How one Norwegian discount grocer remains competitive on price

Though shopping behaviour continuously changes, one thing remains the same: the importance of price. And for REMA 1000, a discount grocery retailer in Norway, offering the lowest prices in a hyper-competitive market is mission critical.

In its efforts to lead on price, REMA is using technology from Revionics to manage, display and adjust its prices daily in response to what its competitors are offering, explained Partap Sandhu, a pricing analyst at REMA 1000, during a presentation at NRF ’24 Retail’s Big Show in New York City earlier this week.

The grocer sends “price hunters” armed with devices to collect price information from its competitors throughout the country. (The team of price hunters record up to one million unique price observations per week, according to Sandhu.)

Pricing data is uploaded to a dashboard that is overseen by a team of four from the company’s head office. REMA 1000 compares the competitors’ data to its own and makes real-time price adjustments to electronic shelf labels (ESL) and point-of-sale systems across all 675 of its stores. From start to finish, the process takes as little as 15 minutes. 

“We are dynamically pricing,” said Sandhu. “So, we have about 700,000 transactions per day, 45,000 items per store and we also have 150,000 competitor price observations per day.”

Sandhu said REMA 1000 makes approximately 100 price changes per day—and prices on a specific product can sometimes change as many as six times per day—but using the ESLs frees up in-store staff to focus on more meaningful tasks.

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With ESLs, “We can do everything we want… we can implement 4000, 5000, 6,000 price changes each day if we want,” said Sandhu. “So, I mean, the sky is the limit once you have a system that supports all of those changes in stores and having ESLs where you don't need to do any operational things and interfere with what the employees are doing.”

Sandhu said the grocer adopted electronic shelf labels approximately 10 years ago as competition in the market intensified. “We needed to compete to take out Lidl… had we not, we would have been bankrupt. To stay in the market, you have to have the lowest price. That’s it.”

(In the battle against Lidl, REMA 1000 was the clear winner. The German discount chain Lidl, a success in most other European countries, struggled to get off the ground in Norway and eventually sold all 50 of its stores in the country to REMA 1000.)

“Our business model [is] pretty simple,” said Sandhu. “We drive low prices. Low prices drive customers, so we can [increase] our sales. Higher sales mean we can have a better cost price from the vendors. Lower cost means, again, lower prices. So, it’s a pretty simple model.”

For Sandhu, the most important key performance indicator (KPI) is “how much difference in price we have to, of course, our competition.” Another marker of success, said Sandhu, is nabbing the No. 1 spot on Norwegian newspaper VG’s list of grocery chains offering the lowest prices.

The newspaper conducts its own price checks on grocery items from chains across the country and publishes the results. “This is a huge marketing thing for us. When we win, we use it in our marketing that REMA is the cheapest in Norway,” said Sandhu. “For us, it’s important to show customers we have the lowest prices.” Falling short of No. 1, he said, “would be disastrous.”