In his first interview since taking over, new Netto UK managing director Claus Wædeled said he believed there was room for 1,000 stores in the UK if the British could be persuaded to embrace the discounter formula.
Netto wanted to get the message across that discounters were not just about economy ranges, he said.
“There is room for more discounting in the UK. People are getting used to buying from discounters, if you look at the flight industry. Netto is what EasyJet is for the flight industry.
“In the UK we have not been good at telling people that discounting is not just about low
prices, it’s low prices for very good quality products.”
Netto stores were being moved into better and more prominent locations on the outskirts of towns with good access and parking. There is also an ongoing programme of refurbishing existing stores. “Twelve years ago when we were looking for sites in the UK it was important to buy them cheap,” said Wædeled.
“Now we want quality, and we will pay the price for it.”
The company plans to open up to 20 new stores this year and at least another 20 in 2005.
Ranges were also being altered to appeal to a wider customer base, he said.
He cited Netto’s extension of its ranges of wine in all stores, with prices per bottle up to £5.99 compared to the previous £1.99 to £3.99.
Wædeled said: “The thinking is that wine sales are on the increase so we are introducing new lines with higher price points to get in the sort of customer that buys wine.”
He said one of the main advantages Netto UK had over its discounter rivals was that it sourced many of its products locally in the UK.
That meant its range of 1,100 lines with an additional 50 to 100 weekly spotline specials was in tune with UK consumer demand. Other ranges came through parent company Dansk’s central sourcing system.
Wædeled had been surprised that Netto UK still only had 136 stores when he joined from the Dansk-owned supermarket chain Føtex in Denmark last year. Discounters had a “very low” market share in the UK of less than 5% with Netto at 0.8% share according to ACNielsen data, he said.
That compared to countries like Denmark, where Dansk is based, where discounters had about 30% share.
Aldi, Netto’s closest hard discount rival, has also been trying to reposition itself with a more upmarket quality image for the past 18 months (The Grocer, August 24, 2002).
This week it launched a new wave of premium own label products.
Anne Bruce