Did you think that groceries have become unusually expensive during the corona pandemic? Then maybe you are not alone. But is it really true?
The online newspaper compared a shopping cart with 28 items from the discounters Kiwi, Extra and Rema 1000. In the price test, we examined whether the prices of the same items have changed since September 2021 last year until the end of January this year.
Read the full review in the suitcase below
The result shows an almost historic price differential, with Extra charging almost twice the price of its competitors for individual items.
That’s bad news for the chain, which advertises “extra low prices” with the slogan “Make it cheap” and has won multiple price tests.
The price test shows that Extra 121 crowns is more expensive than Kiwi and Rema 1000 – a price increase of 14 percent. This corresponds to the price increase that Norwegian food customers pay in convenience stores Joker and lowest price.
The online newspaper has never measured such a large price difference in the cheap chains since the price tests began in 2019 in a general shopping cart.
– This is an unusual observation, confirms Øystein Foros, economics professor at the Norwegian School of Management (NHH), to Nettavisen.
Historical price differences
The price picture now shows that extra costs up to 15 NOK more than Kiwi and Rema 1000 for the same item.
The price test of the online newspaper shows:
- 21 of 28 items have become more expensive at Extra since September 2021.
1 out of 3 items have received a price increase and are more expensive than Kiwi and Rema 1000.
- Rema 1000 and Kiwi fixed prices for only 4 items out of 28. A number of other items have become cheaper.
- Broccoli has been reduced by NOK 10 in all stores.
Extra is 15 crowns more expensive on Krydder Kalkunskinke.
Superchips cost 13 crowns more at Extra than at Kiwi and Rema 1000.
– The competition in the food industry is not tough enough
However, it is not just the large price difference between Extra and the competition that is unusual.
The arch-rivals Kiwi and Rema 1000 perform exactly the same in the price test, namely on the ear.
– It is obvious that the food industry monitors each other and is guided by price, says Ivar Gaasland, social economist and professor at BI.
The economist emphasizes that equal prices indicate little competition between the chain stores. Gaasland believes grocery store prices would have risen and fallen much more if competition had been stiffer.
Foros believes that one shouldn’t bet too much on the Rema 1000 and Kiwi coming out exactly the same when tested, but stresses that it’s common in price surveys for a few items to be priced differently. A series of tests conducted by Nettavisen have also shown this.
Here you can check what has become more expensive in the grocery store.
Economist: Unusual observation
The food industry adjusts prices twice a year, on February 1st and July 1st. Foros points out that we are now faced with price changes in the industry.
– It is shocking that this is happening a week before the February adjustments. Extra may have sped up its adjustments. In any case, it’s very unusual that with so many items in the shopping cart, they can’t keep up with the competition in terms of price, he emphasizes.
The economics professor says that in the weeks after the adjustments in February and July, there may be larger price differences between the low-price chains – before the chains usually price converge again.
Both Gaasland and Foros point out that due to higher commodity prices and higher fertilizer prices in the market, prices are now expected to rise.
They predict that Kiwi and Rema 1000 will also raise prices due to the market turmoil. In addition to the price adjustment that takes place in February.
Extra: We are not satisfied with the result
Harald Kristiansen answers why Extra is 14 percent more expensive than Rema 1000 and Kiwi.
– We are not satisfied with the result, Extra should be as cheap as the competition, but this is a snapshot that is not representative. We are now in a time when it is perfectly normal for prices to move a lot. While prices in the rest of Europe have risen by 2.5 percent, prices in Norway have fallen by 2.2 percent due to stiff competition, he says.
– Are you considering price reductions?
– We cannot comment on our pricing strategy for competitive reasons. The Extra discount chain will continue to have the lowest prices and the best promotions so that customers, who are also our owners, get the cheapest shopping cart at Extra.
Kristiansen says he also cannot comment on whether there will be another price hike in February.
Not satisfied with the same price
Hanne Knudsen, head of communications at Rema 1000, says they don’t like that they’re doing the same as rival Kiwi in the Nettavisen price test.
– We are not satisfied with the fact that the prices are the same – we sell groceries the cheapest in Norway, she tells Nettavisen.
– They are 14 percent cheaper than Extra and most items in the shopping cart are either cheaper or the same price as four months ago. Will you continue to maintain these prices or can customers expect a price increase towards Extra?
– We will sell groceries the cheapest in Norway, promises Knudsen.
Kristine Aakvaag Arvin, communications manager at Kiwi, replies that there is fierce competition in the industry and they strive every day to be the cheapest.
– When we push prices down, competitors often follow. Kiwi price pressure has helped food and non-alcoholic beverage prices fall 1.9 percent from December 2020 to December 2021, while the headline consumer price index rose 5.3 percent, she says.
Kiwi’s communications manager says they are happy to be at a time with
High electricity prices and higher interest rates can help make groceries cheaper.
– Some suppliers have announced price increases for the future, but we will do everything we can to keep prices as low as possible, she says.