The impending change of ownership of supermarket Rimi is unlikely to have a major impact in Estonia, as competition among retail chains is tight, the board chair of competitor Coop said.
Swedish retail group ICA Gruppen this week announced that it was selling its Rimi stores in Estonia, Latvia and Lithuania to Danish retail giant Salling Group.
Given the intense competition in Estonia’s retail market, Coop Eesti Keskuhistu Chairman Rainer Rohtla said this change of ownership was unlikely to have a significant impact, though it might do more in Lithuania and Latvia.
Rohtla said: “It may have a greater impact in Latvia and Lithuania, where competition among retail chains is lower.”
“Since Rimi’s new owner operates the Netto discount chain in Poland, time will tell if they attempt to bring that model to the Baltic market,” Rohtla added.
“Another aspect that could change is the impact on Estonian farmers and producers. If more foreign-sourced goods start arriving in Estonia, it could negatively affect local suppliers, as the owner has a strong retail network in Poland that could facilitate bulk purchasing,” Rohtla noted.
What happens to Rimi in the Baltic States under its new ownership, and what ambitions Salling Group has for the region, remains to be seen, he has added. “It is not even clear whether they will continue under the Rimi brand or rebrand it. All these questions remain unanswered today.”
Rohtla noted that Netto stores owned by Salling Group were discount retailers, though Rimi was not positioned as a discount chain in Estonia.
The market includes various retail formats, and the new owner’s strategy will determine its focus.
However, Rohtla said he did not believe that a discount-chain-backed company’s entry would force other grocery chains to change pricing policies or shift to lower-priced products.
“Not all consumers want cheap goods,” he said. “A large portion of shoppers still want high-quality products at an affordable price. As always, if you want something good and cheap, buy good and buy cheap.”
Coop Eesti roughly fills the market niche Rohtla is mentioning and has quite a strong presence in the so-called golden triangle, the commuter belt around Tallinn.
Rohtla noted that the sale of Rimi would always have likely involved a foreign buyer, as no Baltic competitor would have the resources to meet the deal.
While Estonia has a high level of retail space per capita, competition is spotty, with some areas oversaturated with outlets and others lacking stores.
He stressed also that retail market consolidation was challenging due to high investment costs, making large-scale mergers unlikely soon.
Salling Group is acquiring Rimi, which has 11,000 Baltic employees, for EUR 1.3 billion, pending competition authority approval. The stores would retain the Rimi brand, with no immediate changes to e-commerce or logistics.
Salling’s history dates back to 1906, when it started as a small clothing store in Denmark.
Since then, it has grown into an international retail chain operating in Denmark, Germany and Poland.
In 2020, Netto expanded in Poland by acquiring Tesco’s 301 supermarkets, rebranding 243 as Netto and closing 58.
Prices at Danish Netto stores are often lower than at Rimi: for instance, a standard pot of Philadelphia cream cheese costs EUR 1.61 at Netto versus EUR 2.69-3.39 with Rimi, while Toffifee candies cost EUR 3.35 per box at Netto compared with EUR 5.49 at Rimi at the time of writing. (ERR)