Swedish grocer braces for radical change in online food shopping

A bottle of Heinz Kraft Co. Heinz brand Yellow Mustard sits in a grocery bag in an arranged photograph taken in Dobbs Ferry, New York, U.S., on Wednesday, Feb. 20, 2019. Kraft Heinz Co. is releasing earnings figures on February 21. Photographer: Tiffany Hagler-Geard/Bloomberg

Sweden’s largest food retailer ICA is preparing for its largest transformation yet to cater to a growing number of customers who want to shop for groceries online and have them delivered home. 

The 81-year-old company is following in the footprints of other Swedish retail giants like Hennes & Mauritz AB and Ikea in shifting investments toward e-commerce, advanced analytics and services to meet customers’ changing preferences. 

ICA Sweden chief executive officer Anders Svensson said he expects online to account for 10% of ICA’s total sales in 2025, up from a mere 1.5% currently and driven by annual growth of about 30%-40%. 

“It’s a huge shift, and it’s accelerating,” Svensson said in an interview at the company’s brand new headquarters in Solna, just north of Stockholm, on Tuesday. “The Swedish food retail market has never been in such rapid transformation as it is now.” 

Traditional food retailers are feeling the squeeze from both online-only suppliers such as Kinnevik AB’s MatHem and low-price players including Germany’s Lidl and Axfood AB’s Willys. Speculation that Amazon.com Inc and Costco Wholesale Corp could set up shop in the Nordic country is further adding to a sense of urgency in establishing a dominating all-channel presence. 


To do that, ICA is taking a number of steps to build an entire ecosystem around its core food business. The goal is to integrate all of its businesses, which also include a pharmacy chain, an online doctor, a home decorating outlet and a bank, into one seamless online shopping experience. These kinds of services may grow over time, possibly through acquisitions. 

“Even if we are big in Sweden, we don’t have the capacity to build in-house when it comes to these new digital services and platforms, so I wouldn’t completely rule out some kind of collaboration or acquisition there,” Svensson said. “It could be a smaller collaboration or acquisition for specific services to larger acquisitions if we think of something new.” 

To free up resources for its digital shift, ICA is automating a number of administrative jobs while hiring more data scientists to help tailor-make offerings to individual customers. The number of employees working with advanced analytics and AI will more than double in the next year from around a dozen today, and that number may swell to the hundreds in the future, Svensson said. 

Big data 

A similar focus on online sales is underway in the fashion retail industry, where Swedish clothing giant H&M is tapping big data and artificial intelligence to better understand its customers and to make sure it actually designs things shoppers want. 

ICA is also investing heavily in an automated e-commerce warehouse in Stockholm that can feature nearly three times as many items as its current warehouses and is slated to open in 2022. The facility will be key to handle the expected increase in online sales as individual ICA store owners will struggle to meet the demand. 

“We have stores that have 10% to 20% of sales online and when you get close to 10% it starts to conflict with regular store sales,” Svensson said. To avoid clogging up storage space and waste time filling online orders, ICA provides its retailers with an optional warehouse-based service for picking the items, packing the bags and delivering them to customers. 

Having an effective solution will be essential for achieving profitability as competition increases, Svensson said. The company is also looking to open a warehouse for online sales in Gothenburg or Malmo as the number of retailers within its chain offering e-commerce may jump to 400 in the next few years from more than 280 at the end of the fourth quarter, Svensson said. 

“If we do this right, it’s a very good growth opportunity for ICA,” he said. – Bloomberg

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3

Next In Tech News

New generation of digital banks bets on minority markets
Taiwan's TSMC says suffered a brief power dip, electricity now restored
Google 'respectfully disagrees' with Italy's antitrust decision
Taiwan's TSMC says 'no major impact so far' from island-wide power outage
Italy fines Google $123 million for abuse of dominant position
Samsung Elec raises non-memory chip investment to $151 billion through 2030
Samsung boosts non-memory chip investment to $151 billion as S.Korea offers bigger tax breaks
Bumble adds users, makes profit, but gives cautious outlook
Apple-Epic judge hints at compromise in feud over app store
DarkSide hackers mint money with ransomware franchise

Stories You'll Enjoy