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Wednesday, April 24, 2024

Consumers seek grocery store revenge

Norwegian consumers seem to be waking up to years of high prices and relatively poor selection at their local grocery stores. A story about how a small local candy maker was kept off the shelves of Norway’s powerful grocery chains has sparked public indignation, and would-be customers are now clamouring to buy his sweets.

“This is incredible,” said Rune Forsberg, who founded and runs the small Hval Sjokoladefabrikk in Fokserød, just outside the southwestern city of Sandefjord. Newspaper Aftenposten reported on Friday that orders for his chocolate and candy have poured in from all over the country, since consumers can’t find it at grocery stores like Meny or Kiwi. The welcome flood of direct orders has prompted Forsberg to hire in extra help to boost production.

Couldn’t afford shelf space
The sudden demand began after Norwegian Broadcasting (NRK) ran an investigative program earlier this week detailing how Norway’s grocery store chains, which are owned by some of the country’s wealthiest families, drive hard bargains with suppliers and wholesalers that they already don’t control. The chains engage in what they prefer to call “joint marketing,” which forces suppliers to pay for in-store promotions, the stores’ own advertising and marketing efforts and, not least, choice placement on grocery store shelves.

The small Hval Sjokoladefabrikk was unable to compete against industrial food producer Orkla’s candy and chocolate maker, Nidar, which reportedly paid NOK 18 million to get its products into the large grocery store chains that are controlled by just a few families in Norway. The family-owned NorgesGruppen, for example, runs both retailing and wholesaling operations and controls such large chains as Meny, Ultra, Centra, Kiwi and Joker stores.

Newspaper Dagens Næringsliv (DN) was the first to report several years ago how suppliers have to cut deals every year with these chains and others to get their products into the stores. The practice, critics claim, leads to fewer products, less competition and higher prices and is illegal in countries like Great Britain. Critics charge that most of the profits, also from extra price hikes imposed by the stores themselves, lands in the pockets of those controlling the grocery stores.

‘Siding with the little guy’
Complaints over high prices and poor selection in Norway have raged for years, in line with the growth of cross-border trade fueled by those driving to Sweden to shop. Only now, however, have consumers responded in such a way that one professor likened it to “revenge,” while the government minister in charge of  agriculture and food, Sylvi Listhaug, is considering a ban on the grocery stores’ marketing practices.

“What we’re seeing now is that consumers are taking revenge, and siding with the little guy in the battle between (a retail version) of David and Goliath,” Professor Tor W Andreassen at business school NHH in Bergen told Aftenposten. He said that consumers clearly have sympathy for, in this case, Hval Sjokoladefabrikk, “and they’re staging an uproar against it being kept off the shelves of the big chains.” Hval’s products have also won many taste tests, and consumers “want a taste themselves,” Andreassen said. Consumers can also now use the power of social media to make their displeasure with the grocery chains known.

Hval’s owner said he’s also been contacted now by the grocery chain REMA 1000 and thinks the consumer uproar in his favour “may be a turning point for us.” Listhaug is taking up the fight, too, challenging also REMA 1000’s owners and taking steps to demand changes in purchasing practices. Other calls were going out for Norway’s competition authority, Konkurransetilsynet, to take a more active role in better regulating the few families in Norway who control the market. Berglund



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