“You have to cut costs right down to the bone” – NRK Urix – Foreign news and documentaries
A jazz band plays Christmas music. It may seem staged, but it is completely coincidental that the musicians have taken up a position outside the entrance to Rema 1000 in Valby in Copenhagen just this morning.
However, it is a special day for the employees. They must show off the store to Rema 1000’s founder and owner, Odd Reitan.
It has been a few weeks since it became known that Rema 1000 is making a significant splash on the Danish grocery market. The acquisition of 114 stores from the German chain Aldi’s Danish operation will probably make the Norwegian discount chain the largest, at least in terms of market share, also in Denmark.
Cut in the sea
Odd Reitan, the son Ole Robert Reitan, who is also one of the top in the company, and the rest of the delegation will be shown in the store. One of the first things Reitan senior notices and comments on is the light.
– You have very nice light here. It makes the goods shine.
– That’s great to hear, says grocer Max Skov Hansen, pointing far and wide to his son in the store.
Rema 1000 started cautiously on the Danish market in 1994. It wasn’t until about ten years later that the investment gained momentum. Well, the chain has 363 stores spread all over Denmark (a country which is smaller in area than the old Finnmark county). Professor at Copenhagen Business Scholl, Mogens Bjerre points to two challenges Rema 1000 must solve.
- They need permission from The Danish Competition and Consumer Authority because the acquisition will make them dominant in the market.
- They must in a relatively short time find 114 people spread across the country who are willing to invest time and money in building a new store.
– We see that Rema 1000 is set up in places that would otherwise not have a store if you had to hire a store manager because it simply would not be financially sound. The merchants like to work 70–80 hours a week and that is part of the reason why Rema 1000 can establish itself where they actually do, says Bjerre.
Strong brand name
But Rema 1000 must be said to be a Danish success story already.
In recent years, they have topped a number of awards. Among other things as Denmark’s strongest brand name – i.e. stronger than, for example, Ikea, Lego, Arla, DR and all the other competitors on the grocery market.
– We are trying to create a small convenience store for people who live in a big city. We are people’s pantry – most people do not have large fridges and freezers at home, so they often shop in the store. We have to get to know the customer and know the products, it is important for him that we have in the store, explains the merchant at the Rema store in Valby.
Odd Reitan listens carefully. He believes that the philosophy is much of the reason why Rema 1000 has been a great success in Denmark. That, as well as the fact that local merchants themselves invest in and own the store.
– We have organized the Rema chain very much based on self-interest, where we have merchants who each run their own store under contract with us. After all, this is much of the reason for the success in both Norway and Denmark. And it suits Danish culture, you know, to run for yourself – to be your own merchant, says Odd Reitan.
The Germans who went bankrupt
Now comes the biggest expansion in the Danish market. The German grocery chain Aldi has been in Denmark for 45 years. But the last few years have been tough financially. In 2021, the deficit was almost DKK 400 million. They cannot afford to lose that and have therefore decided to shut down the company in Denmark.
And then Odd Reitan stood ready with the checkbook to buy vacant shop premises.
But in the 70s, everything was different. Odd Reitan talks about the study for Germany which was started at Rema 1000 in Norway. At that time he ran some convenience stores in Trondheim. He did not think he was very successful, but had heard of the brothers Karl and Theo Albrecht who were still taking market share with the Aldi chain.
– After all, they had succeeded in something tremendous. So I thought I have to go down and have a look, so we travel to Germany to visit Aldi and it was a great experience. That was the turning point for me. Then it was all about absorbing as many impulses as possible there and then going home and translating it into Norwegian. And it became after every Rema 1000, he says enthusiastically.
– If it hadn’t been for Aldi, it wouldn’t have been Rema.
I think Danes like to try something new
Odd Reitan talks about how the store manager in Germany presented his strategy to cut operating costs in order to be able to push prices down.
– I remember the store manager raised his arm, says Reitan, uses his fist and holds his right hand up in the air.
– As if he was holding a feather. He also said: “You understand, mister Reitan, that here it is important to cut costs right down to the bone. Then you can sell cheap”, he says and later as he holds a knife in the imaginary fenal year.
Odd Reitan went home and founded what is now Norway’s and will become Denmark’s largest grocery chain.
A success that also gets attention in professional circles. Mogens Bjer has done a lot of research on grocery chains in particular. He believes that much of the reason for Rema 1000’s success is the business model. Local merchants who own large parts of the store and work on contract for Rema 1000. At the same time, Bjerre believes that Rema 1000 has succeeded in becoming a chain that most people like.
– The Danes are also curious about new concepts and we also have a greater openness to foreign chains here, says Bjerre.
– There are also stories about Rema 1000 merchants who know their customers by first name and they have also gone above and beyond to be good at looking after their employees, he says.
Hope he makes money
dd Reitan himself has, at least not as it appears, any particularly great concern linked to growth in Denmark. Nor the fact that he is taking over shop premises where the business has been running at a thunderous loss in recent years. He will continue to run his race. And stay true to your concept.
– We are setting up the Rema concept that is in Denmark. We are not making any changes to it. Then we’ll see what it does to the turnover.
– We want it to increase. We expect it, he says with a laugh.
Aldi withdraws from Denmark in January. If permission for the acquisition is granted, the remodeling of the store could start quite quickly in 2023.