Four online developments to watch in the Nordics

Date : 06 May 2021

Harriet Cohen

Senior Retail Analyst

We round up the latest online grocery news in the Nordics where:

  • Sweden’s ICA has opened its first warehouse in partnership with Ocado
  • Salling Group has launched online at its føtex banner in Copenhagen
  • Salling Group has opened its first automated click and collect point
  • Norway’s Kolonial has secured a €223m investment to rebrand and expand in Europe

Many of these developments demonstrate IGD’s 2021 online trends in practice, particularly around its growth potential and driving profitability.

 1. ICA opens first warehouse in partnership with Ocado

Swedish market leader ICA has launched its first e-commerce warehouse in partnership with Ocado in Gothenburg. The warehouse is 17,200 sq. m and will offer delivery seven days a week.

The pandemic has accelerated the importance of online as a strategic priority for ICA, with the retailer fully migrating to Ocado’s e-commerce platform by the end of 2021. This will see ICA’s online grocery offer become increasingly personalised, understanding ‘what the customer usually buys, how often and what “others like you” shop’.

Anders Svensson, CEO of ICA Sweden said, ‘The goal is for the local Ica stores to be able to offer more customers e-commerce services with a personal and smooth shopping experience to make everyday life easier’.

Looking for more insight on Ocado? IGD Retail Analysis subscribers can access our exclusive presentation, ‘Strategic outlook for Ocado’, where we its review performance, priorities and plans for 2021-2025.

Despite having a varied approach to lockdown to other Western European markets, Sweden has seen online grocery account for an increasing share of sales. At ICA, online sales grew by 149% to SEK 2bn (€196.6m) in Q1 2021, accounting for 6.1% of store sales. Meanwhile, the market grew by 128%.

ICA stores sales development online graph
Source: ICA 2021 Q1 Presentation

Find out more about the 10 trends that defined 2020 in Sweden here, where we consider the impact of COVID-19 on channel performance.

2. Salling Group’s føtex banner launches home delivery in Copenhagen

Meanwhile in Denmark, Salling Group’s føtex banner has launched home delivery in Copenhagen following successful trials. The retailer ‘has ambitions to create the country’s best online offer when it comes to home delivery, with a special focus on service, quality and price’.

The range will be price and promotionally matched to the in-store selection. It offers 10,000 products including ‘speciality products from Løgismose, butchery products from Gourmandiet, freshly baked bread from Emmerys and not least fresh fish from Skagenfood.

selected brands from føtex
Source: føtex

Online grocery competitors in Denmark include pure play Nemlig.com and Coop Danmark, while SPAR Denmark and Min Købmand have introduced local online services too.

3. Salling Group opens Bilka automated click and collect point

Salling Group’s hypermarket banner Bilka, also offers an online grocery service and has launched its first automated click and collect station.

Shoppers can place online orders via BilkaToGo.dk before 09.00 and collect the same day from 14.00 via the new temperature-controlled, robotic station at Strandvejen in Fredericia. Five more solutions will follow, offering shoppers added convenience.

With click & collect now a bigger part of the total market, IGD has published a series of new reports for IGD Retail Analysis subscribers:

  1. Click and collect: the short-term solution, the long-term play
  2. Click and collect: retailer best practice
  3. Click and collect: how suppliers can win now, and in the future

4. Kolonial secures €223m investment to fund re-brand and European expansion

Meanwhile, in neighbouring Norway, pure play online grocery retailer Kolonial, which delivered €200m in revenue in 2020; has raised €223m in equity funding. This values the business at €750m, with SoftBank and Prosus co-leading the funding round.

Kolonial is Norway’s biggest online grocery retailer; by comparison Norway’s leading grocery retailer NorgesGruppen delivered online grocery revenue of 770m NOK (€76.9m) in 2020.

Kolonial will use the money, rebranding as Oda and expanding internationally, initially to Helsinki, Finland, followed by Germany in 2022.

Leading Finnish retailers S Group and Kesko both offer an online grocery service. Kesko reported online grocery growth of nearly 400% to €223.3m in 2020, accounting for 2.9% of its grocery sales.

Comparatively, Germany is Europe’s largest grocery market. IGD forecasts it will be worth €269bn by 2022. The pandemic’s boost for the online grocery channel is expected to continue to 2022. Retailers have invested more, added capacity and attracted new shoppers to their ecommerce operations. IGD forecasts it to be the fastest growing channel, accounting for €3.6bn of sales by 2022.

Commenting on the fundraising round, Munish Varma, Managing Partner for SoftBank Investment Advisers said, ‘We believe that Oda’s customer-centric focus, market-leading automation technology and fulfilment efficiency are a winning combination, and position Oda for success in scaling internationally for the benefit of customers and suppliers alike’.

CEO: ‘We’re profitable’

Founder and CEO Karl Munthe-Kaas said, ‘We have built a service targeting the mass market with instant deliveries and low prices, because if you want to capture the full basket for the family, you can’t be a premium service. We’ve done that, and we’re profitable’.

He continued, ‘You need to beat the physical stores on quality, selection and price and get it home delivered…This is a margin business and the only way to optimize is to be completely relentless’.

How does Oda drive profitability?

Oda controls its own supply chains, ‘from producers to consumers’, produces select products itself and uses centralized automated fulfilment centres.

Within these fulfilment centres, CEO Karl Munthe-Kaas advised that Oda picks 212 units per hour (UPH) on average, which he said places it ahead of Ocado at 169 UPH in the U.K. He further compared this to physical store picking, averaging out at 70 UPH. The Company’s average order value is €100.

Average waste is also below 0.5% and Oda achieves zero food waste on its baked goods due to its own demand-driven bakery.

How did Oda scale up its business during the COVID-19 pandemic?

Source: Kolonial, LinkedIn

For the latest insight on the online channel, visit the IGD hub page.

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