Sweden’s Grocery Sector: How Low-Price Competition Reshapes Consumer Spending and Investment Opportunities

The Swedish grocery sector has emerged as a compelling case study in how retail competition, particularly from low-price stores, can drive down prices, reshape consumer behavior, and unlock strategic investment opportunities. From 2023 to 2025, the market has stabilized after years of high inflation, with food price inflation normalizing to 1.4% in 2024 [1]. This shift has redirected focus from price-driven growth to volume expansion and private-label strategies, creating a dynamic landscape where national chains, discounters, and regional players vie for market share.

The Rise of Discounters and Price Competition

Discount retailers like Willys have been pivotal in this transformation. Since 2018, Willys has grown at an 11% annual rate, outpacing the overall market’s 5% growth [1]. Its success stems from a value-driven brand identity, exemplified by campaigns like “Äh Nu Tar Vi Helg,” which boosted sales by 39% and attracted premium customer segments [4]. Willys now commands a 33.1 net Value score, the highest in the sector [2], while national chains like ICA and Coop dominate perceived quality (59.3% consideration score for ICA) [2]. This duality—where affordability and quality coexist—reflects a broader consumer shift toward balancing cost and value.

The discount segment now accounts for over 20% of the market [1], with Willys and other Axfood-owned brands (e.g., City Gross) capturing 25% of the total market share by 2024 [3]. Axfood’s digital infrastructure further strengthens its position, as it holds 28% of online grocery sales [1]. This digital-first approach, combined with aggressive pricing, has forced traditional players to innovate. ICA, for instance, has invested in private-label products and localized services to retain customers, while Coop has leveraged its cooperative model to maintain competitive pricing [2].

Regional Players and Niche Opportunities

Beyond national chains, regional grocers are carving out niches by addressing unmet consumer needs. These smaller retailers emphasize hyper-local sourcing, sustainability, and community-centric services like pharmacies and postal services [1]. While they face challenges such as supply chain volatility and limited capital, their agility allows them to experiment with cost-efficient models. For example, private-label products—now accounting for 39.1% of European grocery sales in 2024 [2]—have become a key differentiator. Swedish consumers, 84% of whom plan to continue buying private-label goods even if their purchasing power improves [2], are increasingly prioritizing affordability without sacrificing quality.

Investment Implications and Strategic Gains

The sector’s evolving dynamics present clear opportunities for investors. National chains like ICA and Axfood remain dominant due to their scale and digital capabilities. ICA’s 2024 fourth-quarter results, for instance, showed a 6.8% sales increase to SEK 40,879 million, driven by price investments in basic items and expanded customer visits [3]. Axfood’s acquisition of City Gross in late 2024 further solidified its hypermarket presence, with net sales rising 9.3% in Q2 2025 [3].

However, regional and discount players offer higher growth potential. Willys’s 11% annual growth rate and Axfood’s 25% market share highlight the scalability of value-focused strategies [1]. Additionally, the sector’s e-commerce segment—though still modest at 4.1% of total sales in 2024—is growing at 4.9% annually [1], with Axfood’s 28% e-commerce share underscoring the importance of digital infrastructure [1]. Investors should also consider the long-term viability of private-label strategies, as 84% of European consumers view these products as a permanent part of their shopping habits [2].

Conclusion: A Balanced Future

Sweden’s grocery sector is poised for continued evolution, with competition intensifying between national chains, discounters, and regional players. While national retailers like ICA and Coop are unlikely to cede their dominance easily, the rise of value-focused brands and localized services is redefining consumer expectations. For investors, the key lies in identifying companies that balance scale with innovation—whether through digital expansion, private-label growth, or sustainable sourcing. As the market stabilizes, those who adapt to the dual priorities of affordability and quality will likely emerge as long-term leaders.

Source:
[1] Rising Grocery Retail Sales and Price Dynamics in Sweden, [https://www.ainvest.com/news/rising-grocery-retail-sales-price-dynamics-sweden-opportunities-stabilizing-food-sector-2508/]
[2] The State of Grocery Retail Europe 2025, [https://www.mckinsey.com/industries/retail/our-insights/state-of-grocery-europe-report]
[3] ICA Gruppen's Report for the Fourth Quarter of 2024, [https://www.icagruppen.se/en/archive/press-archive/2025/ica-gruppens-report-for-the-fourth-quarter-of-2024/]
[4] A Bag Full of Game Changers, [https://nordddb.com/growth-cases/willys/]