Shopping at the grocery store has become significantly more expensive in the past year.
On 1 February, the prices from the suppliers to the grocery chains will be adjusted, and it is expected that the prices will increase further for the consumers.
Ragnhild Silkoset, professor of marketing at BI School of Business, believes that low-price chains in particular are starting to have a problem explaining things to customers.
Rema 1000 advertises that they have “always low prices”, while Kiwi calls itself “the price pusher”. Coop Extra has the slogan “make it cheap”.
– Customers no longer believe the message. They have been exposed too many times. We as consumers need better documentation now to trust the promises they make, says Silkoset to TV 2.
MORE AWARE: Marketing expert Ragnhild Silkoset believes that consumers’ increased awareness means that grocery chains have to market themselves differently. Photo: Torbjørn Brovold / BI
– Price laundering
Silkoset highlights the concept of “price washing” to explain the low-cost chains’ marketing. The term is used in the same way as “sports washing” or “green washing”.
– They are unable to document that they are actually working to reduce prices as much as possible, says Silkoset.
TV 2 has asked the discount chains what they think about what Silkoset says. Both Kiwi and Coop say they stand by their slogans, while Rema 1000 has not yet responded to the inquiry.
– Kiwi is the price pusher in the grocery market, and we know we are the cheapest. As a professor at a business school surely understands, we have to adjust the prices when we get increased input prices and other increased costs, says communications manager Kristine Aakvaag Arvin at Kiwi to TV 2.
PRICE PRESSURE: Communications manager Kristine Aakvaag Arvin Kiwi believes the price increase would have been even greater without Kiwi’s price pressure. Photo: Gorm Røseth / TV 2
She claims Kiwi herself earns less money than before.
– We obviously stand by our slogan, and we promise that we will continue to push prices as much as we can, says Arvin.
– Will kill the myth
Communications manager Harald Kristiansen at Coop says they have significantly lower margins than the big suppliers, and has also questioned where the money goes in the value chain.
STANDING FOR THE SLOGAN: Communications manager Harald Kristiansen at Coop believes you can still “do it cheaply” at Coop Extra. Photo: Espen Solli
– Coop is therefore pleased that the government will now carry out a margin study in the entire value chain. Then comes the documentation that Silkoset is calling for, and it will kill the myth that we are the ones who make the most money from our food, says Kristiansen.
– Do you still think that the consumer can “do it cheaply” at Coop Extra?
– Yes, definitely, and you get to share in the profit we have to create. Extra was recently named the cheapest nationwide chain in a large price survey, and it is a position we have ambitions to retain, Kristiansen replies.
Believe in price wars
When prices are now expected to rise, Silkoset is clear about which marketing strategy she believes the grocery chains will use.
– I think they will run a lot of campaigns. They set the price first, and then they lower the prices of some goods in time-specific periods, she says.
PRICE WAR: Silkoset believes there could be a price war on goods such as fruit and vegetables. Photo: Ingrid Wollberg / TV 2
Although the chains do not necessarily want it themselves, Silkoset believes that we can expect a price war on certain goods after 1 February. She highlights fruit and vegetables as an example.
– This applies to products that stores do not profit from having lying around because they go bad, says Silkoset.
Economist and merchandise trade expert Odd Gisholt believes that the low-price chains will compete hard for everyday goods such as bread, milk, meat, cheese, fruit and vegetables after 1 February.
– The chains have over 7,000 articles on their shelves, but there are only a few articles for which there is a price war. These will also be low in price after 1 February, but a good number of the others will have a large price increase, says Gisholt to TV 2.
PRICE WAR: Odd Gisholt, merchandise trade expert at the Department of Marketing, believes that customers can expect a price war on individual items. Photo: Aleksander Myklebust / TV 2
– The word price war is often associated with “wild” offers, such as record cheap snacks. Will we see any such offers?
– There will probably be such crazy offers on individual items. We will continue to experience such things, says Gisholt.
Used as “infiltrators”
Grocery expert Erik Fagerlid does not go as far in expecting a price war, but says it is common for certain goods to drop in price a few weeks after the increase around 1 February.
– After February, the winter holiday, the Easter holiday, on 17 May will also continue. Then we will buy Easter goodies, and sausages and ketchup until 17 May, and then the prices normally go down again on this, says Fagerlid to TV 2.
EASTER GOODS: Easter is among the holidays for price wars. Photo: Frode Sunde / TV 2
He calls it occasion-based marketing, and believes that the specific goods that are reduced in price act as “pullers”.
– The chains are constantly looking to advertise a product that is much cheaper with them than with others. Once you’re there, you might buy the whole shopping basket there, says Fagerlid.
– In all years, it has proven to be very effective marketing.
EFFECTIVE MARKETING: Grocery expert Erik Fagerlid calls well-placed campaigns effective marketing. Photo: Gorm Røseth / TV 2
– Can save large sums
The experts agree that the focus on increased food prices among the media, politicians and the general public has made Norwegians more price conscious during shopping trips.
Silkoset strongly encourages you to drop your loyalty to one particular grocery chain, and instead follow the offers.
– Be prepared to go to three stores to buy what you need. Loyalty is helping to destroy your own market, she says.
Gisholt also believes there is a lot to be gained from keeping up to date on campaigns and possible price wars.
– I recommend everyone to go and look in all the discount stores. Then you can get your bearings and pick up the offers that are available. You should also have all the loyalty cards, says Gisholt and highlights Trumf, Coop membership and Æ.
He also singles out chains such as Europris and Normal, where, according to him, you can get certain items, such as hygiene items, at a lower price.
– You have to get your bearings, and if you do, you can save large sums, says Gisholt.
