In our recent Western European outlook 2021 article, we highlighted ‘Stepping up on sustainability’ as one of five trends that we expect to shape grocery retail in 2021. This is especially the case in the Nordics, where sustainability remains at the heart of retailer strategies despite the COVID-19 pandemic.
In 2020, the World Economic Forum in Davos revealed the Global 100 Most Sustainable Companies in the World. Companies headquartered in Europe accounted for half of the entries, with the Nordics over-indexing. Finland’s Kesko was the only company in the food and beverage retail sector to have been included globally.
Although sustainability strategies vary by retailer, common themes include achieving carbon neutrality, driving energy efficiency and reducing plastic and waste. Supporting local communities and suppliers are also key priorities. Meanwhile, there is a growing shift towards vegetarian and plant-based food too.
In this article, we consider how Lidl, ICA, Salling Group, Kesko, NorgesGruppen and other retailers are championing sustainability across the region.
A global priority for Lidl, especially in the Nordics
Creating a sustainable model is a priority for Lidl globally, especially in the three Nordic countries where the discounter operates. Its focus areas include reducing its environmental impact and supporting local economies. Lidl Denmark is expected to become the first Danish retailer to be carbon neutral by the end of 2020, while in Finland and Sweden it is targeting doing so by 2025.
Lidl Sweden: Lidl Future, supporting small local suppliers and investing in electric and automated transport
Lidl Future initiatives: the programme, launched in 2019 aims to provide financial support to institutes, universities, and businesses for innovative and impactful sustainable projects through competition. In 2019 the challenge was around the reduction of plastic usage.
In 2020 the competition theme was ‘Sustainable Emergency’, with Lidl receiving 122 applications. The winners were selected by a panel of external experts and Lidl employees including CEO Johan Augustsson. The winners shared prize money of SEK 11.2m. (€1.1m)
The winning projects included locally produced fish fed with food waste, seed treatment to reduce the use of pesticides and organic-based edible packaging for fruits and vegetables. The finalist list is available on Lidl Future Initiatives website.
Source: Lidl Sweden
Supporting small, local suppliers: At the beginning of the COVID-19 pandemic in Europe in March 2020, Lidl encouraged suppliers impacted by the closure of hospitality businesses to reach out for help. An efficient application process was implemented to fast-track product listing, which resulted in product listings for over 50 new small and independent suppliers. A third of the assortment is now sourced in-country.
Lidl is looking to further develop these partnerships and work with more local suppliers as it has been well received by shoppers. Following the success of some products, Lidl Sweden is now offering the opportunity to export products to several new suppliers, such as beer and soft drink manufacturer Hammars Bryggeri.
|Source: Lidl Sweden
Investing in electric and automated transport: In April 2020, Lidl Sweden announced a new partnership with automated and electric transport specialist Einride. The two companies have the ambition to create a zero-emission transport network by 2025. In a second phase of the partnership, Lidl is looking to optimize transport thanks to intelligent planning solutions from Einride. Ultimately the two companies want to move toward fully optimized routes and automated transport between warehouses and stores.
Sweden’s retailers champion the value chain, vegetarian products and sustainability declarations
At its recent Capital Markets Day event, Swedish market leader ICA described how sustainability remains high on its agenda, with a climate ambition from 2021 that covers all parts of the value chain, from ‘primary production and suppliers’ to ‘warehouses, stores and offices’ and ‘customers’.
Meanwhile, a recent survey annual commissioned by Axfood found that a growing number of Swedes are eating more and more vegetarian food. ‘Almost a quarter (23 percent) of consumers state that they will continue to change their eating habits and eat less meat in the coming year. 58 per cent state climate and environment as the main reason’. Last year, the retailer launched around 20 private label vegetarian products, including ‘plant-based dairy alternatives, snacks, pure protein sources and chilled and frozen vegetarian ready-made food’.
