Normal expanding rapidly in Northern Europe
The Danish discount chain Normal has grown rapidly during the last years. The company has proliferated already to six countries (Denmark, Norway, Sweden, Finland, Netherlands, France) with 370 stores. This expansion has lead to a doubling of revenues during the last two years.
On the surface Normal resembles the other Danish chain with IKEA type of forced circulation for customers in the stores, Flying Tiger Copenhagen. However, where Flying Tiger sells a lot of non branded products, Normal focuses on more familiar and branded products.
The discount nature of Normal comes up in the Gross margins of the company. With margins around 20% Normal has significantly lower margins than many of its main competitors. With that being said, it is difficult to pinpoint any direct competitors for Normal. They sell a lot of everyday products that are sold in grocery stores, but with no fresh products and very limited assortment, Normal should not be compared to a grocery store.
Perhaps best possible comparisons (especially of the listed companies) are Clas Ohlson and Tokmanni. Neither has assortments that overlap significantly with Normal. At the same time they do have a lot of same product categories. Cosmetics retailers would have also been interesting to compare.
Where Tokmanni has Gross margins of around 35% and Clas Ohlson of around 40%, Normal sells products with half of the margin of the competitors. This should be reflected on the prices also.
Small assortment enables efficiency
Despite low margins, Normal is able to produce robust EBIT margins between 6-8%. This is comparable, but somewhat lower than for Tokmanni and Clas Ohlson. Normal is able to have profitable business with low Gross margins (and with low prices according to the company). This is done with efficient operations that all boil down to the efficient assortment management.
Normal sells a limited assortment of products and that assortment is changing all the time in the stores. This resembles the approach the German discounters have with their non-food assortments. This also leads to the fact that the assortment turns over often and thus puts much less burden on the finances of the company.
----------------
Would you like to learn more about the retail trends and numbers?
We conduct trend reviews, from individual presentations to ongoing quarterly reviews. Read more about them in the Services section or send us a message at arhi@adainsights.fi, and we can talk more about how we could help you understand the changing retail environment.