ICA Gruppen Annual Report 2020 - ICA Gruppen Annual Report 2020

2020 in brief

Stable development despite extraordinary circumstances

Despite significant challenges in the external environment, 2020 was another strong year for ICA Gruppen. Net sales, adjusted for divestments, increased by 6.3% to SEK 126.3 billion. Our operating profit excluding items affecting comparability increased to SEK 5.8 billion, representing an operating margin of 4.6%. Positive development within ICA Sweden, largely driven by a significant increase in wholesale volumes, is the main reason for this strong result.

Strong online growth

Online sales rose substantially in 2020. The ICA stores’ online sales of grocery items and meal kits increased by 117%. The increase in online sales for Apotek Hjärtat was 92%. This growth was partly due to the ongoing pandemic, but also to important initiatives implemented in recent years.

New Group climate target

ICA Gruppen reached its climate neutrality target in 2020. Since 2006 emissions of greenhouse gases have decreased by 76% and the remaining emissions are offset through climate compensation. The new climate ambition, which extends to 2030, aims for net zero emissions in the Group’s own operations and halved climate impact from customers’ grocery purchases. ICA Gruppen also has an existing goal for its suppliers to adopt science-based climate targets.

126 Bn

Sales 2020 in SEK

5.8 Bn

Operating profit 2020*

4.6 %

Operating margin 2020*

*Excluding items affecting comparability

Initiatives in response to Covid-19

ICA Gruppen’s operations fill several functions that are critical in society. Having access to food, medicines and financial services is critical if a society is to function properly. In 2020 a significant number of steps were taken to protect employees, customers and suppliers to the greatest extent possible, while also enabling business to continue unaffected as far as possible. All decisions were based on a precautionary approach, taking into account the recommendations issued by the relevant authorities.

Ensure safe stores and workplaces
Reducing the risk of spreading the infection in stores, pharmacies and warehouses was a top priority. Efforts to prevent infection involved a broad spectrum of measures, including continuously assessing the risks in workplaces and processes, strict cleaning and hygiene protocols, information on staying at a safe distance, plexiglass shields at checkouts and various measures to reduce the risk of crowding.

Meeting greater online demand
To handle the significant increase in e-commerce, major initiatives were implemented during the year not only by ICA Sweden and Apotek Hjärtat, but also by local retailers. They included a substantial upscaling in logistics and transportation.

Launch of online shopping by Rimi Baltic brought forward
In response to the Covid-19 pandemic, Rimi Baltic brought forward its online shopping launch in Lithuania and Estonia in 2020. Online shopping has thus been offered in all three Baltic countries since April 2020.

Information in multiple languages
To increase knowledge in the community about how to reduce the spread of Covid-19, ICA and Apotek Hjärtat have provided information on the recommendations issued by the Public Health Agency of Sweden in several different languages.

Partnership with the Red Cross to deliver food and groceries to people in risk groups
Through the partnership with the Red Cross, ICA, Apotek Hjärtat and Rimi Baltic helped to increase the availability of food and medicines at the local and national levels for these groups.

A lot of effort was put into securing the supply of groceries to Sweden, Estonia, Latvia and Lithuania during the year. Rapid changes in demand and customer behaviour resulted in short-term shortages of some specific products in individual stores and pharmacies during the year. There were, however, no lasting shortages.

New ways of working and working from home
All employees within the Group that were able to work from home during the year were encouraged to do so. Physical meetings were avoided as far as possible and replaced by digital ones.

Frequent employee surveys
To get a picture of how employees were feeling during the year about their mental health, a number of surveys were carried out on a recurring basis. The results showed that in general the employees were staying in good shape mentally.

Financial targets

Meeting our financial targets

Sustainability targets

Raised ambitions within sustainability

CEO’S COMMENTS

Stable development during a very different year

2020 was very much characterised by the pandemic and its consequences, but it was also a year in which we continued to focus on our forward-looking initiatives. During a year of significant challenges – all around the world and for us – the fact that we still managed to perform well in meeting our financial targets clearly shows the strength of our offering.

As we now look to the future, we do so from a strong foundation and with a strategy that is well-suited to the new normal. We intend to continue to grow within our core business of grocery retail, but also within our complementary operations of non-food, pharmacy, banking & insurance and real estate. We will do this through continued improvement in each of our business areas, but also through increased collaboration and – if the right opportunities arise – also through add-on acquisitions. Digitalisation is now creating entirely new possibilities. Increased cooperation within the Group and linking the physical and digital channels more clearly will provide entirely new opportunities to create even more attractive customer offerings.

