Klas Balkow: "We continue to attract new customers and take market share"
Axfood summarises a quarter characterised by a continued positive trend in customer traffic, volume growth and strengthened market positions. Despite very high comparison figures, growth was once again higher than the market’s, leading to a solid earnings performance. Additional steps were also taken as part of the Group’s investments to strengthen its competitiveness over time.
During the first quarter of the year, food price inflation continued to decrease, following on from the trend we have noticed in the past year. According to Statistics Sweden, the rate of inflation was 1.4% overall – and even lower at
the end of the quarter. The market is now displaying a solid recovery with volume growth in the quarter and support from a positive calendar effect of 2.2% due to the leap day and Easter. In total, the market grew 6.4% in an intensified competitive environment, characterised by a continued focus on price value among consumers.
Continued momentum for Axfood into the new year
Given that we were facing uniquely high comparison figures, the beginning of the year was strong, with 6.9% growth in retail sales. The fact that we posted solid growth in a market with low inflation was a result of significant
volume growth. This confirms that our customers appreciate the offerings in our various concepts.
Willys has a competitive offering, with the ambition to deliver Sweden’s cheapest bag of groceries, and has attracted many new customers for a long time. During the first quarter, Willys continued to gain market share, albeit
at a somewhat slower rate than previously, which is natural given the exceptionally high comparison figures. Compared with the same period two years ago, Willys has grown more than twice as much as the market.
The first quarter saw another excellent performance from Hemköp, with like-for-like growth of 7.0%. With a focus on price value and store modernisations, more consumers are being drawn to Hemköp’s concept. I would also like to highlight the initiatives in sustainability. Hemköp is an industry leader in the sale of organic goods, and during the quarter the chain was recognised for its work with an award from Sweden's organic farmers.
In the café and restaurant market, the beginning of the year was weak, including a negative effect from Easter. This was reflected in Snabbgross’s performance, even though Snabbgross once again gained market share during the quarter. While Snabbgross navigated a challenging market, Snabbgross Club expanded and two additional stores were converted to the membership-based consumer concept during the quarter.
With continued volume growth and a positive trend in customer traffic, Axfood delivered a solid earnings performance for the first quarter.
High rate of development through digitalisation
and automation
Our development clearly shows that we have continuously strengthened our competitiveness, and to carry on doing so in the future, we are continuing to make investments. In the back-end operations, we are establishing a new logistics structure and are still in a ramp-up phase at the new logistics centre in Bålsta. The deployment of automation and transfer of inventory for dry and refrigerated goods is now complete, and operations within the frozen assortment were also initiated recently according to plan. E-commerce logistics will be added later in the year. We continue to expect improvements in efficiency from the second half of the year. During the quarter, we also put the automation solution at our new fruit and vegetable warehouse in Landskrona into operation.
Promoting healthier and more sustainable consumption
Sustainability work at Axfood is wide-ranging and we are continuously taking steps in many areas. Right now, we are accelerating the transition to renewable fuel in our transports from warehouses to stores, which meant that we drastically reduced our climate impact per tonne of goods transported during the quarter. We also increased the amount of self-generated energy from solar panels. We are continuing to develop an assortment of sustainable and healthy products, and it is gratifying to see consumers’ increased interest in hybrid products. Through Nöt & Grönt, a mince from Garant that is half minced beef and half vegetables, customers are offered a healthier and more sustainable product at an attractive price.
Focus on continued growth
We can now look back at a positive beginning to the year, during which we continued to attract new customers and gained market share in an increasingly competitive market. With an ambitious agenda for continued development, we have a good opportunity to take additional steps towards being the leader in affordable, good and sustainable food.