Economy and Business, Trade | Kiwi, Rema and Extra raise billions: – This is the game in the industry

(The newspaper online): Have you seen enough ads for Kiwi Which pushes prices down Or perhaps about claims It is the final amount on the cash register that matters?

Perhaps it's not surprising that you feel this way, since grocery chains Rema 1000 and Kiwi are the ones that spend the most on advertising.

The grocery industry as a whole stands out. This industry spends the most money on advertising ever. Nearly double the second number on the list, the electronics industry.

Compete with ads

Nettavisen had access to statistics from analysis firm Nielsen. It shows that grocery chains spent nearly four billion Norwegian kroner on advertising last year. A slight decrease of 1.8 percent from the previous year.

The most widely used Rema 1000 is NOK 870 million. Next comes Kiwi with NOK 803 million, and Extra with NOK 741 million. In total, the three spent at least NOK 2.4 billion on advertising last year.

– There is strong competition between chains. But it's hard for them to win by being the cheapest, so it becomes a competition to be the best at marketing, says Trond Blindheim, who studies marketing communication and consumer behavior at Christiania College.

Another expert supports him:

Advertising, price and location are the three most aggressive tools. Since everyone follows each other like Siamese twins in price, and the structure of the store is the same, advertising becomes an important weapon in the battle for customers, says Norwegian Business School (NHH) professor Tor Wallen Andreasen, who lives in Sleibenden in Baerum.

Skeptical

The statistics are based on so-called aggregate figures. This means that they do not take into account discounts, which tend to be relatively large. Likewise, there are large amounts involved.

– Hundreds of billions of kroner's worth of groceries are traded. Blindheim says high sales volume is an important reason why so much money is spent on advertising.

He's skeptical about whether the ad will actually have such a big impact.

– Chains spend huge amounts of money on advertising, but the chance that people will change stores is very small.

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He points out that groceries are called low-interest products.

– He says: – We do not spend a lot of time choosing goods or where to buy them.

– Research shows that the most important thing to people is location. And then parking is number two. Price is only a third, says Blindheim, and is much less important than location.

Kiwi and Rima pieces

Grocery chain suppliers, such as Tine, Nortura and Orkla, are also spending huge sums on advertising. In fact, they account for more than half of ad purchases in the grocery category. In total, the industry bought just over $8 billion in advertising in 2023, before discounts.

Rema 1000 and Kiwi cut their advertising buys slightly last year, by NOK 34 and 94 million respectively. The third lower-priced series, Extra, generated the most number of series and increased ad buys by NOK 106 million.

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Tor Wallin Andrassen believes Extra is trying to stay away from others.

The game in the industry is to steal customers from each other. The question then, says Andreessen, is how loyal Extra's new customers will be.

– We have to say about it

– Why do you Kiwi spend so much money on advertising?

– When we pay prices, we have to tell our customers about it. We constantly measure the impact of our campaigns and see that advertising remains effective, says Nora Helgesen, Communications Director.

– Why not lower prices instead?

Kiwi is raising prices every day, and we've won four of the last five VG food shows. This proves that we are the rate payers. “When we lower our prices, we have to let our customers know,” she says.

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Coop believes it's not enough to just be the cheapest.

Competition in the grocery business is more intense than ever, especially among lower-priced chain stores. It's primarily about being the cheapest, but also about getting the message out about this through paid media,” says marketing manager Stine Sjølie at Coop Norge.

Coop Extra series is the only discount chain that increases the use of advertising among the three discount chains.

– Extra has in all years invested less in media than its closest competitors. This also applies to 2023, even if our numbers are increasing compared to previous years, Cioli says.

Rima is at the top of the ad

Rema 1000 spends the largest amount on advertising of the three discount chains.

– Why do you spend so much?

– We always work to keep costs as low as possible and are always constantly evaluating which platforms give us the best value for money, says Marketing Director Pia Melby.

– Having said that, we know that advertising in traditional media brings in more customers, which means we increase sales, and more sales means we can buy in larger quantities at lower unit prices. When we get lower purchase prices, we take them directly to the customer in the form of lower off-shelf prices, she says.