Cross-border shopping – threat and opportunity
Norwegian lobbyists are sounding the alarm about the consequences of Swedish border shopping and are asking prime minister Støre to wake up. Danish merchants are experiencing similar challenges with German grocery competition, and German retailers are concerned about cheap goods from Poland. Swedish merchants “hate” cheap beer and sausages from Denmark.
Cross-border shopping is always a concern and a joy for some at many borders around the world.
The Confederation of Norwegian Industries (NHO), which normally speaks warmly about trade and has recently expressed concern about the increasing cross-border shopping with Sweden, which is back to pre-Corona levels.
Lack of harmonisation of taxes
Linda Vist, industry director for trade in NHO Service and Trade, has stressed the importance of political action to meet the challenges of increased cross-border shopping. Tobias Strandskog-Christensen, industry manager for catering in NHO Reiseliv, has also expressed concern about the loss of jobs and investments in Norway. Petter Haas Brubakk from NHO Food and Drink has criticized the government for its lack of action against cross-border shopping and primarily wants the harmonization of taxes on alcohol and tobacco.
NHO believes that the government is paralyzed and is not doing enough to slow down the growth in cross-border shopping, which results in value creation and tax revenues ending up in Sweden instead of Norway.
Paradoxically, it seems that NHO supports international trade when it is far away, but is against when it is close to the Norwegian border. But of course, that only applies to imports. No one in NHO complained about cross-border shopping when the Swedes went crazy to buy margarine, sugar, and tobacco paper. Large merchant fortunes were created on the Norwegian side of the border in the seventies. One saw no protests.
Positive consequences
In real economic terms, cross-border shopping is an economic mechanism that increases competition, pushes prices down and gives consumers greater choice. From such a perspective, perhaps the government should be in favour of cross-border shopping when they also claim that competition in Norwegian grocery is suboptimal?
Although cross-border shopping presents some challenges, it can also be seen as an opportunity. Increased competition can force Norwegian grocery chains to improve their offerings, reduce prices, and improve customer service.
In the long term, this can strengthen the Norwegian grocery industry by motivating and strengthening innovation and efficiency. Furthermore, cross-border shopping can increase the exchange of goods and ideas between countries, which can have positive effects on both the economy and consumers.
Norwegian industry players claim that this trade has become so extensive that it constitutes a kind of "new fifth grocery chain," which in practice brings as much as ten percent of its trade out of the country.
In Denmark, the business community argues about similar challenges with German discount stores, and in Germany there are fears that Polish stores are increasingly attracting customers.
How are we to understand this dynamic? Is it an imbalance that requires political countermeasures, or should the industry adapt?
Political countermeasures – a double-edged sword
Industry players worry that the cross-border shopping reduces tax revenues, undermines Norwegian grocery competition, and pushes Norwegian boarder merchants to the brink.
For players who perceive cross-border shopping as a threat, the solution is often to demand political countermeasures. The proposals vary from tariffs to tax relief for domestic trade and regulation of the grocery market. Norwegian grocery chains, for example, have advocated tax reductions to make it more attractive to shop domestically.
Political countermeasures against cross-border shopping are however problematic.
First, they represent protectionism, where countries set up barriers to foreign competition, which can lead to trade conflicts and, in the worst case, countermeasures from neighbouring countries. It is enough to think about all the new tariffs and unwanted tariff proposals from the US president Donald Trump since January 2025.
If Norway imposes tariffs on Swedish goods, Sweden could respond by making Norwegian exports more expensive. At the same time, tax breaks in Norway could reduce government revenues, and regulating the grocery market could lead to inefficient solutions that weaken consumers' freedom of choice.
Cross-border shopping a balancing act
While the business community sees cross-border shopping as a threat, it can also be seen as a force that drives necessary restructuring. When Norwegians shop in Sweden, it is because the prices are lower and the selection at the border is often larger.
This sends a clear signal to Norwegian players that rivalry must be reinforced. This has also led to Norwegian owned stores in Sweden, something which obviously should reduce the worries from the retailers.
If Norwegian stores are to survive in the face of Swedish cross-border shopping, they must find solutions that make them more attractive to consumers. This could involve more efficient distribution models, innovation in product selection or changes in pricing. Of course, easier said than done.
However, the main point being that if we politically look upon cross border shopping as an asset it will be easier to make good political solutions. Cross-border shopping with Sweden is or could be a threat to grocery stores in Østfold, but it is an unconditional advantage for Norwegian consumers who gain access to a larger selection of products, lower prices, and new shopping experiences.[1]
[1] Note that the FOOD project has generated a number of scientific papers on cross-border trade in Sweden, all listed and available on FOOD’s research home page.