How Elkjøp manages 400 leases

Elkjøp Nordic leases premises for 400 stores throughout the Nordic region, at a cost of NOK 1 billion per year. This is how the group behind Elgiganten and Elkjøp manages its leases.

Decades have passed and many millions of washing machines and TVs have been sold since 1962, when 33 independent Norwegian shopkeepers joined forces to become Elkjøp. The chain is now owned by the British group Dixons Carphone, indisputably one of the world’s biggest electronics retailers.

Its 400 stores in the Nordic region, trading under names such as Elgiganten in Sweden and Denmark, and Elkjøp in Norway, posted sales of almost NOK 35 billion last year. Project Manager Tom Espen Eide of Elkjøp Nordic is responsible for managing all 400 of the rental agreements.

Previously dependent on one person, and with poor control
Eide is in charge of the actual documents, the rental costs, expiry dates, landlords – in short, everything involved in each individual rental relationship. As this is an article in House of Control’s newsletter, there are no prizes for guessing what software he uses to keep on top of it all. But what was used before that?

“We used Excel,” recalls Eide. “It worked reasonably well when we had relatively few rental agreements, but as the group grew and developed the situation gradually became unmanageable and completely unviable.

“The spreadsheet quickly became horribly complex, with new columns always being added, and it was hard to find the information you needed. It was difficult to link to documents, such as the leases. Then errors started creeping in. And eventually there was only one person who could actually manage the task.”

This ultimately resulted in a lack of control, a system that created its own complexity, and a high degree of dependence on key individuals. It could also have had a significant financial impact:

“In a large business group, due diligence has to be carried out from time to time, and of course within retail the rental agreements are part of this process,” explains Eide.

Much-desired control
A few years ago, Elkjøp Nordic adopted House of Control’s solution at corporate level. Eide explains that Complete Control is the answer to all the underlying challenges involved in administering a large portfolio of rental agreements.

“Having 400 rental agreements and an annual rent bill of NOK 1 billion constitutes a risk for the group in itself. It’s very important that the leases we want to retain are renewed and/or renegotiated. With so many leases, this work has to be automated, otherwise we could easily run into trouble that would cost us millions.

“I use Complete Control more or less every day to look at various leases. It’s a solution that is intuitive to use and that gives me a good overview. I can’t imagine it being possible to manage the portfolio in any way other than using a tool like Complete Control,” says Eide.