"Subsidies for the milk go far back in time and are determined by the board," said Morten Helliksen, administrative director for Coop Svalbard.
Those rearing over because reduced-fat milk costs 28.90 kroner per liter at the store should know that it is greatly subsidized (see table). Coop Svalbard actually loses more than six kroner per liter you buy.
"It is part of our self responsibility," Helliksen said.
Good Norwegian effect
When this is read, Coop Svalbard will have just had its annual meeting. The members of the company will benefit from record-high sales of 113.6 million kroner last year and an after-tax profit of nearly 6.8 million kroner. The cooperative store is rock solid with a shareholder's equity of 57.3 percent.
Helliksen has marked the tourism industry as the other thing talk about.
"We noticed it was good when Norwegian began to fly to Svalbard again in March of last year," he said. "There were noticeably more customers in the store throughout the year and at the beginning of the tourist season it was completely packed with customers between the shelves. It is truly gratifying."
"One would think that such a result, in a market where the store essentially has a monopoly in the grocery area, indicates the store has good profit margins at the very, very maximum. But it does not. Especially with Tine daily products, there is little to gain.
"The milk we sell, as I said, with solid losses," Helliksen said. "In addition, yogurt and juice by Tine is sold without significant profits. We follow otherwise sales promotions by Coop despite the fact we have significant shipping costs."
A good example:
"The Christmas ribs we sold for 29.90 kroner per kilo, there was not much profit for us to speak of," he said with a smile.
There are shipping costs that differ Coop Svalbard significantly from comparable stores on the mainland. Fresh goods must be transported by air and it costs more than 23 kroner per kilo to send such items to Svalbard. Thus the VAT on food, which does not exist here, has long ago been eaten up and then some.
Shipping by boat is far less expensive, but it is only in recent years that deliveries by the Nordbjørn have been made each month.
"For us it is pure luxury with a boat a month," Helliksen said.
The director was previously responsible for a number of Kiwi stores in the Oslo area. One thing that is especially difficult at his current job at Coop Svalbard, compared to his previous one, is logistics. At Sjøområdet the store has a 2,000-square-meter warehouse where dry goods, refrigerated products and frozen goods are retrieved several times a day. And you have to be constantly on the alert with regard to orders.
"Coop Svalbard has an extremely expensive commodities management where the goods, after they are ordered and shipped from a supplier, go from the airport or pier into the warehouse and the store," Helliksen said. "That is a work in progress continuously every day and that is costly for the operation. But so it must be."
Svalbardbutikken has more employees involved with the planning and ordering of goods than other stores. With such a long distance to suppliers you must be able to plan for the most part.
"And it is not always going to go well according to plan," Helliksen said, mentioning an example from last week.
Some items going to Svalbard from Coop's stock at Gardermoen were loaded into a trailer that sat in place to catch a plane to Tromsø. But a storm at Saltfjellet meant it did not come forward so that it reached the next plane.
"That meant that the goods that should have been here on Friday did not come until Monday and that shifted all of our logistics," Helliksen said. "But we do our utmost to help our clients get what they need."
Many have argued it is time for Svalbardbutikken to get some competition. How does he see it?
"I cannot prevent competitors from starting up," he said. "It will be interesting to see what happens with Lompensenteret."
Moore people, more goods
Karin Mella, the store's manager, gives the better flight bargains and employees credit for the good results last year.
Svalbardbutikken expected high sales due to the extended flight offers, but she was surprised nevertheless.
"We thought at first that there would only be increased income on the days there were planes coming," she said. "But it also persisted during the intervening days. We have also noted increased sales during the dark season, just like the tourism industry. One sees now, for example, that it is becoming popular to give Svalbard trips as gifts to people, and we see that more and more people are choosing to celebrate the big day here in Longyearbyen with friends. That it has been so, the extended flight deals must take some of the credit. It has been an exciting, not to mention positive, development that a great many in Longyearbyen see a lot of good from."
Hard work at the store is also behind the good results at Coop Svalbard, with an expanded range of products, including several varieties of the same commodity. If requests for specific goods are received from customers, they are listed in a book.
"So we strive to obtain the item," Mella said. "Whether we succeed or not, there is feedback to the customer from the store. Building good relationships is important for success in the retail sector. Overall, I commend the staff for handling customers in a good way."
Svalbardbutikken has employees from 11 countries on its payroll.