$4 billion on cheap stores: how a Norwegian earned on discounters chain

One of the richest people in Norway, Odd Reitan, began his career with a small grocery store. Now he is entangled Northern Europe with a discounters chain and is ready to apply his skills in state-building.
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On Wednesday, February 10, the Swedish Axfood Corporation - one of the largest retailers in the region with an annual turnover of more than € 4 billion - has announced his departure from the Board of Directors of the company by its founder - a businessman Odd Reitan, owns the second-largest package Axfood shares in the amount of 15.6 %. The news brought down Axfood shares by 5%. A few days before the group quotes were near historic highs, and the share of Reitan in Axfood was estimated at 5.5 billion Norwegian kroner ($ 640 million) is more than three times the initial investment of a businessman in Axfood. All state Rejtan Forbes magazine at the time of publication are estimated at $ 5.2 billion in 2015, the last of the world ranking of billionaires. In view of the fall of the crown due to the collapse in oil prices, by February 2016 the state businessman for "RTC" dropped to $ 4 billion . The title of a wealthy Norwegian, he lost to his main competitor, the owner of the supermarket chain RIMI Stein Erik Hagen.

The main source of income of a businessman - holding Reitan Group, where Odd Reitan is the CEO and owner. Formally, the company's shares divided by 33.3% between Oddm, and his two sons. The main business Reitan Group is concentrated in the retail and real estate. In 2014, total revenues amounted to 81.6 billion kroons (or $ 9.5 billion, growth of CZK 6%), net profit - 1.8 billion kroner ($ 210 million, a drop in the crowns of 8%). Now Reitan owns 3.9 thousand. Sales outlets, which employ nearly 37 thousand. Man, but he began his business career with one person in a single store.

Child fjords

In 1948, before the birth of Odd, his father Ole Reitan and his wife opened on the outskirts of the Norwegian Trondheim small shop with colonial goods. By origin, Ole was a peasant, the eldest son of a local farmer. But he changed his mind 23 years to engage in her father's land and decided to become a trader-wimp.

With the end of the Second World War and the period of the German occupation of the new Norwegian government has been gradually phased out of the goods distribution system and the state regulation of prices, which favorably affected the development of trade. For 15 years, Ole has accumulated on the opening of a new business, and in 1964 launched its own supermarketin another suburb of Trondheim. By the time his eldest son grew Odd, also worked in his father's shop.

The young Odd Reitan came another idea: to open a shop in a crowded place, but with the low prices, which is due to cost reductions can be achieved (for example, the most efficient use of retail space). On the savings in time and money to part-time work with financial and logistical help of his father's 20-year-old Odd opens in May 1972 its first own store AS Sjokkpris (in a literal translation - "Shock price" JSC).

Odd Shop located in the heart of Trondheim, in the middle of a small block, around which laid the tram ring and terminal station on the main (and now only) tram branch. Villagers and residents of the suburbs, coming to the center, the first thing seen across Sjokkpris shop. This is already in the first weeks of 100 square meters area in front of the store. m started lining up queue.

As a co-investor, Ole Reitan with satisfaction watched the progress of his son and soon accepted his offer to unite all the family shopping in a single network. For this purpose, in 1975, the family's first ever Reitan Holding Reitankjeden was created (it was later renamed the Reitan Group). Holding shares were divided equally between the father and son. When in 1988, Reitan Sr. died Odd for a few years became the sole owner of the business, but at the end of the 1990s, the newly divided it equally between himself and his two sons.

Odd Reitan in figures

$ 4 billion - the state of businessman

36.6 ths. People are employed in the Reitan Group structures

23.7% - share of REMA 1000 Norwegian retail market

$ 9.5 billion - Reitan Group's revenue in 2014

9th place is Reitan Group among the largest companies by revenue in Norway

634 petrol stations in Denmark, Norway and control structures Reitan

Sources: DN500, Forbes, Nielsen, company data

No frills

By the time the association of family assets into one holding business Reitan was already five stores: father and son bought a few outlets in the hometown. Since 1977, the company began work on a franchising scheme, issuing licenses to young entrepreneurs to open small shops under its guise. Otsyuand businessmen had the idea of ​​creating a single recognizable brand. Initially, it was decided the name REMA 500 that represents the number of headings in the store. Soon it was changed to 600 REMA, and in the spring of 1980 a network called REMA 1000.

Format stores, discounters has been successfully tested Odd still in his first shop, but the network REMA 1000 and partly based on the ideas, "peeped" during his trip to Germany in 1977. Then a young businessman familiar with the principle of the Aldi grocery chain, which is considered a classic example of the classic discounter. At Aldi Reitan borrowed ideas to save space by calculations of stocks on the shop floor, as well as limiting the number of brands, which are represented by a specific product.

