ICA: Great investment in e-commerce
That the grocery giant ICA, in Sweden, does not take market shares, but retains its position as a strong market leader in Sweden is not unexpected, but nonetheless a fact. Good purchasing conditions and efficient operations are the background, but the ICA boss is probably more concerned about market shares than he might like to stress.
The management in ICA with Per Strömberg at the forefront believes strongly in e-commerce and invests millions upon millions in e-commerce. Exactly how many millions is a trade secret, but new and planned, fully automated warehouses for e-commerce in Stockholm, Gothenburg and probably Malmö speak their clear language.
Although e-commerce in grocery shopping is still small and unprofitable, ICA believes it will take off in the future. So far this year e-commerce in ICA has increased with 38%, but is still not more than approximately 3 percent of total grocery turnover.
“E-commerce also contributes to creating loyalty,” emphasizes CEO Per Strömberg to NHH.
Strong growth in vegetal
Alternatives to meat has increased by 40% or more in Sweden so far in 2019. 1.7 million households have tested alternatives to meat in the last 12 months, an increase of 40%. These households on average buy an alternative to meat products every month.
Sales of fresh and frozen vegetarian food have increased 16% over the past 12 months, explains Strömberg. If this sales growth continues, sales of meat and dairy substitutes will exceed today's sales of fresh and frozen chicken in 2025, and fresh and frozen meat in 2030!
ICA is the market leader in this segment and is growing faster than other players, argues Strömberg and promises more proprietary branded products (private label) in this segment in 2019 and 2020-
Focus on environmentally friendly solutions
For large groups, environmental friendliness is no longer a competitive factor, it is a pure necessity, in Sweden as in Norway or for that matter all developed markets.
“In addition to our focus on the long-term sustainability goals, intensive work is underway on a wide range of sustainability efforts. For example, we are in the process of starting the implementation of our new fuel strategy with the goal that all freight transport in the ICA will be fossil-free by 2030 and in the three metropolitan (Stockholm, Malmö, Gothenburg) areas as early as 2025. There are also many activities within the framework of our ambition to contribute to a circular and durable plastic system,” ICA Gruppen's CEO Per Strömberg reasons.
Consolidated net sales amounted to SEK 29,818 M (28,846), an increase of 3.4 percent, roughly on a par with the price increase. operating profit excl. items affecting comparability were SEK 1 599m (1 499). Profit for the period amounted to SEK 1,202 M (1,082). Earnings per share were SEK 5.96 (5.36)
The market was not impressed by the overall performance and sent the shares down 1.8 per cent in the morning-hours following the presentation of the Q3 results.