Supermarkets, Coop | The kiwi price cut may have consequences for Coop:

Two weeks ago the news came that Kiwi, Meny and the other chains owned by Norgesgruppen have better purchasing conditions from several large suppliers, compared to Coop and Rema.

On Sunday, Kiwi came out and said they were starting the biggest price cut of all time, and both Rema and the Coop Extra chain said they were following suit. This is a price cut of more than 500 items, with an average price drop of 21 percent.

– We will always follow the price, but it costs us more to give low prices than those that have better purchasing conditions. It goes way beyond our competitiveness when we have to use our “war box,” says Bjørn Takle Friis, Coop Norge communications director for Nettavisen.

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This will have consequences for Coop.

– It goes beyond our opportunities to establish new stores, he says.

Although they can compete with Kiwi on price in existing stores and gain customer growth in these stores, new stores in the right location are important.

– Kiwi has more funds to do other things to stay competitive, says Friis.

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Not equal opportunities

When Coop follows the big Kiwi price cuts, this is in addition to their own promotions and price cuts. In early October, Coop started a price war on the cheapest products, when it slashed the prices of 160 products in the cheap Xtra series.

– We must be competitive in price, otherwise we would not have had the right to life. We win by following our competitors, but we would like to have money to invest more, says Friis.

If more players had as many opportunities to boost prices as Kiwi, there would be more dynamism in the market, he believes. Friis also doesn’t think the competitor’s price cut is something to brag about.

– It is not very impressive to cut prices for a month. These are just campaigns, and we run them all the time, he says, noting:

– They scream louder than they should. They raise it a lot, he says.

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I’m not sure how much it stings

Øystein Foros, NHH professor and grocery expert, doubts that all Norwegian consumers realize exactly which Kiwi products have cut prices.

– The chains, on the other hand, do it, because they do not want Kiwi to be 20 percent cheaper than those of the selected articles. But how much it hurts for Coop and Rema to follow him will likely vary, he says.

– It can sting less than what they express, says Foros.

Forums notes that it all depends on how many sale items people buy.

– If customers are not aware of prices and do not buy the products on offer, it hurts very little. If a large part of customers’ shopping cart is made up of sale goods, it costs more, he says, adding:

– But customers may not be as aware of exactly what products have been reduced in price.

Strengthen the brand

Forums believes Kiwi uses pricing campaigns to try and build its own reputation, to show that customers can be sure of getting the lowest prices with them. But the teacher has an important message for people:

– Before you have managed to rush to Kiwi to buy an item that they have reduced in price, it is just as cheap to buy the same item at Rema and Extra, he says.

Forums notes that therefore it doesn’t matter where you shop, if you stick to the products on offer.

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– How important is it to new store locations and proper location?

– Of course it is important. It doesn’t really matter in terms of price if I buy in Kiwi, Rema or Extra, so location is important, says Forums, explaining:

– If I pass by an Extra store that is a bit complicated, on the way home from work, it is clear that I prefer to stop at a Kiwi store with a large parking lot close to where I live.

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It is even more important if the size and number of stores influence the purchasing conditions.

– Then there will be a battle to constantly open new stores, says Foros.

It focuses on the shopping experience.

Rema 1000 has not responded to Nettavisen’s questions about what consequences the Kiwi price cuts may have for them, when they monitor the price. However, public relations and communications manager Calle Hägg points out that there is fierce competition.

– We operate in the most efficient way possible to offer our clients the lowest possible prices. If we get better purchasing conditions, our customers will get even lower prices, he says.

Rema focuses both on low prices and on offering customers a good shopping experience. Hägg says they are absolutely sure that nobody beats them on value for money.

– We are sure that we have many competitive advantages in addition to our price increase, which is stronger than ever, he says.

Doesn’t care about competition

Kiwi communications director Kristine Aakvaag Arvin will not comment on Coop’s criticism of the Kiwi campaign.

– We care what customers think about Kiwi and spend little energy thinking about what the competition says about us, he says.

Arvin believes Kiwi is the price squeezer on the market and is proud of its fourth price cut, which lasts for six weeks.

– It’s tough competition and we’ll win over customers with the lowest prices, the best stores, and the happiest employees, he says.