Group Strategy

ICA Gruppen is driven by the vision to make every day a little easier. Our companies rely on a stable ground with several common strengths. We continue to evolve by finding easier and better solutions for our customers, enabling them to shop more conveniently, cook better food, live a healthier life, have a more stable economy and live in more sustainable communities.

Since the creation of the Group we have consolidated our company structure to become more synergistic – with groceries as our core and complemented by our supporting businesses i.e. pharmacy, non-food, bank, insurance and real estate.

By co-operating between our businesses we create scale and realize important synergies e.g. common loyalty program, co-location of stores, sourcing and administration. In addition, digitalization creates new possibilities for additional synergies e.g. in e-commerce, data and investments in new technology and capabilities.

As the environment is changing more rapidly we also need to be more agile. The Group strategy builds on our stable foundation and common strengths and sets the direction for all businesses within the Group. The Group strategy consists of 5 long-term Strategic target pictures with the purpose to enable and create growth and to fulfil our vision.

 

The Group´s strategic themes 2020

Our corporate strategy is based on five long-term strategic themes.

- We are where our customers are, locally, digitally and personally, with strong and affordable customer offerings.   

- We earn our customers’ loyalty with a great brand, a broad ecosystem and a personalised, data driven communication.

- We are committed and inclusive. Together we build a fast moving and constantly learning company.
 

- We improve continuously and leverage technology to make it easier for our custoners, improve efficiency and value for money.

- We lead the development towards a more sustainable and healthy society - for a good tomorrow.  

Step-changes 2020-2022

ICA Gruppen’s Board of Directors has adopted the prioritised step-changes for the Group. The step-changes pinpoint where ICA Gruppen needs to consolidate its strengths during the next three years. There are other important areas, but the step-changes are the areas that will require extra effort.

ICA Gruppen has internal targets for each step-change and will measure the progress each year.

The step-changes, with a three-year horizon, replace the previous strategic priorities.

Financial targets

ICA Gruppen is one of the leading retail companies in the Nordic region with a clear strategy for profitable growth. The Group’s financial targets will ensure that ICA Gruppen provides shareholder value over time and will reflect the Group’s focus on the stable grocery retail market. 

The Board of ICA Gruppen has adopted the following long-term financial targets for the Group:

Grow faster than the market

Good sales performance and a strong market position are important factors for achieving and maintaining good profitability and growth in value.


Outcome 2019
In 2019 the Swedish ICA stores’ growth was in line with market growth in Sweden according to the Food Retail Index. Apotek Hjärtat’s sales in 2019 were somewhat lower than market growth. Rimi Baltic’s sales – affected by store conversions, among other things – increased but at a slower pace than the market.

Outcome financial targets at the end of the previous quarter ›

Operating margin of at least 4.5%

The target level provides room for investments in the business and a return on capital invested, and is at a good level for the sector. In their business control and follow-up work, the Board and Management Team do not take into account non-recurring items; these items are therefore excluded from the target.


Outcome 2019
The operating margin was higher in 2019 than in the previous year. Positive price and product mix effects, along with good volume growth in several operations, were partly offset by higher costs for a number of large improvement and development projects conducted on a broad front within the Group. ICA Sweden’s structural costs in 2018 affected the operating margin for 2018 by –0.1%.

Outcome financial targets at the end of the previous quarter ›

Return on capital employed of 7.5%

The target level indicates that the Group is using capital effectively. The target was changed at the beginning of 2019 due to accounting changes under IFRS 16.
ICA Bank is not included in the calculation because banking legislation stipulates that its assets and liabilities are not available to the Group. Instead ICA Bank has a target for return on equity that is a more appropriate target for banking operations.


Outcome 2019
The return on capital employed increased to 7.9%. The improvement in earnings during the year explains why the return increased even though average capital employed rose by around SEK 1 billion during the year.

