The Swedish food retail market
The food retail sector is an important part of Swedish industry and a large employer, providing a livelihood for more than 100,000 people. Young people account for roughly a fourth of these. In the countryside, grocery stores often serve as a community hub, offering in addition to groceries, also pharmacy, post and banking services.
The food retail market is relatively insensitive to economic swings and is driven largely by population growth and inflation. The market is mature, and the three largest actors – ICA, Axfood and Coop – together account for approximately 90% of sales.
In recent years, growth in the food retail industry has been strongest in the discount segment, where Willys is the leading actor. The discount segment represents 15% of the market and can be divided into two sub-segments, hard discount and soft discount. The biggest difference between the two consists of their offering and the breadth of their assortments. Between 2015 and 2019, average annual growth for the discount segment was more than 5%, compared with nearly 3% for the market as a whole.
In recent years sales of groceries online have grown rapidly. Still, e-commerce accounts for only a small share of the food retail market – close to 5% in 2020. In e-commerce, growth is considerably stronger for the store pick-up option than home delivery.
Axfood estimates that sales on the market excluding VAT for the store chains’ amounted to approximately SEK 233 bn (227) in 2019. In 2020 the Swedish food retail market grew by a total of 7.6%. The market benefited from greater consumption at home during the corona pandemic, as many people opted to stay away from cafés and restaurants. However, the situation was challenging for stores in certain geographic locations. Sales for cross-border shopping fell to very low levels after Norway instituted a quarantine requirement for travel from Sweden and kept it in force for most of the year. Stores in central urban locations experienced a sharp decline in customer traffic associated with increased remote working during the pandemic. Growth for e-commerce was exceptionally high and reached 95%, with a large inflow of new consumers.
Market shares 2019
Segmentation in 2019
Sources: Swedish Food Retail Index (Swedish Food Retailers Federation in cooperation with HUI Research) and Axfood’s estimates based on public information. Market share data for Coop includes Netto, which was acquired in 2019.