The chief economist says opening up about food prices can be negative for you and me.
Recently, Oda, formerly Kolonial, announced that they are in a price battle with lower price chains. Thus, they will now compete for more affordable foods with Kiwi, Extra and Rema 1000.
None of the Norwegian discount chains, except for Oda, an online grocery store, are available for price comparison.
Oda is now breaking with the historical practice in the lower price segment where competitors’ prices were not publicly available to competitors.
The lack of transparency has led, among other things, to lower price chains having their own price hunters that get prices from competitors in competition to be the cheapest.
Oda currently has 300,000 customers and a turnover of NOK 2 billion.
Oda CEO Karl Munthe-Kaas says the Kiwi, Extra and Rema 1000 have been dominant in the low-cost genre for a long time.
– We have always been much cheaper than all the other online grocery stores since the beginning. We are now stepping into the low price segment, by lowering prices, this is an important message for our customers, says Monte Cass, and confirms:
It should be clear to consumers that they can trust that we have prices as low as the Rema 1000, he tells Nettavisen.
– How do you expect it to appear in future Nettavisen price comparisons for lower price chains?
– We’ll match low-priced chains, as well as make personalized offers. He says I expect to come out the same.
Small market share
The CEO is not afraid that they are now putting a lot of responsibility on their shoulders to match the lower price chains.
“Surveys show that two-thirds of consumers shop at low-priced chains, and that price is very important to Norwegian consumers,” he says.
Oda here is thought to be a huge advantage compared to other low price chains,
“We now match low with price, but they don’t match us in selection, quality, and home delivery,” he says.
Munthe-Kaas says that in the future they will have a strong focus on growth, and they want to capture new market shares.
Oda delivers goods to customers in eastern Norway only. As of today, they have a small percentage of the market share in the total grocery market.
By comparison, Norgesgruppen, including Meny and Kiwim, has 44 percent.
It can provide more expensive food
Professor and Chief Economist of the Norwegian Competition Authority Jan Yingve Sand gave a speech recently at the Grocery Market Conference “Food” in Oslo.
In the lecture, Sand spoke of his belief that open price information could contribute to higher prices at the grocery store.
– Price transparency is an issue if competitors share prices – it could lead to coordinated behavior, he told Nettavisen, emphasizing that it’s not a direct comment that Oda has now established itself as a low-priced chain.
Watch the interview with Jan Ynge Sand here:
Sand believes that cooperation can signal to the competitor what it intends to do with price in relation to certain products.
– Thus, you could end up with higher prices than you would otherwise, says the chief economist at the Norwegian Competition Authority.
– How can price transparency affect the price to the consumer?
It can be affected, among other things, by companies trying to signal to their other competitors that they want a higher price, and that they also try to set a slightly higher price — so that competitors follow, which in turn gives higher prices to the consumer, Sandy says.
However, Oda’s chief disagrees with the chief economist, and thinks it’s unclear whether price comparisons are driving prices up and down.
Munthe-Kaas thinks it’s worth noting that almost all other industries have an opportunity for price comparisons, whether that’s about mortgages, or a number of verifiable items on the price comparison portal, prisjakt.no.
– We have taken the prices and posted them on a website. We want to prove that we have the same low price chains. I can’t see that this is a negative. I think it sharpens the competition.
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