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Swedish grocers' earnings outstrip CEOs

Peter Vinthagen Simpson · 1 Oct 2009, 15:28

Published: 01 Oct 2009 15:28 GMT+02:00

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Dividend pay outs from profits earned on supplying goods to the Swedish grocery shopper elevate many ICA store owners to untold wealth which affords them such trappings of success as sports cars and luxury houses, according to a report in the Dagens Nyheter (DN) newspaper.

The ten most profitable ICA franchises enable their owners to extract more than 130 million kronor ($19 million) in dividends in 2008 - in addition to their salaries.

Leading the pack of wealthy grocers is Rolf Karlsson who is the owner/CEO of ICA Maxi in Gothenburg, DN reports. Karlsson claimed a dividend of 37 million kronor on top of his 1.6 million income in 2008.

Clothing retail giant H&M head Rolf Eriksen by comparison had to make do with only 17 million kronor, including bonus, while Volvo Trucks CEO Leif Johansson took home a mere 15 million kronor.

Rolf Eriksson's remuneration is reported to be 125 times that of a cashier employed in his store and comes despite the economic downturn.

"People have to eat. Maybe you cut back on foreign travel and save on restaurant visits which means that more food is bought. This can be one effect," Madelene Gummesson at ICA explained to the newspaper.

But the weak state of competition within the sector and lazy consumers are also cited as reasons for the booming profits at the grocery giant.

Story continues below…

Gummesson points out however that the firm has cut prices on key goods on several occasions in the past year and argues that the improvements in profits and margin are due to increasing turnover and the reduction of logistical and administration costs.

Peter Vinthagen Simpson (news@thelocal.se)

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Your comments about this article

20:07 October 1, 2009 by BCR
yet another swedish monopoly. ica really sucks, an it is very dificult to find a good alternative. at least there is waitrose in the UK, or all the proper supermarches in france...
20:18 October 1, 2009 by mkvgtired
"the weak state of competition within the sector". This will always leed to higher prices.
22:27 October 1, 2009 by Captcha
The owners are doing a good job and are not breaking any laws. So what is the problem? When they buy sports cars and luxury houses it creates jobs. Glad to see them spend the money.
09:52 October 2, 2009 by Xavid
There are other alternatives. WIllies Hemkop and several others.

I like ICA because its always clean. I do think they are a bit expensive and can cut the prices a bit. But that is only where I live. I hear that other ICA's in other areas are a bit cheaper.

But Willies is the cheapest. but they are the most unorganized store. At least the ones I go to.
10:23 October 2, 2009 by Rick Methven
Willies and Hemkop are the same company catering for different ends of the market. In most areas you will find that ICA is the cheapest for the standard basket of goods. The ICA store owners make the money that they do because the stores attact more customers than Hemkop/Willies or COOP because they provide better value for money.
10:32 October 2, 2009 by kmbr
They pay out the dividends to investors also. I don't know about Sweden but in the US something like 60 to 70 percent of the population own stock.Everyday people hold all sorts of investment vehicles-- that being stocks or mutual funds. I am not sure of the amount of strictly stocks or funds. Keeping in mind of course that many funds (equity funds) also hold stocks in them so anyone who has any type of equity fund also does own stock --albeit indirectly.

Gotta stop trying to kill the golden geese.
12:22 October 2, 2009 by avanhooijdonk
A Swedish monopoly? First of all it is 60% owned by Ahold, which would make it a Dutch monopoly IN Sweden...

Second in the Stockholm area there are too many alternatives to mention. (City gross, Coop, Vi, Hemköp, etc etc)

When we decide to go to ICA it is because we are looking for something special that is not available in other stores and because we are willing to pay the price for that product.

ICA is not cheap, but provides value-add through its variety in products.
15:19 October 2, 2009 by Caribbean guy/Swedish Gal
ICA reminds me of A&P Dominion now Metro on the other hand the others reminds me of NO Frills and Price Chopper and the likes

like seriously what does a person do with 37 million sek in a year??
15:45 October 2, 2009 by saltis
Adding to 'captcha's' comment ("The owners are doing a good job and are not breaking any laws. So what is the problem [...]"), how does the alternative look like?

A multinational retail conglomerate, ideally transfer-pricing its earnings to Carribean tax havens? Or a privately-owned discounter chain like Germany's Lidl, famous for spying on its employees, suppressing unionization and "deliberately poisoning discarded food in a bid to keep homeless people at bay" (TheLocal, 13 November 2008)?

With these alternative options in mind, I'd be very happy to see many successful franchisees, including that handful of millionaires among them. In contrast to those Bertil Hults (EF Education, Switzerland) and Ingvar Kamprads (Ikea, Netherlands Antilles), I assume they build their luxury houses in the community where their wealth originates.
21:36 October 3, 2009 by Kennethmac2000
ICA must be the only major retailer in Sweden, and perhaps the only major supermarket chain in Europe, which permits the use of inconsistent graphic design and branding in all its different stores.

To me, ICA stores are the epitome of unprofessionalism and old-fashionedness, and many remind me more than a little of supermarkets in the UK in the 1980s.

It seems particularly strange when one sets ICA alongside other Swedish retailers - both global players like IKEA and H&M, and more local players like Stadium and the various telcos. All of them run extremely slick retail operations with consistent branding, in-store 'feel', terms and conditions of sale, and so on.

What is even more strange is that, if you look at Albert Heijn, Royal Ahold's supermarket chain in the Netherlands, it is like night and day compared to ICA -professionally-run, slick stores that give Tesco and Carrefour a run for their money.

The competition authorities should split up the ICA monopoly, and soon.
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