STOCKHOLM, Sweden -- Supermarkets aren't one of the first things that come to mind when one thinks of Sweden.That Scandinavian country, a tourist draw, is certainly known for its rich scenery and cultural traditions and a wilderness said by some to be the best preserved in Europe.But even though U.S. supermarket executives rarely cite lessons from Swedish food retailing, they could learn a few things

STOCKHOLM, Sweden -- Supermarkets aren't one of the first things that come to mind when one thinks of Sweden.

That Scandinavian country, a tourist draw, is certainly known for its rich scenery and cultural traditions and a wilderness said by some to be the best preserved in Europe.

But even though U.S. supermarket executives rarely cite lessons from Swedish food retailing, they could learn a few things about niche marketing from their counterparts in that country.

In a nation of 8.8 million people, Sweden's supermarkets are grappling for market share by pursuing a relatively wide variety of formats keyed to specific customer segments, ranging from low price to convenience.

A store tour in the capital region of Stockholm underscored the variety of strategies employed -- from a price-focused hypermarket to a medium-sized operator stressing home-meal replacement to a large supermarket specializing in quality meats and other perishables. Fresh food accounts for a large portion of each outlet's business but is handled in different ways.

The store tour was sponsored by CIES-The Food Business Forum, a Paris-based food-industry organization. It was held during CIES' Annual Executive Congress here.

Sweden's supermarkets once were modeled on U.S. operators but have differentiated and evolved. "After the Second World War, and for the following 25 years, we studied the U.S. food retailers, copied their ideas, and converted some of them into Swedish-style operations," said Roland Fahlin, president of Sweden's largest supermarket group, ICA, in a speech at the CIES Congress. "From the '70s onward, we have developed more of our own concepts."

In 1997 the Swedish food-retailing market was worth $20.75 billion U.S., and so far no major international supermarket chains have entered the country, according to information provided by CIES. The battle for sales is being waged in the context of a consolidating food-retailing market.

Most of the major retail players operate multiple formats. The main retail groups, with market share percentages and 1998 sales in U.S. dollars, are: ICA, 35%, $7.3 billion; KF Group, 19.3%, $4.0 billion; D-Group, 14.9%, $3.1 billion; Hemkop, 3.2%, $661 million; and Bergedahls, 2.4%, $499 million.

The major player, ICA, is a group that oversees some 2,200 stores in Sweden, with units owned by managers, according to ICA. The stores vary widely from small, countryside outlets with annual sales of about $1 million U.S. to large hypermarkets posting volume up to $50 million. ICA stores must maintain specified standards to remain in the group. ICA also has store holdings in other Scandinavian countries.

The group operates in five divisions that incorporate a selection of formats, each associated with the ICA logo.

"ICA is successful because of the concept of manager-owned stores," Torbjorn Kennerfalk, operations manager for ICA's Plus division, told SN. ICA Plus stores are small- or medium-sized supermarkets, often located in smaller shopping centers.

"When managers own the stores decisions can be made fast and economically," he added.

ICA's major competitor, KF Group, operates stores owned by a consumer co-operative rather than individual managers, according to CIES. Its stores range from a new hypermarket concept called B&W to a mid-sized supermarket format called Grona.

ICA, KF Group and other Swedish supermarkets enjoy an environment of few restrictions when it comes to hours of operation. That contrasts with severe restrictions in some other European countries.

And so far local retailers don't have too much to fear from electronic shopping competition -- at least in the near-term. Even though Sweden's population shows high rates of Internet usage, sales over the Internet are low, representing only 0.2% of total retail sales, according to CIES.

Following is a look at three Swedish retailers and their merchandising strategies:


Hemkop, a large supemarket format, incorporates a large range of prepared food and perishables under one roof while not skimping on packaged groceries either. It includes hot-food stations, an in-store restaurant, ready-to-heat meals, upscale produce, and a circular deli department that is considered the heart of the store.

This retailer prefers to stress the local angle. The deli department's offerings are heavily Swedish, including products such as ham and sausages. And a primary feature is the special care in the handling of domestically produced meat, supported by relationships with Swedish farmers.

The Hemkop store SN visited is located in the basement of the large Ahlens department store near the center of the city. However, the department store doesn't have an ownership stake in the supermarket.

Hemkop is a store format of Sweden's Antonia Axison group, which also has non-supermarket holdings. The format was recently moved to the city from central Sweden, according to CIES.

The Stockholm store, with total food sales area of about 22,000 square feet and total area of 33,000 square feet, is the largest in the Hemkop group. Indeed, it is seeking to expand further into adjoining spaces. The store's offerings total 20,000 items, including 280 in produce.

Tomas Aromssom, store manager, said fresh food accounts for 60% to 70% of sales. Citing an example of the wide assortment, he said, "Our fresh-fish department has 50 different items each day."

The Hemkop store also includes nonfood departments, including a health and beauty care section.


Maxi is a new entry in Sweden's hypermarket scene, a price-oriented format that is part of the leading ICA group. It is taking on local hypermarket players like B&W and OBS! Indeed, the store visited by SN was in a shopping center located just a few miles from the biggest Obs! Hypermarket.

"The Obs! store has been there for 25 years, but since opening in 1997 we've taken a big share of the market," said Kenneth Bengtsson, a manager-owner of the Maxi Haninge store.

"We've managed to do this with lower prices in a building smaller than Obs! The Swedish people are very busy and only want to spend 20 to 25 mintues in a store, so the smaller size helps."

Bengtsson, who also owns another Maxi store, said that format has 22 locations and expects to grow to 35 in a few years, mostly in the country's big cities.

The Maxi unit SN visited has a food sales area of about 38,000 square feet and total retail area of 72,000 square feet. It stocks roughly 25,000 items and has 18 checkouts. It posts average sales per week of about $1.5 million. This unit includes a McDonald's restaurant and an in-store play area for children. It provides discounts on gasoline for ICA loyalty-card holders.

The produce section represents a major element of the store's food strategy. It offers about 250 items, including pre-packaged produce, compared with about 100 items in a typical Swedish supermarket, Bengtsson said.

True to the hypermarket concept, the merchandising offerings throughout the store include large-size family packs in food and nonfood, including meat and paper goods.


A medium-sized supermarket division of the ICA group, Metro is an urban format stressing convenience and prepared foods. There are 12 of these units in Stockholm.

The store SN visited, called Metro Ringen, attracts local residents and commuters traveling by bus or subway. It is located in a busy section of Stockholm with the main entrance accessed from an indoor shopping plaza. The store posts average sales per week of about $300,000 in a space with a food-selling area of roughly 6,500 square feet and retail area of 13,500 square feet.

The store's most dramatic feature is its food-preparation station at the front entrance, where cooking, by wok and other means, is demonstrated for customers.

"Other stores might stress low prices, but our main focus is fresh foods," said Lars Ohlander, owner. "This is a new store with perishables up front, which is a new approach. Cooking demonstrations give ideas to customers. A total of 65% of store sales is in perishables."

The day SN visited, the wok demonstration was in full gear, producing a beef entree that included hot spices and rice. Nearby was a sales station for barbecued chicken and packaged, ready-to-heat meals, including pastas and salads. There was also a deli station that included pates and meats. The store relies on a third-party supplier for many of its packaged meals.

The lack of parking spaces reduces the average customer transaction size, but the store makes up for it by attracting 25,000 customers per week, he said.