Food price inflation declined during the final quarter of the year, a trend that has been ongoing since the start of the year. However, high living costs are continuing to affect consumers and their purchasing behaviour, and market
dynamics are being impacted by price consciousness. Changing consumption patterns are placing demands on us as a food retailer and creating a need for greater flexibility when it comes to adapting our offering. Over the past year, we have once again proved our ability to successfully navigate shifts and changing behaviours, as evidenced by the strong influx of new customers to our various concepts and increased market share.

Strong end to the year

Axfood ended the year with retail sales up nearly 9% compared with 6% for the market, despite significantly comparison figures. With the growth in the fourth quarter, and consistently high growth over the full year, the Group passed SEK 80 billion in net sales for the first time. Willys has a unique concept on the market and continues to attract customers with the ambition to offer Sweden's cheapest bag of groceries, modern stores and a wide and attractive assortment. In the fourth quarter, Willys continued to gain market share through robust volume growth, and the loyalty of existing customers remained strong. I would also like to highlight Willys’ successful work in e-commerce, where Willys reached a new milestone of SEK 3 billion in sales in 2023.

Hemköp continued to strengthen its position in the traditional grocery segment and once again succeeded in outperforming market growth. For several years, Hemköp has worked to consolidate its position, with a high pace in store modernisations, initiatives with respect to price value, and important progress in the area of sustainability. This has created the right conditions and is now helping to further boost Hemköp’s impressive performance, creating a solid base for further steps forward.

The market in which Snabbgross operates has shown a gradual deterioration during the year, and many cafés and restaurants are facing challenges. Snabbgross has however delivered a stable performance thanks to its flexibility and ability to adapt its offering. The number of customers has continuously increased, and two more existing stores were converted to the membership-based Snabbgross Club consumer concept during the fourth quarter. Overall, thanks to a large influx of new customers and robust growth, Axfood delivered a stable earnings development during the year, despite higher costs at all levels that have not been fully passed on to consumers.

Major progress toward efficiency enhancements

We have made major investments in recent years, not least in our new logistics structure, in order to improve our competitiveness in the market. These investments will result in a more sustainable and efficient product supply. The implementation and ramp-up of our new, highly automated logistics centre in Bålsta outside Stockholm continued throughout most of 2023, and it was great to showcase this impressive facility in connection with
Axfood’s Capital Markets Day in November. The refrigerated assortment is now being put into operation, and the automation will be completed in 2024. While the facility in Bålsta is an important part of our investments, we are also strengthening our logistics platform in other ways. The automation solution at our new fruit and vegetable warehouse in Landskrona was recently put into operation. Our combined investments will result in significant efficiency improvements and cost savings starting in the second half of 2024.

Digitalisation, AI and automation are rapidly evolving areas, and are also crucial for creating a high level of efficiency and strong customer offerings. We have developed our business considerably over the years, and our digital transformation is continuing. In all areas of our operations, we are continuing to develop a data-driven work approach. Not only with respect to logistics, but also in terms of our store operations, where we in 2024 are upgrading our back office system in order to simplify and streamline processes for store employees.

New sustainability initiatives

For some time now, we have not seen the development we would have liked to see when it comes to sales of sustainable and healthy products, as consumers have reprioritised their purchasing decisions due to high inflation. At Axfood, however, we have maintained a high level of ambition in our sustainability work during the year and taken further steps in many areas. In particular, we are continuing to offer our customers a sustainable and healthy assortment of products in our stores and to guide them towards sustainable and healthy choices. I would also like to mention our new, extensive solar power initiatives, including large rooftop installations at our warehouses in Bålsta and Landskrona and the ongoing construction of Sweden’s largest onshore solarpark in Hallstavik. We have also started the two-year process of converting to renewable fuels for our transports from warehouse to stores, both internal and external.

High tempo and looking ahead

In an exceptional time of historically high inflation and changing consumer behaviour, we are closing the books on a successful year in which we strengthened our market positions and took major steps to improve our competitiveness in the long term. I would like to extend my sincere thanks to all of our customers for the confidence in us and  to all employees in the Group for your outstanding work.

In 2024, we will maintain a high rate of establishment with the aim of expanding the store network to include 10 to 15 new stores, the majority of which will be Willys stores, so that even more customers can benefit from our concepts. Axfood has a strong financial position, and our investments across the operations are expected to amount to SEK 1.6 to 1.7 billion in 2024. The Board will propose an increased dividend of SEK 8.50 per share to the Annual
General Meeting. We are entering the new year with a strong position, which will provide us with favourable conditions to continue to attract new customers and strengthen the loyalty of our existing customers, and to become even more efficient in our underlying operations as our new logistics initiatives are put to full use.

Read the year-end report for 2023

Klas Balkow
President and CEO, Axfood AB