Sweden – a niche monopoly market

If your car breaks down, cross your fingers it won’t do it on a Sunday. I came to think of this as I read Chris Anderson’s blog The Long Tail. He writes about the long tail concept as something that emerged in two steps, the first being “the abundance boom of the 1990s that arrived with an explosion of variety on supermarket shelves”. The exploding supply of a wide range of consumer products even made it difficult for consumers – how could you choose between 150 kinds of toothpaste or 273 versions of cereal? It even introduced the concept of the “tyranny of choice” .

In many ways that’s true in most industrialized nations, but in other cases the interaction between the market forces supply and demand are not working properly. Last week my car wouldn’t start because the battery had gone to meet the battery maker, and it was time to buy a new one. Problem was that it was Sunday and the retailers I knew about that sell auto parts were closed. Idiot that I am, I borrowed a car from a friend and went to the nearest gas station thinking that I could easily get one there, but gas stations today hardly sell any products with a connection to vehicles. Instead, antifreeze fluids and wiper blades are hidden behind racks of the latest DVD’s, freshly baked cinnamon rolls and four isles of groceries.

At my first stop, they had batteries but they didn’t carry one that fit my Saab 9-5, Sweden’s third most common car brand. At my second stop they only had a few different batteries left, none which fit my car. At my third stop I struck gold, i.e. they could offer me the choice of one battery at the reasonable price of 800 SEK (about 90 euro).

And it’s not like I live in the middle of nowhere, I live in a suburb to Stockholm, in a city with the third highest average income in Sweden so if I want to spend my money on a product I expect that I would have a few choices on where to spend them. Not so in Sweden. The same goes for clothing and several other consumer products. Have you ever tried to buy winter overalls for your kids in December? Impossible, all the good ones are taken. Another example, I am tall and skinny and tried to buy a pair of black corduroy pants in January, which I guess is pretty late in the season and had to go to a bunch of stores to find a pair that fit. And if you wanted the best Christmas presents, don’t wait until the last week to buy that cool Spider Man game, or you might be stuck with a geeky animal puzzle. I could go on and on.

One could argue that gas stations get a higher revenue from selling DVD’s than from selling batteries, but if they won’t do it, consumer demand should allow someone else to. After all, there are 4 million cars in use in Sweden and they all need new batteries once every few years. Question is why there is no “tyranny of choice” in the Swedish market for so many products. One answer could be that there are so few of us in this country that companies can’t satisfy all our needs. If someone wants to buy a new iPod on Sunday night, tough, stores are closed.

Another answer would be that there isn’t enough competition. A few companies become so dominant that they own their niche and create a niche monopoly in which they don’t have to serve all the needs of the consumers. Consumers will have to suffice with what’s being served, and to a higher price. In the latest issue of Swedish business weekly Veckans Affärer, there’s an article about price levels in Europe, and according to Eurostat Sweden has the third highest prices in Europe. A portion of this can be explained with a lack of competition. Writes Veckans Affärer: “Increased competition would result in lower prices”. Hopefully increased competition would also give consumers more choices or the long tail will only be something we read about in Wired.