Odd Reitan’s retail business, Reitangruppen, is the company that carves its values in stone
The story of Odd Reitan’s journey from Norwegian shopkeeper to business magnate started with his list of company values scribbled on Post-it notes. They now stand carved in stone at the headquarters of Reitangruppen, the fifth largest company in Norway, and remain central to the company’s success in franchising and partnership.
Rock-solid values and culture
Reitan's is no ordinary head office. One of Norway's most charismatic business leaders, he presides over Lade farm manor in his home city of Trondheim as CEO and Chairman of the board.
"Developing our company culture is hugely important," Reitan says. "And doing that in a place which is full of history works for me."
The former settlement dates back to the Viking Age and was a one-time seat of Norwegian rulers, whose lives were remembered with Nordic runestones. At the main entrance, Reitan's alternative monument stands proud, inscribed with the eight values he laid down more than 40 years ago.
Given that Reitan began in the discount trade, the concept of value is what drives this business. Following in his father's footsteps, Reitan opened his first shop in 1972 under the name Sjokkpris (Shock Price).
"It was very cheap," he says. "We sold coffee for one crown per bag, so it really was quite a shock for people.
It took around a year to build it up to something profitable." Reitan's plan to turn his small venture into something bigger encouraged him to study the franchise system.
After achieving success with his first outlet, Reitan created the REMA 1000 concept in 1979 — a no-frills franchise supermarket chain, which initially offered a selection of only 1,000 essential products at very low costs. The aim was to reduce operating costs to a minimum by negotiating with the producers directly, bypassing agents and allowing the retailer to pass on those savings directly to the customer.
He believed that growth would come from bringing in people who shared his values and were as excited about the business as he was, enabling him to open new outlets and give franchisees a share of the spoils. Offering cut-price goods to Scandinavians was a shrewd move: an instant hit with consumers that has been the main factor in the group's long-term success.
An outlet for success
Today, 30 years later, the REMA 1000 brand has grown to more than 740 stores throughout Norway, Sweden and Denmark. It is the most successful of the four business areas that make up the Reitan Group, totaling around 55% of the US$12.2b (NOK72b) turnover in 2012.
Being inclusive has also aided the company's pace of growth — a point that Reitan regularly stresses when meeting today's young entrepreneurs. "Individuals think too much for themselves," he says.
"You have to include other people in your dreams to see the vision and make it come true." Crucially for Reitan, he believes expansion has been achieved without compromising the company's core values.
In essence, it remains a discount retail and convenience business, albeit one that has successfully branched out into other areas such as real estate and fuel stations.
Its interests include R-Kioski, a Finnish convenience chain, fuel stations in Norway and Denmark, 50 Lidl stores and the Swedish news agency Pressbyrån.
Despite the company's success, Reitan admits its journey from a small shop to one of Scandinavia's leading retailers has not been plain sailing. Mistakes have been made and there have been a few setbacks along the way.
In the 1990s, Reitangruppen signed license agreements for the REMA 1000 concept in Poland, Hungary, the Czech Republic and Slovakia. "We did it so fast and we were very dependent on good purchasing prices, but these countries were very new to market economics," Reitan says.
"[In hindsight] I would not have started in central European countries as early as I did. We sold them because they demanded too much focus and time to make them work back then.
"There are times when things go wrong, but not as wrong as not making any decisions at all," he says, recalling his early venture into Eastern Europe. "I want things to happen fast, so I need people to take decisions and to do it in a way that's right for the business.
To avoid anarchy, we have to have a strong culture with common behaviors." And that's where the company values come into play again, providing a constant rock that underpins the business throughout change and growth.
But Reitan's own decision-making skills were put to full effect when the company merged and then demerged with Narvesen ASA — a Norwegian convenience store and news agency chain — in 2001 and listed on the Oslo Stock Exchange. "Narvesen approached us and initiated the merger," Reitan explains.
"We wanted to get bigger, and so we found the offer from Narvesen attractive." But, within a year, the company was back in his ownership.
Growth from within
"I was on holiday, thinking about the business, and how its value was lower than what I knew it could be worth," he says. "If no one else could see it then something needed to change.
Combined with the fact that we were used to taking decisions very quickly with the family and we were not able to do that anymore, I knew we needed to buy back and I knew I was the right buyer." Within minutes, he was in touch via text message with his sons: Magnus, CEO of Reitan Convenience, and Ole Robert, CEO of REMA 1000, and, on returning from vacation, the deal was set to proceed.
Reitangruppen was back in family control. "The decisions being made now within Reitangruppen are the best, because they are being made by the business managers themselves," Reitan reflects.
"There are new stores opening every day. I don't always know where and when, but I like it."
Having built the business from scratch, he is now setting his sights on a bigger prize — increasing the company's presence in Trondheim — with the Reitan Real Estate business. The entrepreneur is a big fan of his home city, which has been on his shopping list for the past 15 years, having already secured hotels, apartments and office space.
According to Reitan, this business area boasts the clearest vision in the whole group. It is most certainly the boldest.
"It's a dream of doing something that hasn't been done before," he enthuses. "For a company to own a city."