Morrisons denies Netto revival threat
Julian Wild, head of the food team at Rollits solicitors, said: “Morrisons is already in more than enough trouble without the threat of another discounter coming onto the market.
“I have to say, I’m pretty unclear which direction they will take, other than to make another round of price cuts,” Wild told FoodManufacture.co.uk.
‘We’ll keep doing what’s best’
But a Morrisons’ spokesman rejected claims Netto’s arrival would challenge its position. “We’ll keep doing what’s best for the customer,” he said.
“We have just permanently lowered 1,200 prices making us among the cheapest on the market.
“Our stores offer so many things that the discounter doesn’t include, including service, wider range and butchers, bakers and fishmongers with traditional skills.”
Another analyst warned Morrisons had no unique selling points to distinguish itself from the other big three and said it was lagging.
“Tesco has online, Asda has low prices and now Sainsbury has a discounter. [Netto re-launching] won’t help Morrisons,” said the analyst who did not want to be named.
Meanwhile, Ed Garner, communications director at Kantar Worldpanel, said the announcement came “completely out of the blue” and was likely to have caused commotion in a few of the big three’s head offices.
‘A lot of sense’
“But there’s a lot of sense in Sainsbury linking with Netto,” Garner told FoodManufacture.co.uk. “I suspect, at a corporate level, Sainsbury are looking to grow into the discounter sector. However, they do need to keep the two businesses separate.”
Sainsbury’s decision to link with Netto was a surprise, agreed Wild. “But Netto is a readymade brand and it’s better for Sainsbury to align with an existing discount brand, than to create a new one,” he added.
Edouard Aubin and Francois Halconruy, analysts at Morgan Stanley, said the launch grew out of the success experienced by the discounters in the past five years, which was built largely on Aldi and Lidl’s improvement of their perishable offer.
“We believe that Sainsbury now has more reason to be involved in the channel,” they said.
‘Improved its odds’
“We think Sainsbury is significantly improving its odds of success by partnering with a successful discounter.”
Netto exited the UK in 2010, following a £778M buyout of its 193 stores by Asda.
Last week (June 20) it announced a £25M joint venture with Sainsbury to trial a series of 15 new-look stores, which will open in the north of England, before rolling out across the country.
Meanwhile, Sainsbury ceo Justin King told FoodManufacture.co.uk that Netto would bring much-needed expertise to the supermarket.
“Our job is to be close to customers in the UK. We’re not experts in running low-cost sites, we’re not experts in running limited ranges – that’s their core expertise,” said King.
“If you look at Netto stores in Denmark, it’s a different kind of proposition.”
Morrisons announced today (June 23) it would make price cuts to a further 135 products.