Cheap shopping for an expensive country

His financial success Odd Reitan primarily obliged inexpensive grocery chain stores, discounters REMA 100 0. Exactly 800 stores this network accounted for 20% of the total number of outlets in the management of a businessman, but give 71% of revenue in all its businesses - 58 billion kroner, or $ 6.7 billion,annually.

The subjects of the Norwegian King is perhaps the most prosperous nation: according to the IMF, the country is ranked fourth in the world in terms of per capita GDP and the first place in terms of human development (HDI) and property inequality (Gini coefficient). Despite this, analysts point out that the residents of Norway more shops prefer low-discounters in recent years, reducing the daily spending.

For example, last year a study Nielsen sociologists showed that the share of discounters in 2014 amounted to almost 62% of the total revenues of retailers in Norway. Back in 2007, figure was below 48%, then every year began to grow. REMA 1000 stably retains second place with 23.7% (against 23.1% in 2013). The main competitor of the company Reitan - group NorgesGruppen, dealing with the whole spectrum of retail business, from beer to supermarkets and discounters wholesale. The market share of NorgesGruppen Norway is 39.9%.

Nordic adaptation of the German discounter already in the first years of operation shown to be effective, and in 1985, Oddleave the task over five years to open at least one store REMA 1000 every village in Norway with more than 10 thousand. residents. In this period the plan was carried out, and Odd began to expand into neighboring countries.

The first in the field of view of the businessman came to Denmark (under which for centuries was Norway). In 1994, an agreement with Reitan Løvbjerg Danish supermarket chain to buy it has a local discounter chain Prisa. In less than two years, all the outlets of the Prisa and Løvbjerg stores - 43 stores in all - came under the brand REMA 1000. At the beginning of 2016 the Norwegian group ran in Denmark has 272 shops under this brand, providing employment over 7 thousand people..

During the 1990s, the business corporation Reitan Group has spread to neighboring Sweden and Finland. The fall of the Iron Curtain allowed Reitan enter the markets of Poland, Slovakia and the Baltic former Soviet republics, covering several years, the entire Baltic region. After that, it was necessary to restructure the sprawling Reitan Holding. Brand REMA 1000 is preserved only in Norway and Denmark. Shops "steps uptupnosti "in all regions of the Reitan Group's presence was highlighted in a separate business. This category includes, for example, popular in Latvia Narvesen shops and Scandinavian network American corporation 7-Eleven, which develops Reitan franchise.

Not only shops

Two other lines of business Reitan - real estate and petrol stations. Investment in real estate Odd Reitan has engaged in during his father's life in the late 1970s. Now it is owned by seven companies in various fields: from a small firm, which operates retail space in Trondheim, to an international corporation with 29 million square meters. m of available space.

The youngest billionaire Norwegian business - gas stations: the entrepreneur opened a small network of filling stations Rema-Bensin in 1997. Six years later they bought the company Hydro Texaco - a joint venture between the Norwegian energy giant Norsk Hydro and the US Texaco. But the fall of 2006. Reitan's return to the fuel market, fully redeemed network Hydro Texaco (which was later renamed the YX Energi).

A year later, Reitan Group has signed a partnership agreement with the DutchShell Corporation: about half of the gas station YX Energi in Norway and Denmark will be renamed in the Shell, in return Reitan open roadside shops to them by their franchise 7-Eleven. Under a contract of this transformation has touched 269 filling stations. Since 2009, all business groups car maintenance was united under the control of the company Uno-X. Revenue in this segment was the holding in 2014 of NOK 11.5 billion, or about $ 1.3 billion at the current rate (14% of the total turnover of the holding).

The dream of the presidency

Capturing the Scandinavian markets, Reitan started to try myself in journalism. In 2012, the billionaire has published a book, "If I was president," that caused a political scandal in Norway. The book is an autobiography, the memories of his youth and early business career, as well as reflections on the state system Reitan Norway.

"Except for the nice suggestions to move the country's capital in Trondheim, this book is filled top to bottom with every anti-democratic nonsense," - spoke of her ultra Klassekampen newspaper, outraged offer rich Norwegianto allow him to lead the state.

According to Reitan, chief executive should be elected not by Parliament and appointed by the king only. The best candidate, he called himself: the effectiveness of the control method grocery stores Reitan Group businessman offered to project on the entire state. For example, allocating a part of public duties to a third party on a franchise basis. In addition, Reitan proposed to leave the country only three parliamentary parties: the conservative, liberal and socialist.

"Actually, I do not know what I would do as president - admitted later he Reitan. - In the book, I was just playing different assumptions, possibilities and ideas, in addition to a description of his youth, and our family philosophy. " However, the main component of this philosophy - as short as possible and effective decision-making chain.