Things are heating up in the Norwegian retail market, with the arrival of a new player, frozen-food retailer Iceland. ESM spoke to Geir Olav Opheim, its chief executive. This article first appeared in ESM Issue 2, 2019.
Norwegian grocery has, traditionally, been a tough nut to crack. Between them, the country’s three largest retailers – NorgesGruppen, Coop and REMA 1000 – control almost the entire marketplace, leaving scant room for new upstarts (Lidl famously entered Norway in 2004, only to slide into obsolescence four years later).
Hoping to change that is Ice Nordic AS (also known as Iceland Mat), an independent franchise of UK-based frozen-food retailer Iceland, which opened its first store in Asker, in the greater Oslo region in May of last year, following it up with a second, in Larvik, a month later.
Something Different
Small beginnings, perhaps, but as Geir Olav Opheim, chief executive of the venture, tells ESM, the time is right for a new player to shake up the marketplace.
“The Norwegian grocery market has, for some time, been dominated by three large players, and, at the same time, they are more or less perceived as having the same assortment and look and feel to their stores,” Opheim says.
“The consumers need a new alternative regarding grocery stores, and the timing for Iceland coming to the market was right. Consumers are also more ready for new products than they were a few years ago, due to more Norwegians travelling abroad, as well as the fact that they also see the disadvantages in having only three large players in the grocery market.”
During March and April, Iceland Mat will open three new stores: at St Hanshaugen and Stovner Senter, in Oslo, and Bekkestua, in Bærum, with plans under way to open five to seven outlets in the short term, before ramping this up.
“We will open two to three more stores in Q4,” Opheim says. “The locations for the remaining stores have not been decided yet, but we are looking for good sites in the area around or close to Oslo.”
While Iceland Mat doesn’t have a total store count in mind at present, Opheim says that the retailer plans to “increase the phase of store openings radically, from 2020 and beyond.”
Frozen Focus
Like its UK counterpart, Iceland Mat will be focusing primarily on frozen goods, as well as a smaller selection of grocery and chilled items, with the new stores set to offer a wider range than that of the initial openings.
“We need more space for displaying the large assortment Iceland has to offer,” says Opheim, “and we are adding some new categories, which we are sure will increase both sales and satisfaction for our customers.”
Most of what the retailer sells will be imported from Iceland Foods in the UK, with some categories, such as its Indian and dessert ranges, already proving popular. Overall, initial feedback has been positive, with customers saying that they like the stores “because the layout is more open, and it is easier to find what they are looking for,” says Opheim.
“Customers also appreciate that we are flexible in tailoring products to their demand,” he adds. “Iceland Foods has a very broad assortment, good pricing, and keeps high pace on product development, which makes them our natural first choice for supplies.”
Site Availability
Not all, however, share his optimism.
Following the announcement of the three latest store openings in January, Norwegian grocery expert Odd Gisholt said that he believed that the softly-softly approach being undertaken by the brand was too slow, suggesting, “To have a chance, they [Iceland] must get a dozen stores in Oslo,” adding that the best retail locations are “already taken” by competing operators.
Opheim dismisses such suggestions.
“It is realistic to believe we will find suitable locations over time, both because landlords want us to succeed, and because some retailers are closing down, which gives us possibilities,” he says. “I am confident that finding suitable sites will not be a major challenge in the future.”
How about the suggestion from Jostein Skaar of Oslo Economics (and a former director at the Norwegian Competition Authority), who recently suggested that Iceland may face purchasing challenges, given its small status in the market? Again, Opheim doesn’t foresee this being an issue.
“Due to the current market situation, where you have three large grocery players, suppliers also want a more vibrant market,” he says. “Thereby, they are helping us by offering reasonable buying terms.
“We run a very cost-effective organisation, and can thereby offer competitive pricing while still retaining satisfying margins.”
While most products are imported from the UK, Iceland Mat will retain autonomy over its future expansion plans, which Opheim sees as an advantage.
“All decisions regarding products and operations are made in Norway, and we are free to choose from whom we order goods,” he says, adding that while sales in non-frozen, traditional categories have started slowly, efforts are under way to improve sales therein and “top up the average basket size”.
It may take some degree of time and perseverance to take on the giants of Norwegian retail, but Iceland appears ready for the challenge.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine
