Iceland's only toilet paper manufacturer says it is being forced to lay off staff as it cannot compete with the prices offered by a US competitor.
American retail giant Costco opened a new shopping warehouse in Iceland's Reykjavik earlier this year and was initially met with enthusiasm. However, this excitement has not been matched at the offices of toilet paper company Papco, which says its sales have plummeted by up to 30%, Iceland Magazine's website reports.
Papco's Alexander Karason fears that his company's future is being flushed away, saying that the company cannot compete with Costco's wholesale prices. Papco has been forced to cut six jobs as a result, he says.
Speaking to Visir newspaper, he claims that Costco are charging considerably lower prices for their loo roll than in their western stores. "That's something we can't compete with, as we have to buy our raw materials, the paper, at world market prices," he told Visir.
However, the bulk purchases offered at Costco's warehouse store have had an unexpected benefit for at least one local manufacturer. Richard Kristinsson of Mjallar Friggjar, which makes and sells detergents and kitchenware, says that Icelanders have been put off by the huge pack sizes, and have returned to buying their goods in smaller quantities.
Iceland's retail boom
Costco is just one of several foreign companies that has arrived in Iceland and benefitted from the subsequent retail boom after the end of the 2008 Iceland financial crisis.
According to a Bloomberg report, 80,000 Icelanders - a quarter of the population - have already signed up for a membership card for the wholesale shopping club.
But while many overseas investors see opportunities to boost Iceland's economy, Bloomberg says that local companies are less than impressed at the competition.
Local retailer Hagar is one of them, which has closed several of its clothes outlets in anticipation of the Swedish H&M opening two stores in Iceland by the end of August, Bloomberg says.
Reporting by Alistair Coleman
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