The hard discounting end of the UK food-retailing spectrum still has space to accommodate an additional player.

The hard discounting end of the UK food-retailing spectrum still has space to accommodate an additional player.

Cast your mind back to 2010 and to a discount format that faltered. The retailer in question was Netto and the location the UK. The Danish discounter evidently decided that this was not a market in which it could make enough money to justify the operational cost. It sold up (mostly to other hard discounters) and left.

Yet just when the Netto adventure had become little more than a footnote in the annals of UK retail history, it’s back. And this time it’s in concert with Sainsbury’s with both parties putting forward the case that there will be a synergy between them that will mean success and profit.

Things however have changed since 2010. Back then a visit to a Netto store was not an altogether uplifting experience – this really did look and feel like the Ryanair-on-a-budget of retailing and it was hard not to emerge from one of the branches without feeling a sense of vague relief at having done so. It is fair to say that rivals Lidl and Aldi might have had something of a similar effect, but that feeling has changed over time, mentally and physically in the way that the stores now present their offers.

UK hard discounters today take credit cards, bake bread on the premises and have branded as well as private label products, among many other things. Something for most people therefore and the growth at this end of the market reflects the growing acceptance that no-frills retailing can actually have a certain appeal.

As in Germany, the spiritual home of hard discounting, it is now perfectly acceptable to admit to having bought your champagne or whatever from an Aldi or Lidl and almost to feel a certain pride in having shopped smart. And presentation standards have been on the rise over time. The point therefore is that Netto will have to join the party at a time when the discounters are reaching up towards the big supermarkets, just as those organisations are extending their offer downwards to challenge them head on.

Expect more therefore than what was offered before and expect it to be tempered by the generally high visual merchandising standards that characterise the average Sainsbury’s store. There is probably insufficient room in the middle and upper echelons of UK food retailing to accommodate another chain. At the lower end of the market however, improved standards and burgeoning consumer awareness mean there is still a lot to play for.