Swedish grocery retailer Axfood has decided to expand the grocery e-commerce trial for its Willys budget superstore chain.
In addition to Stockholm, Gothenburg, Uppsala and Norrköping the retailer is now expanding both click & collect and home delivery to the third largest city Malmö, northern outpost Luleå, Köping and Bro.
Axfood’s goal is to expand its reach to 20 cities in 2017. The number of stores where click & collect will be introduced depends on how many can adapt to cater for a shopper friendly pick-up procedure.
Regardless of fulfilment method, groceries are always picked directly instore. For click & collect, they can be picked up by shoppers from chilled lockers, easily accessible from the parking lot.
Although it might sound like a small step to add a few cities to its e-commerce coverage, this move clearly signals Axfood’s belief in the channel and its satisfaction with the trial to date. Further signs of the retailer’s commitment to e-commerce are simultaneous investments for its supermarket banner Hemköp and the acquisition of Gothenburg-based online pureplayer Matse Holding earlier this year.
Some might say that this is too little, too late, since closest competitors Ica Gruppen and Coop Sverige already reach the majority of Swedish households. This holds some truth and it's certainly high time to invest in order to gain a hold of the rapidly growing online market. However, Willys discount concept was not a suitable banner to trial with early adopters, who often comprise more affluent shoppers. This explains Axfood CEO Anders Strålman’s initial scepticism of joining in the online war. But now, with shopper attitudes changing and grocery shopping online becoming more mainstream, it is excellent timing for Willys to go online, attracting shoppers with the same low prices as in-store and negligible pick-up/delivery costs.
Furthermore, the grocery e-commerce channel still claims a very small share of the total market. The Swedish interest organisation Svensk Digital Handel estimated total sales for Swedish online grocery at SEK5.7bn. in 2016 - around 1.4% of the total market. Of this, according to LZ Retailytics figures, the traditional grocers Ica Gruppen, Coop Sverige and Bergendahls hold only a very modest share. This makes Axfood’s late arrival less critical and its low price focus and unified organisational structure gives it advantages over the competition. While Coop Sverige must get its many regions to act as one online and Ica Gruppen relies on its independent merchants, Axfood controls all of the Willys stores itself.