Expects big increases in online shopping
E-commerce will obtain big market shares in the Norwegian grocery industry in the future, says Professor Tor W. Andreassen. Speaking at NHH's FOOD conference 13 March, he predicted that e-commerce would account for 30 percent of sales in the grocery market already in 2025.
NHH's FOOD conference, with Professor Frode Steen in the lead, has already established itself as a popular and significant conference for decisionmakers in the industry.
An informal survey among a selection of participants shows that the conference is an important arena for discussing the challenges and opportunities in the grocery industry.
"One day here is well worth it”, were typical comments during the conference.
NHH Professor Tor W. Andreassen warned that the grocery industry is facing major changes in the future. He does not doubt that online shopping will be a major part of sales.
Therefore, it is important to be first, even if it is expensive. The professor predicted that internet trade will take 30 percent of the market by 2025.
According to Andreassen, today's logistics system is optimally adapted to today's business model. Those who are successful in e-commerce must dare to challenge this model and go all in. The grocery chains need to look more at what the customers want - rather than focus on cost-effectiveness. It's more important to get better than cheaper!
Andreassen argues that time is the scarcest resource for families with children, the industry’s most attractive customers. If you solve the “time squeeze” for this group of customers you will be a success, but to do that you have to offer online trading and home delivery, concludes the professor.
"The grocery industry should learn from the media industry, but should not ignore the network effects for too long," concludes Andreassen.
Full speed in the Norwegian economy
Øystein Thøgersen, Macroeconomist and Rector at NHH, opened the FOOD conference. He is not anxious for the macroeconomic picture. Norway is doing well and it's in a good position, both as regards to the world, both in Europe and the United States.
The big question, however, is what will happen to future growth? According to Thøgersen, growth can only come from productivity increases, i.e. through better technology or better organization.
For Norway's part, it is crucial how to change the conversion to a less oil-driven economy. Does the labor force enter highly productive industries or industries with lower productivity? That will determine much of economic development in a longer term, concludes Thøgersen.
CEO Stein Rømmerud in Coca Cola Norway does not hide the fact that he is very disappointed with the introduction of the sugar levy that hit the industry last year.
– It's also not a sugar fee, but rather a tax fee, on finished non-alcoholic beverages. It contributes to increased border trade and reduces the industry's willingness to invest in future-oriented production, argues Rømmerud.
Coca-Cola Norway has ambitions to cut sugar in its products by 19 percent by 2025 and believes predictable framework conditions are crucial.
“It is important to choose the right tools and look upon the industry as partners in this process with the government, emphasizes Rømmerud,” and asks the government to use more carrot and less stick.
Rømmerud received support from the juice and marmalade producer Lerum, who also got many millions NOK in added taxes from 2017 to 2018.
“It's extremely demotivating when such jumps come like lightning from clear skies. The fee must be reversed as soon as possible,” emphasizes CEO Lerum Hjellhaug, and called for better and more predictable budget processes in the future.
Border trade increases
Professor Frode Steen from NHH disclosed that almost 60 percent of all Norwegians have shopped in Sweden during the last twelve months.
The percentage is as anticipated high in Østfold (90%) but surprisingly high also in regions like Vest-Agder, Rogaland and Hordaland (24-35%). Meat is the most popular product group, secondly, mineral water, cheese, sweets and beer.
Figures from Virke (The Enterprise Federation of Norway) show that turnover in Norwegian border trade has increased by 23 per cent in the last 12 months. It worries the grocery industry and Virke director Ingvill Størksen.
Hence, Virke and director Størksen calls for a better understanding among key politicians for the challenges the border trade represents, both for individual companies and for the Norwegian society at large.