Swedish grocer braces for radical change in online shopping

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 towards 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 percent of ICA’s total sales in 2025, up from a mere 1.5 percent currently and driven by annual growth of about 30-40 percent. “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. “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.

INTEGRATION
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.