Sainsbury’s is entering the discount market by way of a joint venture with Netto parent company Dansk Supermarked.
The partnership will see the trial opening of 15 Netto stores in the UK by the end of next year.
Both Sainsbury’s and Dansk Supermarked have invested £12.5m in the venture, but the businesses have said they expect to each incur a post-tax loss of between £5m and £10m by 31 March 2015, due to "start up costs".
The UK discount sector is currently worth an estimated £10 billion in annual sales, according to data from IGD, and is forecast to double in value to approximately £20 billion in the next five years.
Sainsbury’s has promised that consumers will see a marked difference in the new-look Netto stores since they left the UK high street in 2010, with "value and ease of shopping" an important factor in the stores’ design, alongside a fresh food offer and an in-house bakery sporting Danish pastries.
Mike Coupe, the chief executive-designate of Sainsbury’s, who takes over from Justin King next month, said that if the trial proves successful, it "has the potential to open up a new long-term growth opportunity" for the supermarket brand, "complementing our fast expanding convenience, online and non-food businesses, as well as our existing supermarket estate".
He added: "We are very excited about helping to bring the new Netto to British shoppers. The joint venture provides a great opportunity for us to gain exposure to the high growth discount market for the first time in partnership with Dansk Supermarked, whose expertise and values are a strong complement to our own."
Netto, which left the UK four years ago when ASDA bought its stores, will be led by Morten Moberg, the supermarket’s former managing director of Netto International in Germany.