Swedish Coop: A developing economic crisis?
Swedish Coop has been a key player in the grocery market for several years, but in recent years the company has experienced significant financial challenges.
Several factors have contributed to a negative development, and there are now serious concerns about the company's future among many analysts, experts, and stakeholders.
Financial losses and declining market shares
Coop has had large financial losses in recent years. In 2022 and 2023, the company reported a total deficit of over 1.4 billion Swedish kronor.[i] This has led to a weakened financial position, and the company has had to take drastic measures to reduce costs.
For many years before this, Coop "hid" weak operating results by selling off industry and real estate. Now there is no more to take. The balance sheet has been slimmed to the breaking point.
In addition, Coop has lost customers at an alarming rate. In just one year, 200,000 customers have left Coop, and over a two-year period, 400,000 customers have chosen other grocery chains as their first preference.
This has naturally led to a further weakening of the company's revenues. It seems that it is primarily the listed Axfood that is taking over the customers.[ii]
Management problems and strategic mistakes
Coop has also had management challenges, which has contributed to uncertainty within the organization. The company has lacked a permanent CEO until very recently, and several key people have left their positions.
In Sweden, Coop has also reduced the number of stores, and several franchisees have gone bankrupt. This has created frustration among store operators, who believe that Coop has not done enough to help them through the economic crisis.
Coop still has around 800 stores in Sweden and 3.8 million members. The management has told that they are committed to turning the tide through building more X:-tra stores, a least a successful concept in Norway.
However, in Sweden there is only 50 X:-tra stores, in Norway there is nearly 600 Extra stores. To do effective commercials they at least have to triple the number of X:-tra store in Sweden. As of now, it is going very slowly
Conclusion and future prospects
The situation for Swedish Coop is serious, and the company faces major challenges. If they are unable to turn the tide, they may risk having to implement even more closures and cost cuts. To survive, Coop must stop the loss of customers, strengthen its financial position, and find a sustainable strategy for the future.
If they fail to do so, there is a risk that Coop will have to undergo extensive restructuring – or, in the worst case, go bankrupt. If the worst case were to occur, it would be a major loss for customers, the Swedish grocery market, and the Swedish economy in general.
The author has been in contact with Coop. Neither Torell nor the media staff wish to comment on the aforementioned issues at this time. Perhaps sometime in the future, are the signals I have received.
Coop still has around 800 stores in Sweden and 3.8 million members.
CEO Anders Torell's challenge is to make the membership model a competitive advantage – not just an idealistic idea.
It is about showing that membership provides real value in the form of bonuses, influence, and better shopping experiences.
Sources: Coop, Dagens Industri, Dagens Handel, Fri Köpenskap.