Price value and discount

How changes are taking place

• In recent years, the discount trend has grown stronger in the market
• A low price is however not the only factor determining whether a product offers value for money – pleasant service, attractive peripheral services and a high-quality assortment are also important for perception
• Increased digitalisation in society is leading to greater price transparency

Impact on the food retail market

• Consumers are focusing more on price value and demanding an assortment that offers alternatives to strong global and national brands
• Private label products and large purchasing volumes are key for differentiation and efficiency
• Increased price consciousness is having a positive impact on certain market segments, particularly discount players
• Price comparisons require market players to continually monitor their price positions

How Axfood operates

• A focus on strengthening Willys’ position as Sweden’s leading discount grocery chain and ensuring that all concepts in the Group deliver price value
• Large selection of attractive, affordable and high-quality private label products
• Automation, efficient processes and cost control in all operations

Digitalisation, data and automation

How changes are taking place

• Increased digitalisation, technical development and a higher level of automation in all aspects of food retail
• Long-term trend of increased online shopping in the food retail market, although growth has been weak in the last few years

Impact on the food retail market

• New and changed shopping behaviours opening up for new business models and businesses
• Growing degree of personalisation and increasing importance of consumer insight to respond to changing customer needs and behaviour
• Demand for new technical solutions and more in-store digital tools
• Stringent requirements from consumers concerning user-friendly online shopping platforms
• Challenging business model in e-commerce, especially for pure-play online retailers and for home delivery

How Axfood operates

• A flexible in-store shopping experience with digital tools that simplify the shopping process
• Investments in digitalisation and automation of underlying processes within pricing and assortment, product supply and stores
• Good access to data through loyalty programmes and modern systems for leveraging the opportunities created by technology
• Using data and artificial intelligence to better understand customer behaviour, improve customer offerings and communication, and optimise and streamline processes in operations
• Continued initiatives in e-commerce and development of the digital customer meeting, flexible delivery options including home delivery as well as store pick-up

Health and sustainability

How changes are taking place

• There is a growing awareness about the impact of food on the climate and health, especially among young people
• Consumers believe that food retail companies have a major responsibility for the development of sustainable and healthy food
• More and more consumers are open to changing their food consumption over time in order to reduce their carbon footprint

Impact on the food retail market

• Sustainable food consumption is imposing high demands on changes in the food supply chain
• Issues such as responsibility, environmental impact and health are becoming increasingly important, and conscious consumers are manifesting their lifestyles through active food choices
• Many people want more information about origin, quality and ingredients
• Conscious consumers are looking for food inspiration and want help and guidance to make sustainable and healthy choices

How Axfood operates

• Assortment development and focus on sustainability-labelled products, in part through collaboration and innovation projects
• Information and inspiration as well as focus on encouraging sustainable, healthy choices
• Focus on sustainable packaging, reduced food waste, seasonal food, social responsibility and origin
• Environmentally certified stores
• Social advocacy and dialogue with decision-makers as well as publication of the Food 2030 report, Axfood’s proposal for a sustainable food strategy for Sweden

Competition

How changes are taking place

• Traditional food retail companies invest more in price
• The market’s players are creating ecosystems of products and services
• The line between sectors is becoming blurred as products and services are offered that are not traditionally part of the core business
• Innovative companies are challenging

Impact on the food retail market

• Increased competition from traditional as well as new players and from other related industries
• Greater selection for consumers and more stringent requirements
• The market is being renewed through value-creating services such as meal solutions, price comparisons, recipe websites and home delivery

How Axfood operates

• Development of different concepts and a broad presence to meet various customer needs
• Clear Group-wide collaboration to add customer value and increase competitiveness
• An efficient, attractive and innovative assortment and a distinct price position
• Continual development of loyalty programmes to ensure relevance and attractiveness

Demographics

How changes are taking place

• Aging population
• Income gaps in society are increasing
• More diversity and a higher number of people born abroad
• Continued rapid pace of urbanisation, affecting both cities and the countryside

Impact on the food retail market

• As a result of demographic changes, demand is changing when it comes to assortment and price point
• Urbanisation is creating new attractive store locations and scope for online shopping while certain locations are becoming less attractive

How Axfood operates

• Continual assortment development to meet different kinds of needs and preferences, while meeting demand for an assortment that reflects a variety of cuisines
• Establishment of stores and online shopping in growth locations and locations with convenient transportation links
• Clear values and an ambition to reflect the diversity found in society in order to meet various needs

Resilience and regulatory compliance

How changes are taking place

• More uncertain and turbulent geopolitical environment
• Increase in cybercriminal activity, with a higher frequency of IT attacks in society
• Increased regulatory pressure from legislators and authorities, especially in areas such as sustainability, consumer protection and cyber security

Impact on the food retail market

• Global uncertainty is placing new demands on robustness in supply chains and operations
• Increased regulatory pressure and greater focus on securing the food supply in times of crisis are driving costs and complexity
• Digitalisation presents major opportunities but at the same time places greater demands in terms of cyber security and the ability to protect information and customer data

How Axfood operates

• Work to promote local primary food production
• Strategic purchasing with regular evaluations of alternative solutions in terms of suppliers and geographic distribution
• Information and cyber security is a prioritised area and a natural part of the strategic agenda
• Increased cooperation between and within different value chains
• Increased focus on implementation of new legislation and compliance