Back in 2007 the Norwegian supermarket chain Kiwi cut the prices on fruits and vegetables corresponding to the VAT rate (15%), while concurrently urging politicians to remove VAT on fruits and vegetables. It was at that time that they noticed that the price cuts had a positive side effect, namely, a 22% revenue growth on fruit and vegetables. Since then, the company has continued to keep prices down and believes, through experience, that price is a crucial factor in getting customers to choose healthy products.
Fruit and vegetable is now considered the most important product group and KIWI's key focus.
"We focus on fresh foods, including fresh fruits and vegetables, because fresh foods are healthy to the public. “Healthiness to the people” (“Sunnhet til folket” in Norwegian) has been our slogan and our prime cause for several years now, and we believe to have only seen the beginning of a wave of healthiness. We work to inspire customers to make healthy choices, through exposures, product variety, recipes and low prices." said Communications Manager, Kristine Aakvaag Arvin.
The company believes that in-store product placement is very important to growth which is why they invested more than one billion NOK ($122 million USD) to upgrade all of their stores two years ago. One of the main changes was to move the fruit and vegetable section to the store entrance. This has resulted in a sales increase of up to 50 % in some stores, without it being at the expense of other product groups.
January this year saw the launch of the free loyalty program Kiwi Pluss which gives customers 7.5% bonus on all fruits and vegetables. Sales have already increased by 20% since the start of the new program.
"The more fruit and vegetables they buy, the more the customer saves. The loyalty card is registered to their bank account, which eliminates the need for the customer to bring a physical card with them to the store. Norway has a population of 5 million and so far 600,000 are signed up for the loyalty card, so it is proving quite popular." said Kristine.
Lower prices for customers doesn't mean lower prices for growers
The discount on fruit and vegetables actually comes for the Kiwi's marketing budget than the pockets of the growers. Growers still receive the same prices they did before, but are actually making more returns due to the increase in sales.
"We depend on high quality products from our providers and partners, nationally and internationally. Fortunately, our high sales gives us high circulation, and consequently fresh quality." said Kristine.
Shift to recipe and full dinner solutions
Part of Kiwi's fresh produce growth is a combination of their switch to fresher products in all departments with a focus on fresh fruit and vegetables, along with the change in the eating habits of the Norwegian customer.
"We have switched to presenting whole meal solutions to our customers by focusing on recipes and selling more fresh products. Despite being a discount retailer we have really expanded our offering to match what is being offered by the supermarket chains.
Staying competitive in a competitive retail environment
The Norwegian food retail market is fiercely competitive: a population of only 5.2m has an average of 4.8 grocery stores to choose from in close proximity.
"We are price leaders in a competitive market. We constantly fight to be cheapest option in the Norwegian market, while simultaneously making sure that the price war does not come at the expense of quality. Promoting public health is a passionate cause and at the core of our business. We want to inspire customers to eat healthier, make green choices, and have implemented several measures to make sure we do inspire." concludes Kristine.
