The Swedish food retail market
The food retail industry is an important part of Swedish industry and a large employer, providing a livelihood for more than 100,000 people. The sector is important for young people, who account for roughly a quarter of the total number of those employed. In the countryside, grocery stores often serve as a community hub, offering pharmacy, post and banking services in addition to groceries.
The food retail market is relatively unaffected by economic swings and growth is driven largely by population growth and inflation. Annual market growth has historically been between 2% and 3%. The market is mature, and the three largest players – ICA, Axfood and Coop – together account for approximately 90% of sales. During 2022, Axfood’s market share was about 21% (20).
In recent years, growth in the food retail industry has been strongest in the discount segment, where Willys is the leading player. The discount segment represents almost a fifth 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. During the last five years up to 2021, average annual growth for the discount segment was around 7%, compared with just over 3% for the market as a whole.
In recent years, grocery sales online have grown relative to the market. Still, e-commerce accounts for only a small share of total sales – approximately 4.5% in 2022. E-commerce sales are divided relatively evenly between the delivery alternatives store pick-up and home delivery.
Development during 2022
In 2022, the Swedish food retail market grew by a total of 5.7%, and sales excluding VAT amounted to approximately SEK 269 bn (255). Growth was entirely driven by high food price inflation, which, according to Statistics Sweden, amounted to 11.3%. Adjusted for prices, the trend in the market was therefore negative, mainly due to a decline in consumer purchasing power and the recovery of restaurants and cafés following the pandemic. Growth in the discount segment was considerably higher than the rest of the market as a result of increased consumer price consciousness due to rising inflation. As restrictions were relaxed at the start of the year, those market sectors that experienced a challenging situation during the pandemic, such as stores in central urban locations and cross-border shopping with Norway, gradually recovered. As a result of increased customer traffic in physical stores, e-commerce growth was negative and amounted to -17.0%. Store pick-up declined by -23.7%, while home delivery declined by -10.3%.
Sources: Swedish Food Retail Index (Swedish Food Retailers Federation in cooperation with HUI Research) and Axfood’s estimates based on public information.
Market shares 2021
Food retail market segments 2021
Sources: Swedish Food Retail Index (Swedish Food Retailers Federation in cooperation with HUI Research) and Axfood’s estimates based on public information.
