Grocery Retail in Transition: Discount on the Rise, Hypermarket Formats show mixed results

The grocery retail landscape in Sweden is undergoing a clear shift. Chains with a Discount profile like Willys are thriving, offering affordability and efficiency in line with increasingly price-sensitive consumers. Willys, owned by Axfood, continues to expand and gain market share, a proof that the discount model is aligned with current consumer priorities.

However, large-format stores are seeing mixed results. ICA Maxi is a standout success, benefiting from a well-integrated mix between huge assortment and low prices aimed at matching the Willys chain, strong customer loyalty, and a clear brand. In contrast, Axfood’s hypermarket chain City Gross is underperforming. Despite now sharing ownership with Willys, City Gross has struggled to define its identity and compete effectively in a market where choice and price dominate.

It will be interesting to see whether Axfood is able to turn City Gross around. Given their proven success with Willys, the capability is likely there, but it will require a bold strategic approach , possibly redefining the role of City Gross within the portfolio. Can it become a hybrid between discount and full-service, or does it need a completely new format, or will it be Willys-XL?

The opportunity is there: a successful repositioning of City Gross could fill a gap between hypermarkets and discount. But standing still is not an option.

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