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How competitive is the Swedish market for small retail discount chain? Hard as after 10 years they are still to make money in the market

Monday, 03 December 2012
The so - called low priced or discount super markets have tested and what they have found is that Sweden is a tough place to do grocery retail business - especially if you come from aboard.

Evidence of this is that the foreign discount chains are having it very hard to make money in Sweden. After almost ten years, Lidl has amassed Skr 3 billions in losses and the Danish Netto has seen red here as well.

Swedish grocery market is dominated by a few large players, ICA, Coop and Axfood (with stores Hemköp, Willys and Price Extra), report Swedish daily Dagens Nyheter, in a report which they looked at the competitiveness of the Swedish grocery market.

It turns out that the Swedish owned chains, which  might not be very price competitive, are doing better than the foreign ones. Among them though, the Co-operative chain,  Coop has profitability problems, but the foreign-owned companies are struggling more with low rolling losses year after year.

2002 is when the Danish Netto opened its first stores in Sweden. For all this period, it made a profit only for one year: 2010. For Lidl, which premiered in 2003, is even worse. The losses so far amount to some Skr 3 billion.

There is even the fear that chains such as Lidl will not survive the Swedish market.
According to consultant, Egil Bråthe, these company such as Lidl have underestimated the local market. Lidl assortments were perceived as odd when the chain started, and that the company's management philosophy came into conflict with the Swedish Commercial Employees' Union. Now Lidl has adapted, but there are still doubts about the chain survive long in Sweden.

"Many Swedes think it's good to go to Willys or Ica and have buy what they need in one place. For Lidl they go mainly to buy supplement. It has its loyal customers but have not been able to attract the core shoppers," he says to Dagens Nyheter.

Graphics from Dagens Nyeheter
However, some people, such as Thomas Svaton, president of the trade organization Swedish Retail, is convinced that Lidl will stay in Sweden.
"Lidl is known of what constitutes success factors and continually adapts to local conditions. It has never wavered in terms of Sweden and I believe we will continue to see it expand," he said.

Thomas Svaton notes that many Swedes look at Netto and Lidl as price cutters, and it affects the big chains like Ica, Willys and Coop. This made people to know what food cost and can compare prices in other shops.

Last year, in the financial terms that ended last February, Lidl's had made a loss before tax which narrowed to Skr14 million. Rumour is now circulating in the analytical world that Lidl is now showing profits in Sweden. We'll see
by Team

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