Who pays for the price wars?

Abstract

All the major Norwegian newspapers cover the Norwegian grocery industry almost daily. In the past, manufacturers and distributors wielded significant influence over assortment and pricing. However, retailers have more power today, than in recent years. This study examines who is paying for the price war in the Norwegian grocery market. Price wars in the grocery market tend to erupt when demand is high. Especially during seasons including Christmas and Easter. The emphasis of the research is on customers, however, the behavior of the four low-price chains Kiwi, Rema 1000, Extra, and Oda is additionally observed. To acquire a better understanding of the industry, method triangulation has been applied. First, secondary data analysis was implemented. A survey was distributed to consumers in order to acquire a better understanding of their purchasing patterns. Observations during the Easter price war, as well as an in-depth interview with an industry professional, were conducted. A cluster analysis, profile diagram, and store attributes analysis were performed on the survey data. The observations results were categorized utilizing a coding scheme, and the in-depth interview was text analyzed. The study’s main findings are that consumers are paying for the price war. Our findings show that prices fluctuate, making it difficult for customers to keep track. Furthermore, price is deemed important to customers. The industry claims that it is necessary to follow competitors on price adjustments in order to avoid losing customers. Additionally, the respondents can be divided into two consumer clusters based on different customer characteristics. Lastly, for the Norwegian grocery chains, the price war is a profile price battle and the perception of being the cheapest. The findings from our research contribute to a better understanding of Norwegian grocery consumers in general, as well as how current price wars affect them