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Market and trends

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Market and trends

Digitalisation, sustainability and health as well as price value are examples of trends that are having a major impact on society, the food retail industry and Axfood. The pandemic accelerated many of these trends, resulting, for example, in increased e-commerce and a greater focus on sustainable and healthy products, but during the past year, the greatest impact on market dynamics has been the high level of inflation, leading in particular to increased price consciousness among consumers.

Demographics

How changes are taking place

  • The population is becoming both younger and older
  • Income gaps in society are increasing
  • More diversity and a higher number of people born outside Sweden
  • 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 offer affordable, good and sustainable food as well as meeting demand for an international assortment
  • Establishment of stores and online shopping in growth locations with convenient transportation links
  • Clear values and an ambition to reflect the diversity found in society in order to meet various needs

Competition

How changes are taking place

  • Traditional food retail companies focus more on food and invest more based on price considerations
  • Innovative companies are challenging
  • The market’s players are creating ecosystems of products and services
  • Innovative, small players are seeking partnerships

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 more stringent requirements
  • Increasing importance of data and consumer insight to respond to changing customer needs and behaviour
  • The market is being renewed through value-creating services such as meal solutions, price comparisons, recipe websites and home delivery

How Axfood operates

  • Development of distinctive concepts to meet various customer needs
  • Clear Group-wide collaboration to add customer value and increase competitiveness
  • An efficient and attractive assortment and a distinct price position
  • Continual development of loyalty programmes to ensure relevance and attractiveness

Price value

How changes are taking place

  • Increasingly strong discount trend, particularly in times of economic uncertainty and high inflation
  • Digitalisation is leading to increased price transparency
  • 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

Impact on the food retail market

  • 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
  • Consumers are focusing more on value for money and demanding an assortment that offers alternatives to strong global and national brands
  • Private label products and large purchasing volumes are key for being able to offer price value

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 value for money
  • Large selection of attractive, affordable and high-quality private label products
  • Efficient processes and cost control in all operations
  • Comprehensive and frequent price evaluations to ensure price positions

Sector convergence

How changes are taking place

  • Long-term trend toward increased sector convergence, especially in major cities
  • The line between sectors is becoming blurred as many companies offer products and services that traditionally are not part of their core businesses

Impact on the food retail market

  • Groceries are being sold to a greater extent at restaurants, convenience stores and other retail venues
  • The durable goods sector is capturing volumes in certain categories
  • In the long term, the share of household expenses consumed at cafés and restaurants is expected to rise
  • Investments in meal solutions with the establishment of new distribution channels

How Axfood operates

  • Development of the assortment, operations and concepts taking sector convergence into consideration
  • The selection of meal solutions is continuously evolving to meet rising demand

Health and sustainability

How changes are taking place

  • There is a growing awareness about the impact of food on the climate and health, especially among young people
  • Consumers believe that food retail companies have a major responsibility for the development of sustainable and healthy food
  • More and more consumers are open to changing their food consumption over time in order to reduce their carbon footprint

Impact on the food retail market

  • Sustainable food consumption is imposing high demands on changes in the food production 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 the origin, quality and ingredients of products
  • Conscious consumers are looking for food inspiration and want help and guidance to make sustainable and healthy choices

How Axfood operates

  • Assortment development and focus on sustainability-labelled products
  • In-store information and inspiration as well as development of loyalty programmes in terms of health and sustainability
  • Focus on sustainable packaging, reduced food waste, seasonal food, social responsibility and traceability
  • Environmentally certified stores
  • Engagement with decision-makers and annual publication of the Mat 2030 report, Axfood’s proposal for a sustainable food strategy for Sweden.

Digitalisation

How changes are taking place

  • More digitalisation in all areas of food retail, from product development and purchasing to logistics, ways of working, marketing and customer meetings
  • The share of the total market attributable to e-commerce has risen in recent years, although growth has slowed down after the pandemic
  • New payment methods from new players are changing the way data is accessed and collected

Impact on the food retail market

  • Demand for new technical solutions and more in-store digital tools
  • New and changed shopping behaviour opening up for new business models and businesses
  • More stringent requirements from consumers concerning user-friendly online shopping platforms
  • The e-commerce business model is challenging, 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, such as self-service and self-scanning as well as modern payment terminals
  • Investments in digitalisation of core processes within pricing and assortment, product supply and in store
  • Continued initiatives in e-commerce and development of the digital customer meeting, flexible delivery options including home delivery as well as store pick-up