Q3 retail expectations: Sweden
ICA: The market leader growing with online
The biggest retailer in Sweden grew rapidly during the pandemic. Especially the online arm of the grocery business jumped from 2,5 % of the business to more than 5 % of the business. Online has become a significant growth part of the growth of the ICA grocery business. In fact during the last two quarters online has been the only part of ICA that has been growing as the sales levels of the stores have been below the pandemic levels.
Despite positive growth numbers during the pandemic ICA has been lagging the overall Swedish grocery market for quite some time. Over the last 25 months ICA grown faster than the market only during five months.
For the coming quarters it will be interesting to see
how ICAs online business keeps performing, will keep on driving the growth of the business?
Will the stores bounce back to growth after a couple of slower quarters and can ICA grow faster than the market and gain market share?
Axfood: Willy’s challenging ICA with big growth
ICA’s biggest challenger, Axfood, didn't grow as fast as ICA during the pandemic. On the other, price-oriented Willy's chain has grown much faster than ICA for quite some time. Also the online businesses of Axfood have grown more rapidly than ICA online.
However, Axfood online business is on a much more lower base to ICA's online business, which had revenus of 6 500 million SEK during the last 12 months. Axfood online was 3 700 million SEK during the same time period.
For the coming quarters it will be interesting to follow
how the competition between both ICA and Axfood and on the other hand between ICA and the overall market pans out?
After the rapid growth during the pandemic there has arisen some dissatisfaction among ICA entrepreneurs as the price driven grocers have taken share of the market. Will the dissatisfaction grow within ICA?
LMK
Linas Matkasse Group gained a boost from the pandemic, however it has been somewhat more muted than what the traditional online grocery players received. During the first half of 2021 Linas's revenue climbed 24 %. The bigger impact of the pandemic has been the significant rise in the profitability of the business. Linas Matkasse Group became profitable for the first in 2020 and that trend remained during the first half of 2021.
Even though the growth numbers were a bit less dramatic for the meal kits business compared to the traditional online grocery model, the subscription based meal kit ought to be able to sustain those customers in a better way.
It will be interesting to follow
whether the good growth and profitability levels of Linas remain also towards the latter part of the year.
Online grocery index
In terms of the overall grocery market growth published in the Dagligvaruindex, the latter part of the year will be interesting to follow in terms of the online penetration. As the big online growth spikeshave been reduced back to more normal levels, it will be interesting to see where the share of online plateau. The share of online peaked at 7,1 % of the overall grocery market in Q1/2021 and has come down since. It was at it's lowest during July when only 3,6 % of all groceries were sold online.
However, summer is normally the time of year when online share is at it's lowest. That picks up during fall.
It will be intersting to follow
where the share of online grows during the fall of 2021 as the society gets back to normal routines?
How much of the huge spike for online stays as a normal part of the grocery market?