CEO's message

The current rate of development in the Group is very high. We are building a platform that will strengthen our Group and create growth opportunities for many years to come. As I now reflect back on the past year, I cannot help but feel proud of the outstanding commitment of our employees and of what we have achieved together. The investments in the future that are now being carried out would not have been possible without the successful collaboration and shared sense of drive that characterise our Group. We are creating an Axfood for the future, and I want to thank all of our employees for making this possible.

A changing market and operating environment

The markets where we operate are large, stable and growing, but they are also undergoing a change. Both traditional and new players are challenging, and the food retail market is continuously developing and being renewed. The conditions in the market are also changing as a result of digitalisation and new ecosystems of products and services. At the same time, consumers are imposing stricter demands on health and sustainability and becoming more price conscious.

Nevertheless, we currently hold a solid position in this rapidly changing operating environment. We have strong, distinctive concepts that attract all types of consumers. We have a robust technical platform and a high level of expertise in data and analysis, and a large share of the online market. We have a rapid rate of product development and strong private label products that create an attractive and effective assortment.

A successful year

We are closing the books on a year that was impacted by high comparison figures and low food price inflation. We once again outperformed the market in terms of growth both in stores and online and delivered improved earnings. I view this impressive performance as confirmation of the continued development of our various concepts. At the same time, we continued to operate in the midst of the Covid-19 pandemic, which created challenges in the form of new consumption habits as well as periods of high sickness-related absence and certain disruptions in the supply chain.

As pandemic restrictions were eased, market dynamics successively changed over the course of the year, and we saw a continued gradual recovery for stores in central urban locations and for cross-border shopping, as well as restaurants and convenience retailers. The significantly lower level of growth in e-commerce was mainly attributable to the high growth rate in the preceding year, but also to the fact that growing numbers of consumers have returned to shopping in physical stores.

Willys is the food retail concept that reaches the highest share of households in the market with its position as Sweden’s leading discount grocery chain. Willys is also advancing its position in e-commerce, not least through the highly popular Willys Hämta concept. Hemköp, which is continually developing its concept and strengthening its sustainability profile, had one of its strongest years to date and has seen a positive trend in terms of customer loyalty since the launch of its new Klubb Hemköp loyalty programme. Snabbgross had a fantastic year and is benefiting from its enhanced concept, customer base and market share. At the same time, the new Snabbgross Club concept – wholesale stores for B2B customers where private consumers can also shop – is creating exciting new opportunities for further growth.

Our smaller development companies have also consolidated their positions in their respective segments: Urban Deli in the restaurant segment, Middagsfrid in the segment for pre-planned meal kits and Apohem in the online pharmacy market. These businesses contribute to innovation and development in important growth areas.

Overall, the Axfood family has a broad store presence across Sweden, but there are still a number of attractive locations where we are not yet represented. There is also a clear demand for our concepts, and we want to tap into this demand. We therefore plan to accelerate our rate of new store establishment in the coming years and aim to reach even more customers in stores and online. We believe in the strength of having collaborating channels and want to give consumers the best customer meeting, regardless of how they choose to shop at our concepts.

Optimised logistics platform

To be able to continue challenging and growing faster than the market, our base operations also need to be efficient. The activity level in our purchasing and logistics company, Dagab, is very high, and in addition to significant steps in the development of our assortment, increased store and e-commerce logistics efficiency, and a digital and data-driven work approach, we are making major investments to solidify the foundation for a top-class nationwide logistics platform. All to ensure an even more sustainable, efficient and competitive product supply.

A number of major development projects are currently being carried out in parallel. We are establishing a new, highly automated logistics centre in Bålsta outside Stockholm, a new, automated e-commerce warehouse in Backa in Gothenburg, automating our existing high-bay warehouse in Backa, and establishing a new, large-scale and automated nationwide warehouse for fruits and vegetables in Landskrona.

Making food retail history through acquisitions

To complement the Axfood family and bolster our competitiveness, we made food retail history in the autumn through the acquisition of the wholesale business Bergendahls Food and a partnership with the hypermarket chain City Gross – a transaction with a clear industrial approach. By acquiring Bergendahls Food, we can integrate and coordinate Dagab’s logistics and assortment operations, thereby creating economies of scale and cost synergies. And through a long-term partnership with and minority stake in City Gross, we can work together to further develop and strengthen City Gross’s position in the hypermarket segment, a segment that Axfood has not served in the past. Through this exciting transaction, we are creating the conditions to strengthen our market position together.

In addition to the acquisition of Bergendahls, we announced another important strategic transaction in December – our partnership with Mathem, where we will become a co-owner through the divestment of Mat.se. This transaction, which will create clear synergies and economies of scale in pure-play online retail with home delivery, was recently approved by the Swedish Competition Authority and will be completed on 1 March.

Ambitious sustainability agenda

We have an ambitious sustainability agenda. Providing food for a growing population without increasing our carbon footprint or damaging biodiversity is one of the greatest and most acute challenges facing society and one where we, as an industry, can have an impact and contribute to a positive change.

At Axfood, we are constantly moving forward in order to reduce our carbon footprint, minimise food waste, offer consumers a varied assortment of sustainable products, and promote greater gender equality and diversity. We pride ourselves on being perceived as credible and transparent, and aim to create the right conditions for all of our employees to contribute to sustainable development. The level of engagement in the Group is high, and we want to take a stance, inspire and lead the way when it comes to reducing the environmental impact of food in the value chain that we are part of. Our entire fleet of heavy-duty trucks is now fossil-free, the process of building Sweden’s largest solar park is under way, food waste is continuing to decrease, and more of the fish sold in our stores is green-listed – these are just a few of the comprehensive and important sustainability activities we can feel proud to have carried out.

Well equipped for the future

We are emerging from a successful year stronger than before and with the energy to continue investing in the future. A dynamic market requires an ability to change, and the investments we are making are creating the conditions for continued growth. We also see potential for increased profitability over time, which is reflected in our recently raised profitability target.

2021 was perhaps the most intense and exceptional year for Axfood to date, a year in which we took major and important steps for the continued development of our Group. And a year in which we, together with our employees across the country, made major strides toward our vision of being the leader in affordable, good and sustainable food.

Stockholm, February 2022

Klas Balkow
President and CEO