Stockholm / SE. (axf) This week, Sweden’s Axfood AB hosted a Capital Markets Day for institutional investors, analysts and financial media at the Group’s new, highly automated logistics center in Bålsta near Stockholm. During the Capital Markets Day, the company gave an update on the Group’s long-term strategy and its implementation. In addition, information was presented on the performance of the various business areas and the ongoing investments in the future, which form the basis for long-term, profitable and sustainable growth.
«Today, we have a strong position with our various brands and concepts, and in recent years we have continuously outperformed the market in which we operate. To be successful, we need to maintain a high pace of development, and this includes focusing on the efficiency of our operations, digitalization and automation. We are very pleased to have the opportunity to present our new, highly automated logistics center in Bålsta,» says Klas Balkow, President and CEO of Axfood.
To develop an even more sustainable, efficient and competitive product supply, Axfood has made major strides in recent years when it comes to solidifying the foundation for a top-class nationwide logistics platform for many years to come. As previously announced, the investment in the logistics centre in Bålsta is expected to result in SEK 200 to 300 million in annual efficiency improvements beginning in the second half of 2024, which will then increase to SEK 300 to 400 million at full capacity.
(Photo: Axfood AB)
«The ramp-up of the new, highly automated logistics centre in Bålsta is in full swing. More and more stores are receiving their deliveries from Bålsta, and deliveries of chilled goods also started recently. We will start delivering the frozen assortment early next year,» says Nicholas Pettersson, Managing Director of Dagab.
In addition to the investment in the new logistics centre in Bålsta, the existing high-bay warehouse in Backa in Gothenburg will be strengthened and expanded with two new automated aisles, and new automation will soon be deployed in the new and larger national warehouse for fruit and vegetables in Landskrona.
Breadth and cost efficiency through different concepts
Axfood continues to strengthen its position in the Swedish food retail market. Axfood’s breadth of brands with different market positions is a competitive advantage, and every week 4.5 million customers are reached by the Group’s store concepts. Close collaboration between the Group companies and central functions creates economies of scale and cost efficiency. The Group’s annual net sales (rolling 12 months) exceeded SEK 80 billion for the first time in the third quarter of this year. Axfood has gained significant market share and now accounts for about 22 percent of the Swedish food retail market.
(Photo: Axfood AB)
With its offering, clear position and over 230 stores, Willys has continued to significantly outgrow the market. The store has strengthened its brand in recent years and is Sweden’s most recommended store concept in the food retail industry. The growth rate of new customers has accelerated and the Willys Plus loyalty club now has over 3.5 million members. Surveys show that the overwhelming majority of these numerous new customers are satisfied and intend to continue shopping at Willys in the future. In addition, our own data shows that over time new members spend more money at the chain, thus strengthening their relationship with Willys. Willys has continuously strengthened its e-commerce offering over the years and established a position as the second largest player with a market share of approximately 25 percent, significantly higher than Willys’ total share of the food retail market, which is approximately 14 percent.
During the last four quarters, Hemköp has also grown faster than the market and gained market share, especially compared to its closest competitors in the traditional grocery segment. Hemköp is continuing to develop its concept and has achieved a clear return on its investments in price value, food inspiration, store modernisation and assortment development with a focus on health and sustainability. With a strong focus on helping customers make sustainable and healthy choices, Klubb Hemköp now has almost two million members, and Hemköp currently has the highest share of sales of organic products of all Swedish retail chains.
Snabbgross has a clear history of growth and increased market share and has managed to navigate different market dynamics over the years. With its unique concept as Sweden’s only full-range wholesaler for restaurants and cafés with a nationwide network of 30 stores, Snabbgross has an advantageous market position. In addition, the membership-based consumer concept Snabbgross Club, now available in seven stores, provides further opportunities for growth.
Reaffirmed financial targets
Axfood’s financial targets for growth, profitability and financial position remain unchanged. As a result of the logistics investments in recent years and the acquisition of Bergendahls Food, Axfood’s profitability over the past two years has been lower than the long-term target of achieving an operating margin of at least 4.5 percent. The Group’s profitability was also impacted by a lower gross margin in the operations as price increases by suppliers were not fully reflected in prices for consumers. However, the Group’s investments, largely in logistics, together with the development of the store chains, are creating favourable conditions for increased profitability over time (Photos: Axfood AB).