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On Thursday, Extra opens its 500th store in Hønefoss, just 14 years after the opening of the first store. Neither Rema-Reitan nor Rimi-Hagen came close to such numbers.
The Extra chain was established in 2006 and the first store was opened in Halden. Since then, they have grown and become a strong competitor to the low-price chains Kiwi and Rema.
While Kiwi and Rema took 32 and 33 years respectively to get the 500th store, Extra did it faster, the closest being the Stein Erik Hagen supermarket, who ran it for 21 years.
14 years after they opened their first store, they will now open store number 500 on November 26. Therefore, they are the fastest growing supermarket chain in Norway in history.
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– We have grown from 0 to more than 30 billion crowns in turnover in 14 years. We now represent more than 54 percent of Coop’s grocery sales. We have doubled our market share in the last five years. If we maintain this pace, we will be able to outperform our competitors in not many years. Then they don’t stop either, but it’s an interesting development, says the network’s director at Extra, Christian Hoel, to Nettavisen.
And continues:
– We’ve been growth winners for nine out of 12 years in comparable stores, these are fantastic achievements. We are faced with critical questions about modifying profiles, but this is because we have found a winning recipe in the low price market and the turnover figures prove it. Our growth also shows this.
Hoel emphasizes that he is proud of absolutely everyone who has been involved in this adventurous growth.
– It has been a crazy journey and I am very proud of the mobilization at Coop and the cooperative teams that have been involved.
Hoel is also aware that the entry of Extra to the market will benefit consumers.
– Norwegian grocery customers are the main winners of Coop’s consumer-owned investment in the Extra low price chain. This has created stiffer price competition, most recently by being the first to get a large price cut on holiday items, as well as a larger selection at discount stores. Additionally, clients have been provided an alternative where profits are shared with 1.8 million co-owners at Coop.
– Essential for growth history
Grocery expert Erik Fagerlid points out that the acquisition of Ica and the aforementioned supermarket has been important for the Extra chain.
– The acquisition and re-profiling of Ica and Rimi was the jump that made Extra get so many stores quickly. It’s an essential part of the growth story, he tells Nettavisen.
– At the same time, not all stores were equally profitable, says Fagerlid.
He also notes that the acquisition was very expensive.
– Ica was very happy with the sale price. And it’s exhilarating when the salesperson is very happy with the sum, says Fagerlid.
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This means that the chain manager at Extra has proven to be a smart move.
– All objections to the acquisition of ICA Norway, at that price, are refuted. The old supermarkets, which are now Coop, have been very successful. My assessment is that, from both a financial and a market point of view, we have refuted those who doubt in those degrees. Coop Norway has been the very definition of a successful merger, Hoel tells Nettavisen.
Highlights
We also spoke with grocery expert Fagerlid about what he thinks about how important Extra has been to the industry.
– I think we should cheer Extra up a bit. What separates Extra from Kiwi and Rema is the combination of low prices that focus on fresh produce, he says.
The Norwegian Competition Authority has shown that Norgesgruppen, which owns Kiwi and Meny, among others, has better purchasing conditions from several major suppliers than its competitors. Therefore, Kiwi has a competitive advantage over Extra.
– With that starting point, it is quite demanding, when Extra should be among the cheapest chains and have a fairly large selection with a fresh product profile, says Fagerlid.
However, he believes that his concept is good for consumers. Fagerlid says that there are many similar things in the Norwegian grocery industry, so if you want to stand out, you have to stand out in the selection.
Therefore, it is good that the chains dare to invest in fresh products, as Extra does, and for example dinners for less than one hundred crowns, in which Rema 1000 focuses.
– Artificially kept alive
Fagerlid believes that supermarket chains, including Extra, are too focused on setting up new stores. It refers, among other things, to a statement by Bjørn Takle Friis, Coop’s communications director, earlier this fall.
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Then Friis spoke about how Coop is affected by the fact that they have to follow competitors in price when they have worse buying conditions than Kiwi, which is owned by Norgesgruppen.
– It goes far beyond our competitiveness when we have to use our “war box”. It goes beyond our ability to set up new stores, he said.
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Fagerlid believes that consumers deserve bigger stores rather than smaller ones.
– If there is something we do not need, there are several grocery stores. It costs more to set up more stores, and many of them will not be profitable and we as consumers must bear the cost, he says.
He points out that we have as many stores as the UK and that Oslo has twice as many grocery stores per capita as Stockholm.
– Many stores in Norway are artificially kept alive, he points out.
Fagerlid has seen that many chains continue to keep unprofitable stores alive, because they do not want competitors to be able to buy the premises and establish new stores.
Extra’s backstory
Extra opened its first store in Halden in 2006, and just three years later, the chain of stores had surpassed one billion in turnover.
The chain opened its 100th store in November 2013, under then-chain director Håvard Jenssen.
The chain is now run by former supermarket manager Christian Hoel.
The Extra chain really gained momentum after Coop bought ICA Norway, and many old supermarket stores were remodeled. When 500 stores are surpassed after 14 years, the market share is around 16 percent. This makes this chain one of the fastest growing supermarket chains in Europe.
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