Shoppers in Sweden face the highest food prices in the EU, and retailers enjoy some of the fattest profit margins, making the country an irresistible target for foreign competitors, who are chipping away at what many perceive as a local retailing oligopoly.
German hard discounter Lidl has led the way, and supermarket chain Aldi, Britain's Tesco and France's Carrefour are expected to follow, as is US general retailer Wal-Mart, the very mention of whose name gives European retailers sleepless nights.
As they check out their groceries, Swedes pay about 11 percent more than the EU average, and conventional wisdom states that high taxes, labour costs and transport costs are to blame.
But sector watchdogs say that lack of competition weighs just as much.
"Up to half of the price differential can be explained by lack of competition," Karl Lundvall, economist at the Swedish competition authority, said.
New entrants often face great obstacles when trying to set up shop in a sector that is dominated by three large players: ICA with a 37 percent market share, Kooperativa Foerbundet with 18 percent and the Axfood group with 17 percent.
Municipal authorities often delay or deny permission, citing concerns about increased traffic or nuisance for neighbors in the case of larger malls, or concern for smaller, neighborhood shops.
"The three players have learned the rules of the game but for the others it can be a very long process," Lundvall said.
The Swedish incumbents, who have massive financial resources and can bide their time during a lengthy administration process, are refreshingly frank about what has made their lives comfortable.
"There have been obstacles for store establishments over the years, no doubt about that," Janne Pettersson, manager for external communications at retailing giant ICA, said.
But ICA says it senses a sea change, with local authorities less obstructive about new stores which Pettersson said "have a lot of positive effects, creating jobs, lowering prices and giving people a wider selection to choose from".
The stakes are high. According to estimates, Sweden's big three enjoy profit margins of between three and four percent of sales, which compares with an average of only one percent in the highly competitive German retail sector.
"Sweden must look like pure paradise" to foreign distributors, business weekly Affaersvaerlden marveled.
And it is clear that Swedish consumers stand to gain from the establishment of new stores, even if they never set foot in one: "The consumer can continue to shop wherever he or she usually shops and still benefit from the establishment of a new discount store since the `old' shop will reduce its prices as a result of increased competition," the competition authority said in a recent report.
ICA agrees. "There have been, and will be, quite tough negotiations with suppliers" to bring prices down, Pettersson said.
So far, the onslaught of foreign retailers, including Lidl and Danish chain Netto, has been largely limited to southern Sweden, and the suburbs, where there is room for hypermarkets.
But they are also knocking on the door of the Stockholm metropolitan area, the final bastion of high prices, where food costs about seven percent more than in the rest of Sweden.
Germany's Lidl last month opened a store in the capital's Skaerholmen district and Stockholm's mayor Annika Billstroem has called for more of her city's commercial property to be leased to food outlets, hoping this would lead to lower prices.
While change will be slow, the competition watchdogs are optimistic. "We can catch up with the price level in other European countries," said Pettersson.
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