Dansk Supermarked has bought the leases for 81 of the 91 Kiwi discount stores or plots previously put up for sale by its competitor Dagrofa. More than half of the stores are to be converted to its own Netto discount banner and the rest to be sold on to other retailers or companies. According to the Danish magazine Dansk Handelsblad, Rema 1000 has bought leases for six stores and Lidl for one. Dagrofa is also to convert 25 stores to its Spar and two to its Meny banner (not included in the number above).
We can picture two satisfied CEO’s named Per walking out of the Kiwi negotiations. Per Thau (CEO, Dagrofa) got rid of the major portion of stores in record time and presumably at a good price. Per Bank (CEO, Dansk Supermarked) can give his plot scouting team a long break and gets to decide who takes over any stores that will not carry a Netto sign. The likeliest scenario is that as many as possible will be leased to non-grocery retailers or other companies and that fast expanding competitor Rema 1000 will get none.
Adding an assumed 50 stores to its network, Netto will further expand its clear leadership in the discount channel. Its refurbishment programme to adapt Netto stores to modern expectations of a discount store will likely include several of the Kiwi stores that need to be converted anyway. The decision to not keep all stores shows that Netto is being more selective now in deciding where to open and that we could expect a slower domestic expansion pace going forward.
According to LZ Retailytics figures 50 Kiwi stores would add around DKK1.5bn (EUR210mn) of retail sales to Netto’s annual turnover, allowing it to move further ahead of Fakta, Schwarz Group and Aldi. Rema 1000 is expected to keep up with Netto's expansion pace and retain its place as the undisputed second largest discounter.