Asda announced it has reached an agreement with Dansk Supermarked, a Denmark-based retail company, to purchase its fully-owned subsidiary, Netto Foodstores Limited. The transaction, which remains subject to regulatory approval, will enable Asda to convert Netto’s UK locations into its stores and integrate them into Asda’s new supermarkets division for units smaller than 25,000 sq.ft.
Asda expects to finalise the transaction after approval from the Office of Fair Trading later this summer and to complete the refurbishment of Netto stores to trade under an Asda fascia by the middle of 2011. Until official approval is granted, all Netto stores in the UK will continue operations as usual under the existing management.
Netto was established in the UK in 1990 and operates 193 stores at an average 8,000 sq.ft. It is the market leader in Denmark and among the fastest growing discounters in Germany, Poland and Sweden.
Asda’s president and chief executive Andy Clarke said, “We look forward to welcoming Netto’s colleagues into our business and joining our team. Customers will benefit from low prices on a significantly broader range of quality products, complemented by the wide range of services we offer in all our smaller stores.”
“The creation of new in-store jobs in a ‘tough’ economy will also be a welcome boost in scores of communities across the UK.”
With the transformation in range, customers will be able to complete a full weekly shop. As a result, Asda will employ up to twice as many colleagues to serve customers compared to a Netto in the same location.
Netto managing director Claus Juel-Jensen said the management and staff should be proud of Netto’s success, “Netto has been profitable and was appointed ‘Discounter of the Year’ in 2009. As a major league player, Asda is the ideal purchaser of our UK business. We have substantial opportunities for growth in Scandinavia and Northern Europe and believe the time has come to focus our efforts on the development of our business in these countries.”
Asda’s move to acquire all Netto’s UK stores is a key strategic building block in satisfying the demand for the retailer in a much broader range of communities across the UK and underlines Asda’s commitment to its smaller stores division.
— IndiaRetailing Bureau