The price war is on.
Rema 1000 and Coop Extra are dumping prices on a number of goods.
They do this to be competitive with low-cost competitor Kiwi, which did not increase its prices on 1 February.
Declaration of war
– This is a declaration of war, says Bent Sofus Tranøy about Kiwi’s strategy. He is a professor of Political Science at Høgkolen i Innlandet and Høyskolen Kristiania.
– Or was that a bit of a strong word, perhaps? he asks rhetorically.
DESPERATE: Professor Bent Sofus Tranøy believes there was a desperate mood at several grocery chains when Kiwi did not raise prices. Photo: Høgskolen i Innlandet / website
But the professor is sure that there is a hard fight on the part of the Kiwis.
– Kiwis have taken a very hard step now. I don’t recall Kiwi ever saying “no, we’re not joining a joint price increase on February 1st”.
Forwards the bill
The fact that Kiwi, owned by Norgesgruppen, chose not to increase food prices this year signals that the food chain has the biggest muscles.
– We do not know the actual margins of the three grocery chains, because everything is secret.
– But I guess there is a bit of a desperate mood at Rema 1000 and Coop now. I don’t think they can afford to do what they are doing now; the competition is so fierce that I suspect that Rema and Coop are bleeding now.
Furthermore, the economics professor suspects that two things are happening:
– The suppliers of the two chains notice it, I think, because companies always try to pass on the bill. If the bill does not end up with the customers, an attempt will be made to deliver it to the suppliers.
– When interest in prices wanes, say in a week’s time, or at least a month’s time, you will see a cautious price increase until the chains get the margins they need going forward.
– Borders on frivolous
Professor at the Norwegian School of Economics, Tor Andreassen, says it is tempting to use the word “comic”.
POCKET: Tor Andreassen at NHH says it seems that grocery services are most concerned with their own wallet Photo: ODD MEHUS
– They have spent so long telling us that the prices are going up. This is tactics between the chains. They react incredibly quickly to each other’s price changes, which they can do because they have lots of numbers about each other.
– It is as if they are playing chess against each other with the customers as pieces, says Andreassen to TV 2.
He believes that prices will gradually increase in the future, since the prices of energy, distribution and raw materials have increased. The price increase on the shop shelf must cover it in whole or in part, the professor believes.
– This wobble back and forth in pricing shows how dependent the players are on volume and how much they fear a loss of market share in the short term.
– The problem is that the price adjustments show that they are more concerned with their own wallets than the interests of the customers and society. I think it borders on frivolous, says Andreassen.
Debate on increased food prices: Who is left with the surplus?
The chains respond
The two low-price chains inform TV 2 that the prices will already be reduced.
– We cannot afford to lose customers. We can’t afford to lower the prices either, but we just have to find a way to solve it, says director of communications at Coop Norge, Bjørn Takle Friis.
– We must be competitive.
Kiwi did not set prices when most other chain stores did at the end of the month. Takle Friis says Coop will not necessarily raise prices again if Kiwi does.
– Despite increased costs, we now choose to lower the prices, so that the customers see that we mean it when we say that it is the final sum on the till slip that counts, says purchasing director Line Aarnes at Rema 1000 by e-mail.
But despite the loss of additional income, the offer should not deteriorate.
– Our model has always been to sell a lot of goods at low prices, not to take high margins, so we must still have a good selection.
