What did we learn about Nordic online grocery in Q3?
As the major Nordic publicly listed grocery retailers ICA, Kesko and Axfood have all reported their Q3 results, we can get a bit more clarity as to how online grocery performed during the last three months.
In Sweden, which Finland tends to follow, the Click & Collect seems to have decreased more from the highs of the Q1/2021. The entire online grocery market peaked at 7,4% of the overall grocery market. Since that time, the revenues from Click & Collect have decreased by 43%, whereas Home delivery has decreased only by 30%. This goes to indicate that a big share of the pandemic jump in online grocery came from the Click & Collect, especially in the regions where home delivery is not feasible.
This could be supported by the statement from the CEO of ICA Gruppen Per Strömberg as he mentioned that the elderly have been the biggest group to move away from the online back to the bricks and mortar stores. According to Mr Strömberg, the share of over 65-year-old customers has decreased from 48% of all online customers to 29% in the last quarter.
In those non-urban regions, the entrepreneurial ICA and Kesko were able to react faster than the competition. Conversely, as the pandemic is easing down, ICA and Kesko have also been growing less than the main competitors Axfood and S Group. Despite the slower growth, ICA remains by far the biggest online grocery retailer in Sweden. ICA is about 50% bigger than Axfood, which last year surpassed Mathem as the second biggest online grocery retailer in Sweden.
S-Group & Kesko - chasing each other
According to Kauppalehti, S-Group has reached the same level of online sales as Kesko during the third quarter of the year. From that, one can conclude that S-Group has grown rather rapidly during the first nine months of the year. Kesko has grown by 24,5 % during the period.
If S-Group had grown to the same levels as Kesko, it would mean roughly 170 million euros in revenues.
That is approximately the same level of sales they had during the entire last year.
Why has S-Group grown so much over the last nine months?
One explanation is that the rollout of big Prisma hypermarkets to the online platform has been slower than the rollout of K-Citymarkets were. Thus the sales uplift from the Prisma rollout has come at a bit later phase than for Kesko. After all families with children are currently the biggest customer group for the online channel and Prisma has traditionally been the preferred hypermarket chain for families with children.
Another interesting reason could be the rollout of the new S-kaupat.fi ecommerce site that S-Group has started to introduce to the biggest online stores. However, the S-kaupat.fi rollout has happened rather recently to have a notable influence yet.
The stage is set for a very interesting Christmas season for the two grocery giants battling it out in the online channel.
Which one will come out as the biggest as the year ends?
It will be interesting to see how the launch of Oda will influence the home delivery prices. The signs about the resurrection of home delivery as the dominant channel in Sweden could be an indication for Finnish online grocers.
In the bigger cities home delivery will most likely be the preferred choice for the customers, if the price is low enough. Those retailers who are able to offer that will most likely be strong in the big cities. For the rest of the country Click & Collect services are a feasible solution.