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Retail

The A-Z of Retail: R is for Rema 1000

By Steve Wynne-Jones
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The A-Z of Retail: R is for Rema 1000

ESM: European Supermarket Magazine is proud to unveil 'The A-Z of Retail', a new subscriber-only series that offers a deep analysis of the retailers, suppliers and individuals making the news each week. Today: R is for Rema 1000.

A few days before its parent company Reitangruppen was due to publish its full-year figures, a fire broke out on the floor above a Rema 1000 store in Odense, Denmark.

While nobody was injured in the incident, that blaze was, in some ways, a portent of things to come.

On 28 February, the Rema 1000 chain, which is present in both Norway and Denmark, posted a year-on-year sales decrease of 2.1% in 2017, down to NOK 66.4 billion from NOK 67.8 billion in 2016.

And while the Odense store has since been able to reopen, the wider Norway-based group’s challenges appear to be more difficult to tackle.

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Nordic Empire

Rema 1000 operates in Norway and Denmark and makes up some three quarters of the Norway-based Reitangruppen, which also saw its overall figures decline in 2017.

The group is owned and run by the Reitan family, spearheaded by CEO, chairman and patriarch, Odd Reitan, along with his two sons, Ole Robert and Magnus.

The retailer’s annual report revealed that Rema 1000’s operating income ended low at NOK 1.7 billion, down from NOK 2.3 billion in 2016, a decline of 26.1%.

Announcing the group’s results, Odd Reitan proved himself to be somewhat optimistic in spite of the difficult week his business had just come out of.

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"2017 was a very good year," he said. "We did not do everything right, but we did more right than wrong. I'm most proud of our merchants who, together with us, have created both jobs and improved our values."

Overall Concerns

The overall figures for Reitangruppen indicate the nature of the increasingly tough retail environment in which the group operates.

While turnover decreased only marginally from NOK 89.2 billion to NOK 89.1 billion, the group’s pre-tax profits more than halved from NOK 7.3 billion in 2016 to NOK 3.4 billion for 2017 (-53.4%).

Operating profit fell by 14% from NOK 3.99 billion down to NOK 3.43 billion.

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The Norwegian grocery market recorded the lowest growth rate in several years, according to a recent study by Nielsen.

In 2017, the market grew by only 1.1% which equates to about NOK 1.9 billion. This modest growth came as a result of increased border trade, more online grocery sales and increased sales in discounters such as Nille and Europris, according to Nielsen.

Rema 1000 ceded around 1% of its market share last year to its increasingly agile competitors.

Defiantly Optimistic

Much like his father, Ole Robert Reitan, the CEO of the Rema 1000 arm, remains optimistic at the group’s potential to turn things around.

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“Never has the team spirit […] been bigger, the stores have never looked better and we have never learned as much as we did in 2017,” he said.

According to the company, 2018 has started well for the retailer in both Norway and Denmark and the focus will continue to be on delivering low prices for high quality products, which are manufactured and sold in a responsible manner.

The retailer launched a new app in Norway at the beginning of the year, which was downloaded 1.2 million times, according to Reitangruppen. Meanwhile, its Danish business has the most country’s most loyal customers and is best liked by all brands in the country according to YouGov.

"We have had a good start in 2018, customers are returning and we are taking market share,” Ole Robert Reitan continued. “Looking ahead into the new year, we deliver positive results after a little bit of a rough experience in the past.”

While the ‘Reitan Trinity’ are keeping a stiff upper lip, it remains to be seen whether their optimism translates into better figures in the years ahead.

© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Kevin Duggan. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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