Does the level of costs and market structure influence grocery prices? A comparable survey of Norwegian and Swedish grocery markets

Utgangspunktet for denne avhandlingen var rapporten ”Mat, makt og avmakt” (NOU 2011:4, 2011). Hensikten med rapporten var å analysere markedsforholdene i dagligvarehandelen, hvor det ble stilt spørsmålstegn ved årsaken til at norske dagligvarer var priset 23 prosent høyere enn svenske. Temaet for denne avhandlingen er hvorvidt nasjonale beregninger av driftskostnader, bruttofortjeneste og varekostnadsnivå kan benyttes til å forklare hvorfor utsalgspriser i norsk dagligvarehandel er høyere enn i tilsvarende svenske butikker. Vi benyttet et komparativt case-design, og analysene i oppgaven baseres på en sammenligning av ICA-butikkenes salgs- og regnskapsdata. I tillegg var det hensiktsmessig å benytte supplerende litteratur, da det har vært foretatt nyere studier av dagligvaremarkedene i Norden det siste året (2011). Resultatene fra analysen gir indikasjoner på at dagligvareprisforskjellen mellom Norge og Sverige skyldes et høyt norsk kostnadsnivå. Videre viste det seg at våre norske forskningsbutikker hadde tilpasset seg et høyere norsk kostnadsnivå ved å ha mindre butikker, færre ansatte og kortere åpningstider enn de svenske, og at driftskostnadsandelen i forhold til salgsinntekter var tilnærmet lik. Likevel utførte vi en analyse hvor vi lot svensk nivå av driftskostnader overføres til også å gjelde våre norske forskningsobjekter. Resultatene av analysen viste at norske driftskostnader kunne vært redusert med 27 prosent dersom driftskostnadsnivået hadde vært likt som i Sverige. I tillegg til dette viste vi at merkostnaden som følger av høye driftskostnader i Norge kunne utlikne en dagligvareprisforskjell på 21 prosent. Videre kan vi ut fra våre resultater si at norske varekostnader er høyere i andel av salgsinntekt enn de svenske, og varekostnadsnivået kan tilskrives som en årsak til høyere norske dagligvarepriser. Av forhold som kan virke inn på varekostnadsnivået drøftes blant annet graden av konsentrasjon og makt i leverandørleddet og konsekvensene av vernet om norsk landbruk. Når det gjelder Matkjedeutvalgets (NOU 2011:4, 2011) antydning om at det eksisterer høyere bruttofortjenester i det norske dagligvaremarkedet, kan vi med bakgrunn i våre resultater avkrefte dette. Vårt resultat kan bekreftes av Konkurransetilsynets høringssvar til Matkjedeutvalget hvor Konkurransetilsynet påviser at norske dagligvarekjeder har lavere bruttofortjenester enn både svenske og britiske (Konkurransetilsynet, 2011).On April 13th 2011, the Norwegian Inquiry Commission released the report “The powerful and the powerless in the food supply chain” which aimed to analyse the concentration and distribution of market power within different parts of the Norwegian supply chain of groceries. In comparison with Sweden, the report pointed out a significant difference between Norwegian and Swedish grocery prices. The report valued Norwegian grocery prices to be 23 per cent higher than what could be found in Sweden. All though the report identified aspects, which could have an affect in price differences, the report failed to quantify and isolate important factors that could have accounted for at least some of difference in prices of 23 per cent. As a reaction to that, this article explores how cost of sales and operating expenses influence grocery prices in both Sweden and Norway. Our main purpose is to analyse and quantify differences and similarities of cost and market structure within the grocery sector in our two selected countries. The thought behind writing this master thesis was to get a better understanding on how prices are formed in the grocery market. Consequently, this article could enhance our knowledge and help us explain why there is a significant difference in Swedish and Norwegian grocery prices. Based on collected data from our research objects, ICA Norway and ICA Sweden, we have compared the cost aspects in both countries. We have analysed how macro environmental factors in addition to dissimilarities in composition of supply chains may have an impact on consumer prices. The cost of sales, gross margin and operating expenses are all effectuating the selling price of grocery products. Based on our results, we have found that there are two main reasons to why grocery prices are said to be significantly higher in Norway. First, the price level of operating costs is higher in Norway than in Sweden. By applying Swedish level of operating costs on Norwegian calculations, we have found that Norwegian operating cost could be reduced by 27 per cent. The additional costs in terms of a higher level of operational costs would lead to a difference in grocery prices of 21 per cent. However, having analysed Norwegian operating costs as a percentage of sales, we have found that our objects adapts to a higher level of cost by simply reducing the use of cost driven factors such as labour and size of grocery stores. Still, the difference in operating costs plays an important role in explaining existing price differences in the two countries. We find the grocery market in both Sweden and Norway to be dominated by a small number of suppliers, the Swedish suppliers of grocery products are allocated with more even market shares and a larger number of suppliers than in Norway. Our article has shown that the cost of sales, meaning the price set by the supplier, also affects consumer prices. A small number of suppliers will initially decrease the competitiveness in the grocery market, leaving grocery stores worse off by having to accept a higher price on goods. This will affect the value chain as a whole; the grocery markets must charge higher prices on consumer goods in order to cover the costs of goods sold. Furthermore, we have found that higher price on grocery products in Norway is caused by the structure of the Norwegian supply chain, which is mainly controlled by one or two strong suppliers. This collusion of suppliers increase the cost of goods sold to Norwegian grocery stores. This is utterly strengthened by laws and regulations such as duty and import quotas set by the Norwegian authorities in order to protect Norwegian agriculture. Accordantly, Norwegian costs of goods sold are valued to be 5 per cent higher than Swedish as a share of sales. The Norwegian Food Chain Committee has implied that some of the price difference between the two countries can be a result of Norwegian grocery stores taking a higher gross profit compared to Swedish ones. However, The Norwegian Competition Authority found that Norwegian grocery stores are calculating their gross profit at a lower level than the case of both Britain and Sweden.2016-12-1