Sainsbury's to close Netto discount supermarkets, putting 400 jobs at risk

Supermarket chain hopes to re-deploy staff where possible

There are 16 Netto stores across the UK with 400 jobs put at risk by the closure of the chain (Getty Images)

Sainsbury’s is to close its Netto chain of discount stores, it has been announced.

A total of 400 jobs are at risk after the supermarket firm decided to abandon the joint venture with Danish retailer, Dansk Supermarked Group.

The two companies had hoped Netto could rival established discount supermarkets, Lidl and Aldi.

However, it was decided the trial should end as it required rapid expansion and investment to continue.

Sainsbury's chief executive Mike Coupe said the firm needed to focus on its core business and the integration of Argos, which the business is in the midst of acquiring

He said: "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 and instead focus on our core business and on the opportunities we will have following our proposed acquisition of Home Retail Group.”

The £20 million joint venture's value will be written down as zero with Sainsbury's expecting to incur cash costs of around £10 million to wind the business down.

As a result of the increasing marketshare of European discount supermarkets, Sainsbury's has been forced to replace complex promotions in favour of lower prices for everyday products such as egg, chicken or cheese.

Sainsbury's is not alone in being affected, Asda and Tesco have both suffered losses in sales revenue as a result of the success of Aldi and Lidl.