Market and trends
Urbanization, digitalization and focus on sustainable lifestyles are megatrends that affect all of society and thus also the food retail trade. Here are five dominant currents and Axfood’s strategies for dealing with them.
The food retail trade in Sweden is a mature market in which Axfood is the second largest player – a position that has strengthened in recent years. The competition is fierce and has grown in recent years with the emergence of discount stores, the establishment of e-commerce, and the increase in Swedes who eat out more.
Trend 1: Global and urban consumers
Sweden’s population is being concentrated in the major metropolitan areas. The populations of Stockholm, Gothenburg and Malmö are expected to grow by 37% during the next 40 years. Parallel with this, in rural municipalities, populations are expected to decline by 10%.
Population growth in Sweden has been high in recent years due to immigration, a low level of emigration, and more births than deaths. People born outside the country account for a significant share of the population.
At the same time we are travelling more. This has brought an influx of influences and inspiration from other cultures. Food from Japan, the Middle East and Korea are becoming increasingly popular.
Trend 2: Sector convergence and changing consumer patterns
For consumers, time is precious. No matter the errand, it must go quickly and conveniently. Today many tasks are performed online, and demand is rising for digital services that make life easier. A key factor in the growth of e-commerce is that younger generations are more digitally literate. Digital grocery shopping in Sweden is currently in an expansive phase.
According to estimates from the Swedish Digital Commerce Association, online grocery shopping grew by as much as 30% in 2017 compared with 2016, corresponding to 2.4% of total food sales. During the past 25 years the share of household spending on food has decreased by nearly half as a share of total private consumption.
Through sector convergence, a larger share of consumption is instead going towards café and restaurant visits. Today it’s not uncommon to see cafés and pharmacies sharing premises with grocery stores.
Trend 3: Health and lifestyle – trendy and healthy food
Conscious consumers exhibit their lifestyle choices through the food they eat. Health and exercise continue to be symbols and high status. It is no longer only vegetarians and vegans who think about animal welfare and the environment when choosing the food they eat. One in three Swedes considers themselves to be so-called flexitarians.
The large carbon footprint from food production and red flags about cancer are driving demand for healthy, vegetarian, organic and high-protein food. Food with specific, documented health benefits is becoming increasingly common. Many customers want more information about the source, quality and content of products in their efforts to live healthier and care for the climate and environment.
Trend 4: Sustainability and responsibility – a matter of course
Sustainability is becoming increasingly important in consumers’ product choices regardless of whether their concern pertains to animal welfare, the carbon footprint, or the social consequences of the food they eat. Axfood’s customers are growing increasingly conscious of the impact food has on their own health and the environment.
Food is taking on a more important social role. In addition to environmental and health aspects, a growing number of consumers are also concerned about the social conditions in which various products have been produced. Environment-friendly packaging, eating foods in season, food produced for a better environment, ethical aspects and a product’s origin are becoming increasingly important issues.
Consumers’ expectations for the industry are growing every year. Being able to offer a large assortment of organic products has become an inspirational factor – even for discount chains. We see that customers are becoming more conscious and more well-informed, and their commitment to reducing food waste is growing.
Trend 5: Value for money – more than just price
Axfood’s chains have different core customer groups, but what they all share in common is that value for money is not about just the lowest price. Some customers prefer ease of shopping and like new solutions such as self-scanning and e-commerce. For others it is important to find their favourite brands at low prices or to gain inspiration, learn about new trends, and get good service in stores. Axfood’s customers are generally very price-conscious. According to Axfood’s brand survey, “low prices” are ranked as most important, closely followed by “high quality”.
Aspects such as an appealing and organic assortment, attentive service, friendly staff and food inspiration all enhance customers’ perceptions of value for money. As the saying goes, time is money. One in four customers does not want to stand in a queue in a checkout lane and is happy to pay to have their groceries picked, packed and delivered home.