(The online newspaper): Commissioned by Nettavisen, InFact has asked more than 1,000 people two questions about the so-called cheap chains Extra, Kiwi and Rema 1000: Who is the cheapest? And who can be trusted to keep prices down?
As many as 46.1 per cent believe Kiwi is the cheapest grocery chain, more than twice as many as number two on the list.
– This shows that Kiwis have managed to hammer home their advertising message that they are pushing up prices, says grocery expert and professor at the Norwegian School of Economics Tor Wallin Andreassen to Nettavisen.
– Successful stunt
The nationally representative survey was carried out on 6 February. It’s five days after Kiwi surprised by not raising prices. It is normal for grocery chains to set their prices on the first of February each year. Rema 1000 and Coop Extra set the prices, but adjusted them down again the following day.
The survey shows major differences:
- Kiwis 46.1: percent
- Rema 1000: 21.2 percent
- Coop Extra: 11.7 percent
9.1 per cent answered that the chains are just as cheap, while 12 per cent answered “don’t know”.
– Kiwi’s stunt was clearly successful. But I think the effect of that is short-lived. Therefore, we will see more stunts from the chains in the future. The chains will give the impression that they compete hard and that they are cheap, says marketing professor at BI School of Economics, Ragnhild Silkoset.
Fighting for ownership of the “cheapest”
Tor Andreassen at NHH also believes that there will be a response from the other competitors in the future.
– I expect the other two to take extra measures to convince the customers. They cannot live with the fact that the differences are so great and that clearly most perceive Kiwi as the cheapest, says Andreassen.
In the survey, the following question was also asked about the three chains: “Which of these do you trust to be able to keep prices down?”. Here too, Kiwi came out the best:
- Kiwis: 44.5 percent
- Rema 1000: 14.4 percent
- Coop Extra: 10.7 percent
And perhaps a bit surprising: While 21.2 per cent believe Rema 1000 is the cheapest chain, only 14.4 per cent say they trust Rema 1000 to be able to keep prices down.
– In a flat competitive landscape, the players have made price their main weapon. Then who manages to take ownership of the association “cheapest” is important, says Andreassen.
– Previously, Rema 1000 was perceived as the cheapest with its legendary advertisements with the chainsaw that cut the barcodes. Now this is far behind in people’s consciousness. We must therefore expect them to change the content of their advertising campaigns in the future. This also applies to Extra, says Andreassen.
Short term gain
The first of February was a special situation, where Kiwi became cheaper, just by not increasing prices. Normally, the chains will try their hand at stunts by being quick to reduce the price. Being first out is important, according to Silkoset.
– Research from the Netherlands shows that so-called “first mover advantage” gives a big advantage to the chain that lowers prices first. That makes people think they are cheaper, says Silkoset.
Nevertheless, Silkoset believes that the effect Kiwi has achieved with the stunt on the first of February is relatively short-lived, and that it is not at all certain that Kiwi will capture so many new customers.
– The fact that many people think Kiwi is the cheapest does not mean that many people will change shops. In Norway, we shop a lot. Then location matters a lot, says Silkoset.
Coop suspects name confusion
Coop Extra was clearly the chain least believed to have the cheapest prices, only 11.7 per cent pointed to Coop Extra as the cheapest.
– It has been seven years since we changed the name of our low-price chain from Coop Extra to only Extra. We know from other surveys that using the former name instead of Extra results in a lower price perception score, says communications manager Harald Kristiansen at Coop, who believes that someone may have mixed up Extra with some of the other Coop chains.
He also points out that Extra has done well in price tests in the past.
21.2 per cent of the respondents thought Rema 1000 was the cheapest chain. They are far behind Kiwi, which most people point out as the cheapest. Nettavisen has asked Rema 1000 about how they see themselves coming so far behind Kiwi. We have also asked them how they see the fact that even fewer, 14.4 per cent, think they will be able to keep prices down. Rema 1000’s brief comment is:
“The customer is our highest and most important boss, and since 1979 REMA 1000 has aimed to have the lowest grocery prices. We will never change that goal”writes press contact Celine Sjøberg to Nettavisen.
Kiwi is very satisfied that 46.1 percent answer that they are the cheapest chain.
– The customers probably think that Kiwi is the cheapest primarily because we are actually the cheapest, says Kristine Aakvaag Arvin in Kiwi.
She points out that Kiwi kept prices steady on the first of February, while the other two put them up, and then down again the following day.
– It shows that the competition works. Regardless of what happens in the future, we will ensure that we are the cheapest chain, says Arvin.
