It’s unlikely that Spar will become a true discount grocery store, but then again, Lidl hasn’t been one in Finland since its early days either. My own assessment is that Spar’s significance in the Finnish grocery market will remain small, but it could still be substantial for Tokmanni’s business. We have already received encouraging information about how the total sales of stores whose food sections have been converted to Spar have grown.
Taking Kesko as a comparison. At the end of last year, there were 83 Citymarkets, 254 K-Supermarkets, and 721 K-Markets in Finland. Spar cannot compete with Citymarkets. However, about twenty food sections converted to Eurospares could be quite good operators alongside mid-level K-Supermarkets. If the number of Eurospares rises to, say, 30-40, their position would certainly improve further. But could there be, say, 100 Eurospares in Finland? Unlikely.
Separate merchant-driven Spar stores have been discussed as a possibility. But these would likely compete in the K-Market size category, whose significance in the daily goods trade is constantly shrinking and whose number is decreasing. It would be natural to develop cooperation with M-merchants, which could offer economies of scale for all parties. But at the same time, it’s important to remember that M-store’s market share in Finland is 0.2%.
But to reiterate, what is small for the industry can be big for Tokmanni. If Tokmanni were to succeed in, for example, doubling its food sales over some period, it wouldn’t significantly shake up the market situation for the trade. But for Tokmanni, the impact on procurement costs and also on the sales of non-food items would surely be very substantial.