A few decades ago, it was not allowed to sell milk, cheese, and butter in the grocery stores in Norway. It had to be sold by the dairy outlets who had the expertise to handle such delicate products!

In Norway, and most other markets, there is no longer a dairy shop on the corner and most local dairies have closed down a long time ago.

Supermarkets and discount stores have taken over most of the grocery sales. Meat and fish shops (specialty food shops) are also rare. In Norway they have closed down and moved into Meny and Coop Mega, or as vacuum-packed goods in the rest of the grocery industry.

Coop OBS is Norway's only hypermarket concept, but here you can in principle buy most of your needs for daily life and a little more.

For the record - we remind the reader that Coop started as a cooperative to bring down the prices of basic groceries. If we are talking about industry slippage, Coop OBS it is.

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40 retails industries

According to Professor Odd Gisholt, we have 40 retail industries in Norway. Few of them are pure, and the one branch that throughout history has brought in the newest things is the grocery industry. Flowers, textiles, pharmacies are just a few obvious examples.

The sport industry sell shoes – shoes that the shoe retailers also sell, but according to Gisholt the sport stores sell more shoes than the shoe retailers themselves. The shoe retailers are struggling (immensely) because they have not been able to fight back against sport stores and others, nor has it taken on new product categories, clothing, and cosmetics for example.

"Industry mix is ​​here to stay, to the delight of some and the annoyance of others. Over time, there is little doubt that it is the grocery industry that has benefited most from industry mix," Gisholt emphasizes.

"Freia (chocolate and sweets) has been very good at thinking of alternative distribution channels. It is basically not natural to find chewing gum and chocolate in an Elkjøp store, but there they sell it well! The mineral water suppliers do the same in Elkjøp. Well, no wonder, you get thirsty quickly if you buy PCs or mobile phones," grins Gisholt, one of the big names at BI in Oslo.

He continues: 

"Everywhere, suppliers need new distribution channels. That is why it is extremely important to test, test, test. The most important thing is to find your best way to the customer."

"Think of a Walmart in the United States or, for that matter, in China. There they have «all categories»."

"In principle suppliers should not think about retail branches, but about the shortest path to the customer."

"In Europris the first thing you see is groceries. Freia, Orkla and Unilever sell like hot cakes there. But is Europris a grocery store? No, definitely not, but they sell a lot of food (dry goods) and cosmetics, along with batteries, glassware, clothing, and you name it."

"E-commerce is spreading in all industries and all categories. Amazon started with books, now they buy everything. On the Alibaba platform, you will find in principle «everything»."

"Meat and fish and cheese are classic groceries. Now, however, you get everything at OBS, both milk and slalom skis, Gisholt states.

"Groceries have gained a lot from industry slippage."

"It started with cosmetics and ended with flowers. The new thing is sex toys. When I was young, you had to go to the pharmacy, now you can find condoms among the sweets at the checkout," Gisholt concludes.

Stronger competition

In the grocery industry, in Norway and internationally, sales in physical stores and online have grown more than ever. For many, the results have not been lacking either.

However not all retailers have been able to control costs during “pandemic growth”. When the society again moves towards a more normal, “post pandemic” life, the grocery industry will face greater challenges than delivering during strong growth.

Then it will again face stronger competition for the consumer's wallet, from restaurants, nightlife and traveling, and not least digitalization.

It is no longer about formats!

McKinsey, a global and prestigious consultancy, anticipates that the landscape of winners and losers in grocery will cease to be determined by formats in the traditional sense.

Instead, business leaders will be defined by their differentiation, innovation, and defensibility across five main areas.

• WINNING HIGHER SHARE OF STOMACH

Forty percent of consumers in US indicate that they would prefer “frequent stores” that sell more than just groceries. This will likely place some pressure on grocers with specialty and niche value propositions—the bar to deliver exceptional products, value, experience, and service will be higher to justify an additional trip. Clarity in what these grocers stand for, and flawless execution will be key to retaining share of stomach.

• CREDIBLY COMPETING IN THE OMNICHANNEL BATTLEGROUND

Before the pandemic, select retailers whose brick-and-mortar stores provided a competitive advantage through differentiated in-store experiences, services, locations, and formats, among other attributes, considered an omnichannel presence a “nice to have” feature.

Now, to compete in today’s environment, in which recent McKinsey research finds 52 percent of households shop for groceries online across a spectrum of occasions (top up, fill-in, full shop), an omnichannel presence is an imperative. all while ensuring that the channel increases margins, particularly when it is on pace to account for upward of 20 percent of the overall business.

• ELEVATING PRICING AND VALUE

Convenience and value will carry the day in 2021. An estimated 32 percent of consumers indicated that a healthy price–quality equation will dictate where they choose to shop in 2021, and 45 percent of consumers will look for ways to save money.

The increased momentum in private label further supports consumers’ renewed focus on value. Grocers will need to carefully consider how to invest in pricing and promotions.

2020 saw a reduced period of promotional activity owing to the surge in grocery demand, but McKinsey anticipate a return to more strategic pricing and promotional activity in 2021.

• RENEWING THE FOCUS ON FRESH, NEW, AND INNOVATIVE

During 2020, a sense of nostalgia made consumers turn to products from their childhood. McKinsey observed a reduction in the typical innovation-charged new-product releases. However, as fatigue sets in around cooking at home it is reason to believe that consumers will demand more innovation across fresh, ready-to-eat, and frozen products.
In a study conducted by McKinsey, it is stated that 39 percent of consumers want grocers to introduce them to innovative products and experiences, 41 percent want to eat better, and 42 percent plan to continue to cook meals from scratch at home in 2021.

These preferences all point to the need for grocers to have a strong fresh program and an assortment across departments that delivers on both better-for-you and new and exciting consumer needs.

• ACCELERATING PERSONALIZATION.

While affordability perception continues to be a primary driver of store selection, personalization is growing in importance. Consumers are looking for simplicity, a sense that the offers and messages are tailored to them, continued innovation in offers, responsiveness to consumer behavior versus a preset calendar, and seamless integration of a retailer’s different programs. Consumers want to feel recognized as individuals by grocers, which will have to engage beyond relying on mass promotional activity as the answer to share retention. To meet these expectations, grocers will need to rally their organizations around a strategy and vision for personalization; clearly define an operating model between merchandising, pricing, and loyalty teams; and invest in the technology to support the personalization vision.

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