Elsewhere, Coop Sverige is rating its 17,000 strong product catalogue by ‘ten parameters that encircle sustainable development’. These ‘have been developed by WWF’s sustainable food chain initiative, which was launched in 2005 to address the major sustainability challenges in the food and grocery industry’. Trials began last year, while the new service is launching in full in Q1 2021.
|Source: Coop Sverige
Lidl Denmark: reducing plastic, supporting vulnerable while reducing food waste
Reducing plastic usage: Since November 2020, all meat and poultry products sold under the private label Vilstrupgård are packed in recycled plastic trays. The new R-PET trays are made with plastic from recycled plastic bottles. This is part of the group’s wider strategy called REset Plastic to reduce its use of plastic. Lidl is aiming to reduce its overall consumption of plastic packaging by 20% and switch to 100% recycled plastic by 2025. Another development to support this was the launch in August 2020 of reusable bottles and refill tabs for cleaning products under its W5 private label brand.
|Source: Lidl Denmark
Supporting vulnerable and reducing food waste: Supporting the vulnerable continued in partnership with Blå Kors charity through the COVID-19 pandemic. This enabled Lidl to better tackle food waste and donate to those in need, especially during Easter and Christmas when several stores donate all remaining stocks of fresh food products to the charity. Lidl was also the first discounter to extend its partnership with Too Good to Go to all stores in the country.
Denmark’s retailers target waste and plastic reduction and sustainable store development
Sustainability remains a key priority for Salling Group, with the retailer prioritizing the reduction of food waste and plastic. It is also innovating to reduce its carbon footprint in the transport of goods and running increasingly efficient stores and restaurants.
For instance, in December, Salling Group introduced its new concept sustainable Netto store, which has been in development for over two years. The concept has a 40% lower energy consumption than standard Netto stores, as well as 65% less CO2 emissions. It is seen as ‘the new way of building a sustainable supermarket’.
|Source: Salling Group
IGD Retail Analysis subscribers can read more about this store and other innovative concepts in our exclusive article, ‘10 Nordic stores to visit in 2021’.
Meanwhile, waste reduction is key priority for Coop Danmark as it looks to halve its food waste by 2030. It was the first Danish retailer to partner with Too Good To Go and last autumn, the partnership expanded to 340 Fakta stores, as well as the new Coop 365 chain.
Related initiatives include the introduction of the, ‘best before / often good after’ label, repurposing unsold bananas into ice cream and collaborating with ‘Stop Waste Local’, where leftover food from Christmas and Easter holidays is donated.
Lidl Finland’s smarter use of renewable energy and 100% recycling at warehouses
Smarter usage of renewable energy: Lidl Finland implemented smart energy management systems to help regulate the electricity load of the distribution network from renewable energy sources. At 136 stores, the use of ventilation and water-cooling systems helps regulate and balance electricity needs.
The main distribution centre has been equipped with a giant battery that can store electricity, avoiding saturating the network. This efficient management is part of the wider strategy to reduce Lidl’s energy consumption by 20% by 2025.
Recycling rate of 100% at distribution centres: Lidl Finland’s three distribution centres (DC) have reached a recycling rate of 100% according to the latest external audit from Underwriters Laboratories. The DCs recycle 20 different types of waste including five different types of plastic.
Finland’s retailers put customers at the heart of strategy, with Kesko the global industry leader
Market leader S Group has renewed its responsibility programme for the new decade. This sees the retailer prioritise moving customers ‘towards everyday sustainable consumption’. The retailer’s goal is that ‘at least 65% of food it sells in 2030 is plant based and 80% is domestically produced’.
Meanwhile in 2020 Kesko was ‘ranked as the most sustainable grocery trade company in the world for the sixth time’ at the World Economic Forum in Davos. It was the only company from the food and beverage retail sector to have made it onto the ranking in 2020. Its sustainability vision for 2018-2022 is to ‘enable sustainable lifestyles for customers’. Six key actions underpin this, including:
- ‘Pursuing leadership in circular economy solutions
- Strengthening responsible and transparent sourcing in the supply chain
- Commercialization of sustainability through our own brand products
- Creating data-based services for customers and society using customer data and AI responsibly
- Expanding communal responsibility initiatives together with our K-retailers and employees
- Reducing energy consumption and increasing our own renewable energy production’
Norway: NorgesGruppen stands out for Environmental Fund for employees
Meanwhile, in Norway, market leader NorgesGruppen’s sustainability work supports the United Nations 17 Sustainable Development Goals.
One innovation that stands out is the retailer’s Environmental Fund for employees, which has run since 2013. This helps ‘NorgesGruppen's employees reduce their own energy consumption and climate emissions. To achieve this, NorgesGruppen co-finances environmental measures that employees implement’.
In 2020, it allocated NOK 8.5m (€820k) for the Environmental Fund. The popularity of the initiative saw it receive 1,250 applications, with all funding allocated by September 2020.