Grocery store | Oda is leaving Finland, and according to the analyst, it can raise prices – “The last nail in the coffin”

Norwegian Oda’s withdrawal from online food retailing will further centralize the Finnish grocery trade, and it may put an end to hopes that a new operator would enter the grocery market for a long time, estimates an industry analyst.

Norwegian Oda said on Wednesday is planning to close its online food store in Finland and moving to offer logistics services to companies in the trade sector.

Finland’s grocery market is the most concentrated in Western countries. Two large players, the S group and the K group, together grab 82.2 percent of the market.

Oda was the first in twenty years who, as a newcomer, tried to get his slice of the Finnish grocery store.

“Oda leaves Finland with his feet first. The mood is that is this the last nail in the coffin, so that we can change the market in a reasonable period of time”, says the retail analyst Arhi Kivilahti From the research company Ada Insights.

Kivilahti says that in addition to concentration, the Finnish grocery trade is also exceptional in terms of profitability.

“There would certainly be room on the market, but Finland is small and remote,” Kivilahti estimates.

Oda told about the termination plans only after more than a year of operation.

During its first eleven-month accounting period, the company achieved a turnover of 22 million euros in Finland. If the growth had continued at the same rate, according to Oda’s estimate, the turnover would have risen to 34 million euros.

The figures are promising, as the turnover of the S and K group food online stores is estimated to be around 200 million euros.

“It doesn’t seem to be a lack of demand, but building a new one is a really slow process and the world has changed since Oda entered the market,” Kivilahti estimates.

During the year, the interest rate has risen sharply. Growth companies no longer get financing for their projects in the same way as during zero interest rates. Due to this “dramatic” change, the business model that was previously financeable was no longer available today, Oda said on Wednesday.

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“A tightener would have accelerated development.”

On the market industry analyst Kivilahti estimates that Oda’s termination announcement is a setback for the development of food online shopping and slows down its spread in Finland.

“A tensioner like Oda would have accelerated development.”

The S and K groups have been quite passive in the pricing of home delivery of food and, according to Kivilahti’s assessment, have “left” this market to Oda. In an online store, the delivery fee is one of the most decisive factors influencing the purchase decision for the consumer.

“It’s a little surprising that neither of the big retail groups competes on the price of the delivery fee, even though the S group has pushed the prices of the pick-up service,” says Kivilahti.

At Oda, the delivery fee has been lower than at two large trade groups. So the removal of Oda will probably not increase price competition in home delivery.

“The prices of home delivery of food are already very high, and they are not going to decrease at least.”

Finland the third player in the grocery trade, the German Lidl, has conducted online shopping experiments in Finland and in its other countries of operation.

Kivilahti estimates that the termination of Oda will hardly attract Lidl to advance in online shopping in Finland. Kivilahti describes the concept based on Lidl’s brick-and-mortar stores as “disciplined”.

“Lidl has certainly been offered all kinds of online shopping solutions from all directions. It would have great potential online, but the company has not found a model that it would have spread to several of its operating countries,” says Kivilahti.