The grocery group is challenging competitors such as Europris and Normal with a new wholesale chain.
It’s been a few years since we launched a concept we developed ourselves, says Ronar Holevic.
He leads the largest grocery group in Norway, behind Kiwi and Meny, among others, with a turnover of NOK 101 billion in 2020.
Now they have started a new chain of stores called Gigaboks which will sell big packs of groceries and other consumer goods.
“We took our inspiration from Gekås Ullared even though we wouldn’t quite be there, and US company Costco is doing very well, as well as Swedish club Snabbgross,” says project manager Terje Systad.
It starts with a test shop in the Metro Center in Lørenskog, but the goal is to have about a dozen stores in Norway by 2025, so it would be appropriate to start operating outside of the major cities.
Stop cross-border trade
“Through the pandemic, we’ve opened our eyes to a larger food market, and we’ve always played with the idea of dragging our business along for everyday consumer goods,” Holevec says as he shows E24 the 2,800-square-meter building, the chain’s new home.
Systad, who is leading the project, is the usual head of supermarket chain Storcash, which offers bulk packaging to corporate customers, but now they will run a similar concept aimed at the consumer.
Who do you consider your typical customer?
—There are those who like to have the freezer full of enough dope paper and the like, says Sestad.
Now it is the richest grocer in Norway
The pandemic also showed the volume of cross-border trade as it was not possible to go on a shopping trip to Sweden for long periods. In a normal year, cross-border trade was 15.8 billion NOK, according to Statistics Norway. The following year, when the Corona crisis shut down the country, it fell to 1.9 billion.
– Do you think this concept will prevent people from crossing the border?
– This is hope. I think we can offer a slightly different experience which in turn can stem a little bit from these adventurous trips to Sweden, says Sistad.
Ask questions in competition
Stores like Europris and Normal are the stores that have shown the strongest growth in their entire retail business in recent years, so it’s no surprise that Norgesgruppen has now come up with its own concept.
That’s what grocery expert and NHH professor Frode Steen said when he heard about Gigaboks.
He also leads NHH’s Grocery Food project, which is sponsored by Norgesgruppen.
A type of store is what is often called a “wide range of goods,” which contains selected foods and consumer goods at generally lower prices, but rarely with a full range like a regular grocery store.
We’ve researched competitors like Normal and Europris and found that they steal sales from grocery chains.
He points out that there is a much greater risk associated with changing an existing concept than trying something new, especially since Norgesgruppen has good in-grocery buying conditions and a well-functioning logistics system.
Foodora About Investing in Grocery: – Completely Quit
– I think we have here a kind of “Kodak moment” in retail. Steen says it’s hard to start something that you know is eating into your own sales, but it can still be the best way to respond to new competition.
Norgesgruppen also has the largest market share in the Norwegian grocery business, and therefore warns:
– The new concepts are good for the food market as a whole, but at the same time it is a challenge if Norgesgruppen gains market shares here as well. The Norwegian Competition Authority was concerned about the concentration in the food market.
Norgesgruppen answers that this is not about increasing market shares, but “to offer something new to Norwegian customers (…) that is not found in Norwegian retail”.
The new concept from the owner of Kiwi will compete with a number of players in the Norwegian retail market.
– What is the biggest difference between you and, say, Europress, which would probably be one of the most obvious concepts in this country?
– We will have more foods, as well as more ethnic goods, that is, the goods currently used in Asian restaurants. Then there are quite a few great brands that can be sold in slightly larger packages, and there we’re probably a little different from Europris, Systad says.
There are also much larger foreign trading firms that they would like to match with new investment, Hollevick adds.
We must dare to launch new concepts and be relevant, especially when we are faced with new competitors like Amazon which has a crazy product catalog, and then we must also expand to give the customer more to choose from.
There are a number of similar concepts in Norway within the so-called “broad product range”. Did you feel like you had a bad time launching a competitor here?
– We’ve put this on the drawing board for a few years and then we’re entering a time when a lot of people need to save some money and then it’s good to come up with a concept that fits.
The ambition is to open the first store at the end of April, but on the condition that you get the necessary technical equipment for the start-up.
“Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff.”