Quality focused grocers suffering most from the inflation?

Kesko was one of the biggest winners in Finnish retailing during the Covid times. In groceries, Kesko stores, especially K-Citymarket hypermarkets, beat the market month after month. For the first 12 months of Covid, Kesko grew faster than the market during eight months. That led to market share growth and record profits for the company.

As the pandemic started to fade, the growth of Kesko grocery also began to fall behind the market growth. 

Price driving growth before and after the pandemic

During the last 12 months, Kesko has grown faster than the market for three months. Price-led chains Lidl and Prisma have been driving market growth over the previous year.

There are significant indicators towards that kind of development in multiple western markets, such as the UK and Sweden. German discounters have been rapidly outgrowing the market in the UK since March 2022.

On the other hand, in Sweden, the price-driven Willys chain has grown faster than the market. The image below illustrates the growth difference between ICA's hypermarket chain Maxi's growth (one of the biggest winners during the pandemic) and the growth of Willys. Willys grew faster than Maxi before the pandemic and also after the pandemic. During the pandemic, Maxi was winning rather clearly.