(The online newspaper🙂 On Thursday 2 February, both Rema 1000 and Coop Extra chose to lower their prices. It happened only the day after several price tests showed that they had increased the prices by up to 10 percent.
Now experts say The online newspaper have spoken to that none of the chains will dare to raise the prices for a very long time.
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Prolonged price war
– The competition in the grocery market now is a real dog fight. There is fierce competition and none of the chains will give up, says grocery expert Odd Gisholt.
Gisholt has followed the Norwegian grocery industry for a number of years and was previously headmaster at Norway’s Commodities School and college lecturer at BI.
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All the chains say they will be the cheapest, read their comments further down.
– The fierce competition will continue for a long time, several months, says Gisholt.
Earlier this week, Kiwi announced that they will lock the price of 140 items, but according to Gisholt, the chains will not set prices on other items either.
Bitterness and prestige
Gisholt receives support from Trond Blindheim, who teaches marketing communication and consumer behavior at Kristiania University College.
– I think there is a lot of bitterness and prestige among the chains now. I think this price war could go on for a long time, for many weeks and perhaps several months, says Blindheim.
The strong spotlight on the grocery industry makes it difficult for players to raise prices, Blindheim believes.
– The chains know very well that both people, politicians and not least journalists follow closely what they do. The consumer journalists have tested the stores almost daily, and that means they don’t get away with raising the prices so easily, says Blindheim.
Grocery expert, Erik Fagerlid, is a little more skeptical about the duration of the low prices.
– I don’t think the chains will dare to differentiate themselves in terms of price on well-known brands such as Grandiosa, Coca Cola, etc. It is more likely that they will charge it on goods that are difficult for the consumer to compare, for example bread, fruit and vegetables or other own brands, he says.
Fagerlid also envisages that the price increases will first be taken out on goods that we buy less often, for example cleaning and hygiene articles.
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Must endure loss
Odd Gisholt believes there is no doubt about who will win the price war.
– This is good for us consumers. The chains will burn and that will make their profitability worse.
Coop has said that they sell goods at a loss. Gisholt believes they will continue to do so.
– Even if they lose money, I don’t think they will raise the prices again before the others. They have said that Coop Extra should be the cheapest and then they have to keep the prices down to have any credibility.
Fagerlid emphasizes that the best marketing for the three chains is to be the cheapest.
– Attention to being the cheapest is worth a lot of marketing money. They now prefer to lose money in order not to lose their profile. In a way, you can say that they force themselves to lose money because it pays off for their reputation, he says.
Øystein Foros, economics professor at the Norwegian School of Economics, says that the players are most likely burning money now.
– There is a game going on between the three actors which will be exciting to follow.
All will be cheapest
Both Kiwi, Extra and Rema 1000 say they will be the cheapest grocery chain.
– As most people have realized this week, it is Kiwis who are the price pushers in Norway. Had it not been for Kiwis’ price pressure, prices in the market would have been much higher today. We are proud of that, says communications manager Kristine Arvin at Kiwi.
She will not answer how long they will keep prices down or how long they will continue the price war.
– For reasons of competition, we cannot say anything about future prices. But we must ensure that we are still the cheapest, says Arvin.
Extra also says they want to have the position as Norway’s cheapest discount chain. Communications manager Harald Kristiansen refers to a price test from before Christmas where Extra was the cheapest nationwide chain, admittedly after Oda which do not have offers throughout the country.
– We want to maintain our position as Norway’s cheapest nationwide chain, but for reasons of competition we cannot comment on how this will affect prices in the future, says Kristiansen.
Rema 1000 sent out a press release on Thursday 3 February in which they state that the goal of being the cheapest on food remains firm.
– Since 1979, we have aimed to have the lowest grocery prices. We will never change that goal. says Tom Kristiansen, CEO of Rema 1000.
