SIBA and NetonNet can be the electronic retailers to follow Onoff


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Wednesday, 13 July 2011
Reduced sales and increased losses have affected many of the leading chains in the consumer electronics sector in Sweden. Another company in the bad side of the price war in the Swedish electronic market is Siba and internet electronic retailer Net on Net. Fears now is that these could be following Onoff.

On Monday, Onoff was forced by persistent looses to file for bankruptcy. With major international brands  giants such as German Media Markt,  British-owned Elgiganten as well as and Norwegian-owned Experts breathing on its neck, the company could not hold steady.
One weak spot was that Onoff has a very poor business strategy with weak customer services and inability to be flexible in pricing even when it was explicit that its competitors are pricing lower that Onoff. Consumer will always go to where prices are lower and where customer services are good according to conventional believe.


However, it still has not been easy in the Swedish electronic market despite the price war. In 2009, Media Markt made a resounding loss of Skr324 million, representing 7.7 percent of sales. Hakan Ylinenp��, Professor of Entrepreneurship at Lule� University of Technology, believes that it is obvious that there is a price war in which Media Markt trying to take market by brutal price pressure.

In the short term price pressure will lead to cheap goods in the shops, but in the longer term, they may begin to rise, after the big companies putting pressure on prices might have captured the market.

“Media Markt's strategy is to praise the competitor out of the market so that it can be left alone, we get higher prices, but we are still far from it,” says H�kan Ylinenp��.

Siba's performance has deteriorated dramatically over the past five years. And the company has a business plan similar to Onoff.  The group has gone from a profit results in Skr68 million in fiscal year 2005/2006 to a loss of almost Skr44 million in 2009/2010. In April this year Siba closed its weak performing department store Moraberg outside S�dert�lje due to lack of profitability.

“We are a financially strong company that has existed for 60 years. We will go up against these international players. They take the profits from markets with lower competition and go with away with big losses in Sweden to create oligopolies,” says Siba president Fabian Bengtsson.

Another one, web-based retailer Net on Net has had major financial problems in the past year. From May last year to January this year the company made a loss of Skr39 million, compared with a profit of Skr38 million the same period last year. The company laid doff 70 workers in November last year.
By Team

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