S Group lowers prices on 400 products

Date : 19 January 2015

Finnish market leader S Group has announced that it is lowering the prices of the most popular food products in its Prisma hypermarkets from today, in response to customer feedback. The move follows that of rival Kesko, which reportedly reduced prices in November last year.

CEO: ‘We will do our utmost to become the most affordable grocery store in Finland’

Commenting on the development, Taavi Heikkilä, S Group CEO said ‘The new policy is the greatest strategic change in S Group's supermarket trade in a decade. The considerable lowering of prices has demanded a great many efficiency measures and pruning of costs. The work has now progressed to the point where we can begin lowering prices in all Prisma stores in Finland. We know that this is not yet enough. There is a long way to go, but we will not give up. We will do our utmost to become the most affordable grocery store in Finland. While we are lowering prices, we will also hold on to our wide selection and improve it further. Finnish quality is also important to us: almost 80 per cent of our products are made in Finland. We at S Group have listened to our customers and staff. We have asked them how we could best help normal Finnish people in the current hard times. The message is clear: the price of everyday groceries must come down. We will start lowering prices where we have most encounters with customers. In practice, this means Prisma stores. We can deliver everyday help most effectively where we reach the largest customer volume and where our own efficiency enables us to lower prices. Making goods more affordable is a basic duty of cooperative activities. Our only aim is to help ordinary Finnish people’.

Our view

This illustrates how price competition is heating up in the Finnish grocery market as established giants S Group and Kesko compete with each other and discount retailer Lidl to win shoppers. Following price cuts in November, Kesko has reported improving monthly sales at its food business. Its December monthly sales increased by 0.7% versus last year, following a disappointing November where sales decreased by 6.1%. While it may be too early to judge the extent of price cuts on Kesko's performance, this will be a development to watch in the coming months.

Harriet Cohen (Senior Retail Analyst)
This article was written by Harriet Cohen who specialises in grocery retailing in Northern and Central Europe. Harriet brings five years of experience working for UK retailers to IGD. To learn more about how IGD's research can benefit your business further, please get in touch.