Can this organic food supermarket break the oligopoly? (Supermarkets in Stockholm Part 1)

Grocery shopping is either a pleasure or a chore, but almost certainly not the average tourist attraction, so it was with surprise when I saw a supermarket pop up on the Visit Stockholm webpage… have they run out of things to feature?

They did not, and they featured this supermarket for a reason, it fit in really well with the Stockholm brand of clean, green and progressive.

The name of the brand was Paradiset, or Paradise in English. What struck me was the way they proudly proclaimed their goal: break the oligopoly of grocery brands in Stockholm.

Grocery shopping in Stockholm is dominated by an oligopoly of companies – Hemkop, ICA, Willys and Coop, many themselves cooperatives that ended up as massive chains. In traditional economic speak competition is good, all industries and fields that compete end up with better products that meet consumer demand. Since most consumers buy products from the cheapest source, the more companies there are the more of the same product and more people supplying the product, companies therefore cannot overcharge their consumers and their consumers benefit. But not all industries lend themselves to perfect competition, it’s rare to find a situation where perfect competition is possible.

While some new brands have entered the market and try to compete by selling products at cheap prices (such as Germany’s Lidl or Denmark’s Netto), these guys have gone the other direction by selling a lifestyle, an organic lifestyle. What is it to eat organically? Orgnanic food means that the products that you consume are made without the use of chemical fertilizers, pesticides or artificial chemicals; the larger movement also strives to be ecological.

Why do people want to eat organic food? Most people believe that because the product is made entirely from nature without any artificial chemicals it must be healthier. It might, on first blush sound intuitively healthier but reports have shown that not to be the case. In fact these reports have shown no significant health improvement between conventional mass produced groceries and organic food. At the end of the day everything is made up of chemicals, and even nature uses its own natural pesticides.

Another reason is that conventional food production in order to fill customer orders at lower prices leads to problems up stream at the supplier side. This is particularly acute when it comes to products made in developing countries to be sold to consumers in developed economies to support particular food interest of the latest super food trends.

Some people who can afford it therefore purchase organic as a moral statement.

I clicked on the website and spied on their entirely Swedish webpage a single translated page, it was a crowdfunding round with corporate information and they had already surpassed their funding goals. This was clearly more than a grocer, this was a lifestyle – or an attempt to cash in on the organic eating movement.

What was this lifestyle play all about? And how would this desire to break the oligopoly go about? I had to go see for myself what all the hype was.

Despite opening for business only in 2014, this brand already has 3 supermarket outlets with a fourth one slated for opening later this year. All the outlets are presently in Stockholm but the growth is tremendous especially for a non-established brand.

Located at Brännkyrkagatan on the hip Sodermalm island this is the flagship of Paradiset. The standee a short distance away promoted special product offers on sale.

I ain’t gonna lie, some of the prices did look quite good. 5 kroner for a kilogram of potatoes is as cheap as you’ll find anywhere, even where I get my groceries, this grocery stall was making a rather good first impression.

The entrance to the supermarket soon beckoned, but it was different from others because it looked rather more lively and inviting than those of the more lifeless conglomerates. The signs and labels pasted on the store in a way more similar to American capitalism than Swedish Lagosim, but it invited you into the rabbit hole, and I planned on checking it out.

It sure looked way more fancy than a typical supermarket. Most supermarkets are bright and clinical with little decorations of designs to allow the advertising on the products themselves to compete for your attention; you don’t dwell in those places you go in with their bright lights and check out to vast amount of options available. But this supermarket was different, the walls struck me as having a teak wood colour, brown like the woods, far more natural than the typically clinical feel of the supermarket.

I reckon this was intentional, since the woody feel and created a vibe around the stall that screamed, ‘natural, hip and cool’ and since customers are visual, this would probably rub on to the impression of the quality of the produce for sale, that’s how it appeared to me.

The focus on health was quite consistent. Because of the obsession with sweets in Sweden, almost every supermarket has a section selling sweets as well as a smaller nuts option (as a concession to the more health conscious, I imagine), not here. There was a section selling nuts, seeds and grain (right of the picture) with a large variety of options from quinoa to mung beans to risotto rice but no sweets.

The stall also stocked more non-milk, milk options than I had ever seen in my life, no pastuerised milk though.

All around, the store was designed with more finesse and nordic cool – the designers made the place feel more like a cafe than a grocer, there was even a mini restuarant and a little cafe in the supermarket. With a selection of vegetarian and vegan foods on top of the fish and meat ones.

But perhaps the most important question is that of prices, organic food items tend to be more expensive due to the significantly more effort it takes to produce (pesticides and chemicals do make growth and plant health more consistent and manageable). While the food options on offer and day to day consumables (they sell those too) can allow someone to shop there on a regular basis, the price difference from the larger more conventional supermarkets will be apparent before long.

But can the idea succeed? There is a market, and this idea targets the population with the disposable income to partake in the conspicuous consumption market. It serves a market niche that the oligopoly has not yet had external competition from; there are big companies, Lidl and Netto, competing for the price-sensitive clientele.

This is matched by the locations where the stores have opened, and thrived (I reckon) – Sodermalm, Norrmalm and Nacka.

It will be able to carve a niche out for itself thats for sure. Me? I’m most probably not in the target market. I walked out of the store, time to do groceries at my regular haunt a completely different way of dealing with the grocery oligopoly…

ON THE MAP

Advertisements

One thought on “Can this organic food supermarket break the oligopoly? (Supermarkets in Stockholm Part 1)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.