Large companies like Biltema and Ikea try to attract customers to their stores with strikingly affordable food. The products will probably be sold at a loss, says consumer researcher Essi Pöyry.
Espoo The recently opened cafe in Saunalahti has caused a stir on social media attention at exceptionally low prices.
A coffee and a bun costs a total of one euro, a bed with jam and a soft drink costs three euros.
It’s not about any trendy place in the inner city, but a cafe opened in connection with the department store chain Biltema.
When HS visited the site at Biltema Café on Tuesday at noon, customers arrived in a steady stream.
Even the modern interior of the cafe did not remind us that we are now actually in the corner of a hardware store.
Arrived with her husband and child Tiina Takkula sits down to eat shrimp bread and says that they, as people from Espoo, have visited the cafe many times since it opened.
The cafe’s cheap prices are especially attractive, but according to Takkula, you always have to buy something else at the same time. This time, for example, angle rails intended for construction were included.
“The man always buys here not only food but also all kinds of other things.”
There is a big advertisement on the wall of Biltema Café, which shows the pricing.
Takkulan the shrimp bread waiting in front cost 5.90 euros. You could have eaten a hot dog for a euro, and a hanalimsa would go as a ride boy for 1.50 euro.
How can selling such cheap food be profitable at all in a time of accelerated inflation and rising food costs?
It is not necessarily so, says the University researcher Essi Pöyry From the Consumer Research Center of the University of Helsinki.
According to him, the idea is to attract people to the place with inexpensive products, so that they will also make other purchases. Therefore, such throw-in products can often be sold completely without a margin or even at a loss.
“The key challenge for such car markets is to get people to come. But if they can be lured to the place with, for example, cheap coffee and a bun, they often end up buying something else,” says Pöyry.
“So it’s a marketing gimmick, and the actual business comes through other products or impulse purchases.”
Coffee, bun, lettu with jam, soft drink and tap drink cost a total of 5.50 euros.
According to Pöyry, this is not a new phenomenon in itself. Already in 1996, the Swedish furniture giant Ikea, which came to Finland, got Finns used to a new kind of concept, where you could get very affordable food from a restaurant operating in connection with a car market. The “Ikea trick” makes many people buy more than they originally thought.
“Ikea’s meatballs and hodars have since gained a cult reputation, so it has certainly been a profitable investment for the company,” says Pöyry.
The hardware store chain Biltema also comes from Sweden.
According to him, the advantage of inexpensive restaurants and cafes is that they often attract the whole family to go shopping. In this way, more goods usually end up in the shopping cart.
All however, do not fall for the marketing gimmick of a large company.
Egil Jansson has arrived all the way from Kirkkonummi for a cheap coffee and a bun but does not intend to buy anything else from Biltema.
“The cheap price aroused interest, and the price-quality ratio is just right,” he says.
Kirkkonumme resident Egil Jansson came to the department store on Tuesday just for cheap food.
What if, like Jansson, people start coming in droves only for bun coffees that are a loss for the company?
According to Pöyry, large companies can bear the risk. Such pricing would be quite risky for a small cafe entrepreneur.
In addition, large retail chains are better able to assess in advance whether offering affordable food is profitable. In other words, do people buy enough other things in addition to the bun.
Letu, jam and soft drinks can be paid three euros.
Pöyryn according to this, it is particularly interesting that the companies that started a strong price competition are from other Nordic countries: in the case of Ikea and Biltema, from Sweden, cosmetics chain Normalin and a store chain for Tiger from Denmark.
He thinks that it is perhaps partly because Finnish entrepreneurs don’t always dare to invest as much money in marketing or start selling loss-making products.
“Finnish retail stores are not known for their innovation, and new concepts often come here from abroad,” says Pöyry.
On the other hand, Finnish stores have also been able to take advantage of throw-in products by placing very affordable offers on, for example, toilet paper, diapers or coffee. The free buckets distributed by Tokmanni also come to Pöyry’s mind as an example of loss-making throw-in products.
There were enough customers in Biltema’s cafe during the day on Tuesday. It seemed that many of them had come there just to eat, but some also had shopping bags with them.
Generally Pöyry welcomes all competition and sees no downside to consumers being able to buy food cheaply – as long as there aren’t only unhealthy options available.
However, Pöyry reminds consumers to be careful that they don’t end up spending more money than intended when they come after a throw-in product. According to him, people often end up making unprofitable overall solutions due to small savings.
“If you go to the store with the idea of just drinking a cheap coffee, but end up leaving with some junk, you’re probably not saving at all.”
Price lists on display.
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