Reitangruppen explores stock market listing

Date : 17 November 2020

Harriet Cohen

Senior Retail Analyst

Reitangruppen, which operates the discount banner REMA 1000 in Norway and Denmark, as well as a variety of convenience banners in the Nordics and Baltics, is rebranding, restructuring and exploring listing on the stock market. We consider this and how a listing may help fuel the retailer's growth ambitions. Its REMA 1000 banner is the fastest growing discounter in Denmark, while it remains the biggest convenience store operator in the Nordics and Baltics too.

Rebrand: Reitangruppen to REITAN, Restructure: five business areas become three

The Company has been rebranded from Reitangruppen to REITAN, while its five business areas will become three, as of January 2021.

One of these three areas is Reitan Handel. This will include REMA 1000, as well as Reitan Convenience, and Uno X forecourts. Ole Robert Reitan will become chief executive of Reitan Handel.

The two other business areas are Reitan Eindom and Reitan Kapital. ‘Reitan Eindom has three focus areas: City center property in Trondheim, Bergen and Oslo, Logistics and industrial property and Commercial property in Scandinavia. Meanwhile, ‘Reitan Kapital is an investment company’.

Odd Reitan will be CEO of the Reitan parent company, as well as chairman of the board for the three business areas.

Restructure rationale is to consolidate trading activities

Commenting on the restructure, Odd Reitan said, ‘We gather all our trading activities in one business area. Strong, independent concept companies that work more closely together in a natural and good structure will provide opportunities for our trading business. It is both logical, simplifying and reinforcing’.

Major stock market listing from one of Norway’s largest companies

A press release from the Company said, ‘REITAN has also begun to explore the possibility of listing on the stock exchange in the future and in this connection making a minority share of the shares in Reitan Handel available to other shareholders’.

Chairman and CEO Odd Reitan commented, ‘I believe in dispersed ownership. More should own more. If this happens, we will have an arena for co-ownership, which I hope our employees, merchants and customers will join’.

REITAN was listed on the Oslo stock exchange with Reitan Narvesen in 2000 but was removed after one year. Odd Reitan said, ‘We learned a lot at the time and were probably too small and immature but now we are much stronger and more mature for something like that’.

Could a stock market listing could fuel continued growth for REMA 1000 in Denmark?

In 2019, the retailer’s discount banner, REMA 1000 achieved sales of NOK 63.9bn (€8.8bn). Performance was mixed, with the retailer’s business in Norway seeing revenue decline by 1.0% to NOK 41.5bn (€3.9bn).

Meanwhile, Denmark continued to be the growth driver for REMA 1000, with revenue increasing to NOK 22.1bn (€2.1bn).

'Sustained strong performance here means that Denmark accounted for 35% of REMA 1000’s sales in 2019, up from 30% in 2017.’

REITAN's decision to explore listing on the Oslo stock market could help it raise money to address domestic underperformance and drive further growth internationally too.

What’s driving REMA 1000's outperformance in Denmark?

Amidst a competitive discount landscape, REMA 1000 is the fastest growing discounter in Denmark. The following factors play a key role:

  • Store expansion – REMA 1000 has opened around 20 stores in the country annually over the last few years. Later this week, the retailer will launch store number 354
  • Publicity and perception – The perception of the brand among Danes is overwhelmingly positive. REMA 1000 is at the top of YouGov’s list of brands that are the most positively talked about for the third year in a row. The retailer also scores well for women and younger consumers
  • Successful franchise operating model – REMA 1000 acts as the master franchisor regarding ‘concept, culture and financial standards’, while the individual franchisees help ‘to strengthen the concept the REMA 1000 concept through personal initiative, creative desire and knowledge of local conditions’
  • Low cost operating model throughout – Chief Executive, Ole Robert Reitan refers to 'Cutism'. This allows the retailer to pass on lower prices to customers. Recent relevant initiatives include a new Danish fully automated distribution centre, while a focus on digitization in-store helps to cut costs too
  • Value on brands – A recent survey on the price on 24 branded goods in September identified REMA 1000 as the cheapest retailer in the country
  • Private label – REMA 1000 is continuing to invest to remain relevant. Recent launches include plant-based drinks, while the retailer also owns a 49% stake in Gram Slot, a supplier of organic agricultural products

Reitan Handel prioritising new store concepts

Meanwhile, the newly-rebranded Reitan Handel is also investing heavily in the convenience channel across the Nordics and Baltics under different fascias. It operates over 2,000 stores in these markets.

Unlike REMA 1000, which is focusing on expansion, here the priority is on new store concepts. For instance, the Company has launched an unstaffed store concept under the Pressbyrån Go banner in Sweden, while new concepts are set to debut for 7-Eleven and Pressbyrån imminently. Learnings from these concepts may be implemented in the retailer's other fascias across the region also.

Over the summer, the Company also launched a new café chain at Copenhagen Airport, Caffeine. It acquired the Baltic-based chain in 2018 and plans to expand the concept further in the future.

Reitan Convenience, has partnered with brand and design agency, Reactor Sweden on its 2020 and 2024 strategies, as well as on Pressbyrån Go.

We look at how the discount channel could change in a post Coronavirus (COVID-19) world through 10 hypotheses and what it could mean for suppliers.

With retailing across Europe evolving at a fast pace, stay up-to-date with our quarterly insight presentation looking at the latest economic data, retailer results and trends.