Until the beginning of the 1950s, there was something called a branch ban. With the lifting of this ban, a new era began. The same owner could run several stores. The first self-service stores appeared. The move from the city centers to new residential areas began. In Oslo, it was about new drabant towns.
Being allocated a shop plot in one of the drabant towns was often the road to wealth. Few had a car. Therefore, people shopped in the convenience store, which in Oslo had become supermarkets. The first supermarket in Kristiansand, MM in Markensgaten, opened in May 1967.
At the beginning of 1967, there were 77 outlets selling groceries in Kvadraturen, including specialist shops for fruit/vegetables, meat, fish, bakery goods and milk. The number was quickly reduced. At the same time, local chain formations arose, first with the Spar chain. Then followed the MM chain and later the Stjerne chain. Sørlandet’s cooperative was involved from the start.
In the same way that grocery merchants were numerous and independent in the 1950s and 60s, there were also many independent, smaller grocery wholesalers. But already around 1960 there were some wholesale companies, perhaps primarily Joh. Johannson in Oslo, which began by acquiring other wholesalers around the country. Some local wholesalers had already merged into larger units, but that did not prevent further concentrations.
At the same time, there was a radical change in the handling of goods. Large single-level warehouses were built, and storage and transport took place on pallet systems. But the wholesalers had also found out something else, namely that liquidity was an important weapon. While they themselves had a credit period of 30-45 days with their suppliers, they gradually reduced the payment period to 8 days for their customers. This meant that the wholesalers became capital strong. When new shop projects were to be established, it was often only the wholesalers who had the necessary capital to participate, but they in turn engaged private merchants who rented the premises and ran their own shops. On the whole, there was a strict distinction between wholesalers and retailers. At the same time, an increasingly large part of the distribution of goods took place through wholesalers. It was rational and cost-saving. But there was a clear unwritten agreement that wholesale and retail operations should not be mixed on the owner’s side.
Gunnar Strømme
While competition in the retail sector in the 1960s and 70s intensified around the country, it is my contention that the same did not happen as strongly in the Oslo area. The competition was less and the profits for the stores higher. This created a new opportunity. With a limited range of products, it was possible to operate more efficiently and prices could be reduced. The concept that for a period made the owners of the German ALDI chain, the Albrecht brothers, some of the world’s richest, could also be introduced in Norway.
Today’s Norwegian grocery stores, with their long opening hours, may have the capacity to cover the needs of a population of 20 million people.
In 1977, the merchant’s son Stein Erik Hagen opened his first RIMI 500 store in Oslo. Two years later, another merchant’s son, Odd Reitan, followed up with the establishment of the first REMA 1000 store in Trondheim. This was the start of a new era in Norwegian grocery retailing.
But something else had also happened, namely the introduction of new computer technology. Eventually, not only the wholesalers, but also the retailers, could keep track of what was sold of each individual item. When the range of products in the ever-growing low-price chains was smaller, it became vitally important for manufacturers to secure shelf space in stores. They therefore often gave extra discounts to the low-price chains to be included in the range, but large sales of individual items were also rewarded.
The establishment of more and more RIMI and REMA stores, often through the acquisition of other stores or local chains, meant that RIMI and REMA eventually said goodbye to their wholesale suppliers and established their own wholesale functions, often by buying other medium-sized wholesale companies. This was the end of an unwritten “law” that there should be a separation on the ownership side between wholesalers and retailers in the Norwegian grocery trade.
A new battle started. Wholesale company Joh. Johannson established, together with some of his clients, the Norgesgruppen. Hagen sold the RIMI chain to Swedish ICA. But the Swedes did not understand the Norwegian market. After losing NOK 5 billion, ICA sold its stores to Coop. REMA 1000 continued its expansion. Norgesgruppen did the same, with the Meny, Kiwi and Spar chains, and Coop with Extra, Mega and Obs.
When one of Europe’s largest grocery giants, Lidl, established itself on the Norwegian market, they lost large amounts. For the first time ever, they gave up and withdrew from a country where they had established themselves.
Will new, large players try to enter the Norwegian grocery market? Hardly, but there will be a certain shift in the industry as chains such as Europris, Rusta, Normal etc. will eat even more into the grocery market.
Are the grocery chains making too much money? Not from a corporate financial point of view, but large volumes make them financially strong. They use some of this strength for investments in the property market, but also to establish new, large stores, preferably close to competitors. Today’s Norwegian grocery stores, with their long opening hours, may have the capacity to cover the needs of a population of 20 million people. Are more and larger stores contributing to lower prices? I don’t think so, but that’s how competition works, plus the chains are strictly forbidden from colluding to reduce over-establishment.
