Market and trends

Price value and discount

How changes are taking place

• In recent years, the discount trend has grown stronger in the market
• A low price is not the only factor determining whether a product offers value for money – pleasant service, attractive peripheral services and a high-quality assortment are also important for perception
• Increased digitalisation in society is leading to greater price transparency

Impact on the food retail market

• Consumers are focusing more on low prices and price value and demanding an assortment that offers alternatives to strong global and national brands
• Private label products and large purchasing volumes are key for differentiation and efficiency
• Increased price consciousness is having a positive impact on certain market segments, particularly discount players
• Price comparisons require market players to continually monitor their price positions

How Axfood operates

• A focus on strengthening Willys’ position as Sweden’s leading discount grocery chain and ensuring that all concepts in the Group deliver price value
• Large selection of attractive, affordable and high-quality private label products
• Automation, efficiency and cost control in all operations

AI, data, digitalisation and automation

How changes are taking place

• Increased digitalisation, the use of AI and a higher level of automation in all areas of food retail
• Long-term trend of increased online shopping in the food retail market, although growth has been relatively weak in the last few years

Impact on the food retail market

• New and changed shopping behaviours are creating opportunities for new business models and businesses
• Growing degree of personalisation and the use of AI, data and consumer insight to respond to changing customer needs and behaviour
• Demand for new technical solutions and digital tools in stores and logistics
• High demands from consumers concerning user-friendly platforms
• Challenging business model in e-commerce to drive profitable growth, especially for pure-play online retailers and for home delivery

How Axfood operates

• A flexible in-store shopping experience with digital tools that simplify the shopping process
• Investments in AI, data, digitalisation and automation in pricing and assortment, product supply and stores
• Good access to data through loyalty programmes and modern systems that enable the use of data and AI to better understand customer behaviour, improve customer offerings and communication, and optimise and streamline operational processes
• Continued initiatives to strengthen e-commerce and develop the digital customer meeting, flexible delivery options including home delivery as well as store pick-up

Health and sustainability

How changes are taking place

• There is a growing awareness about the impact of food on the climate, biodiversity and health, especially among young people
• Consumers believe that food retail companies have a major responsibility for the development of sustainable and healthy food
• While growing numbers of consumers are willing to give greater consideration to sustainability and change their food consumption over time, increased prices due to high inflation mean that they have been less likely to make sustainable choices in recent years

Impact on the food retail market

• Sustainable food consumption is imposing high demands on changes in the food supply chain
• Issues such as responsibility, environmental impact and health are becoming increasingly important, and conscious consumers are manifesting their lifestyles through active food choices
• Many people want more information about origin, quality and ingredients
• Conscious consumers are looking for food inspiration and want help and guidance to make sustainable and healthy choices

How Axfood operates

• High rate of development despite dampened consumer interest in sustainable and healthy consumption in the wake of high inflation in recent years
• Assortment development and focus on sustainability-labelled products, in part through collaboration and innovation projects
• Information and inspiration as well as a focus on encouraging the customer to make sustainable, healthy choices
• Focus on sustainable packaging, reduced food waste, seasonal food, social responsibility and origin
• Environmentally certified stores
• Social advocacy and dialogues with decision-makers

Competition

How changes are taking place

• Traditional food retail companies invest more in price
• The market’s players are creating ecosystems of products and services and adapts offerings to consumer trends with regards to for example health
• The line between sectors is becoming blurred as products and services are offered that are not traditionally part of the core business
• Innovative players are challenging

Impact on the food retail market

• Increased competition from traditional as well as new players and from other related industries
• Greater selection for consumers and higher demands
• The market is being renewed through value-creating services such as meal solutions, price comparisons and flexible delivery options

How Axfood operates

• Development of different concepts and presence in all market segments to meet various customer needs
• Clear Group-wide collaboration to add customer value, improve efficiency and increase competitiveness
• An efficient, attractive and innovative assortment with a clear price position and distinctive private label products
• Continual development of loyalty programmes to ensure relevance and attractiveness

Demographics

How changes are taking place

• Low population growth
• Aging population
• Income gaps in society are increasing
• More diversity and a higher number of people born abroad
• Continued rapid pace of urbanisation, affecting both cities and the countryside

Impact on the food retail market

• As a result of demographic changes, demand is changing when it comes to assortment and price point
• Urbanisation is creating new attractive store locations and scope for online shopping while certain locations are becoming less attractive

How Axfood operates

• Continual assortment development to meet different kinds of needs and preferences, while meeting demand for an assortment that reflects a variety of cuisines
• Expansion through establishment of new stores and online shopping in growth locations and locations with convenient transportation links
• Clear values and an ambition to reflect the diversity found in society through the assortment and among employees in order to meet various needs

Resilience and regulatory compliance

How changes are taking place

• More uncertain and turbulent geopolitical environment
• Increase in cybercriminal activity
• Increased regulatory pressure from legislators, both in Sweden and in the European Union, and authorities, especially in areas such as sustainability, consumer protection and cyber security

Impact on the food retail market

• Global uncertainty is placing new demands on robustness in operations and supply chains
• Increased regulation and greater focus on securing the food supply in times of crisis are driving costs and complexity
• Digitalisation presents major opportunities but at the same time places greater demands in terms of cyber security and the ability to protect information and customer data

How Axfood operates

• Work that promotes Swedish primary production
• Strategic purchasing with regular evaluation of alternative solutions in terms of suppliers and geographic distribution
• Information and cyber security an integrated part of the strategic agenda
• Increased cooperation between and within different value chains
• Increased focus on implementation of new legislation and compliance