Per Strömberg, CEO ICA Gruppen

STRATEGY

A strategy more relevant than ever before

ICA Gruppen’s strategy is aimed at ensuring long-term growth with sustained profitability – in a market in major transition. The pace of change has been fast for many years, but increased further over the past year as a result of Covid-19. Overall, developments have shown that ICA Gruppen’s strategy – with its strong focus on digitalisation, online, health and value for money, among other things – is more relevant than ever.

The strategy is based on five long-term strategic objectives which provide a framework and set the course for all operations within ICA Gruppen.

AMBITION 2025

A shared ambition for 2025

The vision and the strategic objectives set the long-term course for all operations within ICA Gruppen. Ambition 2025 sets out this course in more detail and states where ICA Gruppen is to be in around five years’ time, in response to identified changes and drivers in the world around us. Ambition 2025 has been created jointly by management, other key individuals within the Group and independent ICA retailers.

ICA is for everyone. We serve all customer segments with relevant price-value and locally adapted offerings. We have the leading everyday food ecosystem built around inspiring local marketplaces with supporting products, services and infrastructure.

Prioritised step-change area
• Strengthened food ecosystem

We are recognised as one of the companies doing the most to improve public health. We are industry leader in progressing towards a climate net zero business. We are known as a trusted source of guidance to make healthy and sustainable choices.

Prioritised step-change areas
• Climate beyond neutrality
• Make healthy choices easy

We are the most attractive and appreciated employer with the proudest employees.
We are known for entrepreneurship, modern ways of working, continuous learning and that together we make a difference.

Prioritised step-change area
• Transformation to reduce costs and build new capabilities

We are a trusted data-driven company, with relevant and personal products and services, based on data that we use across the ICA system, to the benefit of all stakeholders. We are deeply data-driven in our daily work and we leverage data to develop our business.

Prioritised step-change area
• Data-driven transformation supported by AI/AA

TRENDS

From trends to the new normal

The pace of change in all of ICA Gruppen’s markets is high. New technology, rapid digitalisation, new consumption patterns and extensive blurring of industry lines are fundamentally changing the markets. These trends have been around for several years, but some have been very noticeably reinforced by Covid-19. Among other things, the pandemic has contributed to a marked increase in online shopping and even greater interest in health and wellbeing. It is also expected to bring price and value for money more sharply into focus as time goes on.

Rapid technological development and digitalisation are affecting both consumers and businesses. They are changing purchasing behaviour and enabling new actors with new business models to enter the arena. In retail, every part of the value chain is affected – from product development, sourcing, logistics and product supply to online sales and data-driven, personalised offerings.

Growth in e-commerce and greater price transparency combined with the expansion of discount chains has brought about a sharper focus on price and value for money. This is expected to increase further as economic conditions become more challenging.

Corporate responsibility, environmental impact, business ethics and control are increasingly important from both a business and a risk perspective. Customers are demanding sustainable products and services, while long-term collaboration with suppliers is essential for innovation and development. Corporate responsibility is also increasingly valued highly among employees of today and tomorrow.

Among the most obvious trends in society is an increased focus on physical and mental health. The health aspects span a broad spectrum of areas – with diet, exercise and work/life balance being increasingly important lifestyle issues. Interest in what food and medicines contain and how they are produced has increased significantly in recent years.

Customers want better availability, service and offerings. Many also feel that they do not have enough time and this is increasing the demand for ready meal solutions, online shopping and more efficient delivery. It needs to be easy, convenient, tasty, healthy – and fast.

SEGMENTS

ICA Gruppen’s segments

ICA Gruppen operates in a number of areas important to people’s everyday lives, including grocery, pharmacies, banking and insurance. The core business is grocery retail. The intention is for other operations to support the core business, but they may also be developed further for new business opportunities and themselves contribute to profitability and continued growth. ICA Gruppen’s operations are divided into five segments and are unified by a common vision of making every day a little easier.

SUSTAINABILITY

Leader in corporate responsibility

ICA’s ambition is to be a leader in corporate responsibility. Our sustainability work is wide-ranging and includes numerous activities and initiatives. For structured strategy development and communication, the concept of For a Good Tomorrow is used. This is broken down into five defined areas: local,
environment, health, inclusion and diversity, and quality.