Outcome financial targets at the end of the previous quarter ›

Dividend at least 50% of profit for the year

The intention is to provide shareholders with a good dividend while at the same time being able to implement value-adding investments in operations.


Outcome 2019
ICA Gruppen’s AGM 2020 resolved in favour of the proposed dividend of SEK 6 per share for the 2019 financial year. An Extraordinary General Meeting held on Tuesday, 22 September resolved in favour of the proposed dividend of SEK 6.00 per share. A total of SEK 12.00 per share was distributed for 2019, which corresponded to 70% of the profit for the year.

Outcome financial targets at the end of the previous quarter ›

Net debt/EBITDA <3.0

A good balance between earnings and borrowing gives the company the freedom and ability to act, even in times of recession. The target was changed as of the beginning of 2019 due to accounting changes under IFRS 16.


Outcome 2019
The key ratio was somewhat lower than last year due to continued strong cash flows from operating activities and thus a lower debt ratio. Simultaneously, EBITDA was also somewhat higher.

Outcome financial targets at the end of the previous quarter ›

Sustainability targets

ICA Gruppen’s sustainability work is a strategic priority and is integrated into all of the Group’s operations.

To follow up sustainability efforts we have following overall sustainability targets:

ICA Gruppen’s operations are to be climate-neutral by 2020

Climate change affects everyone. To contribute to the UN’s goal to limit global temperature rise, ICA Gruppen has a target that its operations will be climate neutral by 2020. The target includes the climate impact caused by operations at stores, pharmacies, warehouses and offices. This is to be achieved by constantly reducing greenhouse gas emissions and through increased resource efficiency. The climate impact that cannot be eliminated from operations by 2020 will be offset in 2021. In 2018 an additional target was added: that suppliers accounting for 70% of ICA Gruppen’s upstream climate impact are to have adopted science-based climate targets by 2025 at the latest. At the end of 2019 the outcome was 24%.

Based on the pace of activities and the plans that ICA Gruppen has, we will have achieved our set targets by 2020. We are now taking the next step towards achieving at least zero net climate impact by 2030. To achieve this goal ICA Gruppen will balance positive emissions against negative emissions to reduce the climate impact in its own operations through various measures, such as by generating renewable energy. ICA Gruppen has also set the goal to cut the climate impact of customers’ grocery purchases in half by 2030.
 

  Oct 2019 – Sept 2020
Oct 2018 – Sept 2019
Decrease in emissions compared to 2006  -74% -64% 



Outcome 2019
Since the base year 2006 ICA Gruppen’s direct emissions of greenhouse gases have been reduced by 67% thanks to long-term efforts in the areas of energy, refrigerants and goods transport. The main reason for the sustained reduction in 2019 was switching to refrigerants with a lower climate impact in the Swedish and Baltic stores and the transition to renewable energy throughout Rimi Baltic from the fourth quarter.

100% of ICA Gruppen’s corporate brand suppliers in high-risk countries will be socially audited

It is ICA Gruppen’s conviction that all commercial activity must take place under humane conditions. ICA Gruppen’s supplier agreements contain special provisions regarding human rights. Social audits of suppliers in high-risk countries that produce ICA Gruppen’s corporate brand products are conducted on site. The audits are to be performed according to a model approved by the Group or using ICA Gruppen’s own social audit tool. In 2018 a decision was taken that at least 90% of the suppliers of ICA Gruppen’s corporate brand products in high-risk countries must have had an approved social re-audit by year-end 2020.

  Oct 2019 – Sept 2020
Oct 2018 – Sept 2019
Outcome 93% 95%

 
 
Outcome 2019
The outcome for the target 100% of the suppliers of ICA Gruppen’s corporate brand products in high-risk countries will be socially audited was 95% at the end of 2019. During the year, the focus has been to ensure a valid social follow-up audit, which has resulted in a positive trend for the target of re-audits. The outcome was 87% at the end of the year.

90% of ICA Gruppen’s corporate brand suppliers will be quality certified by year-end 2020

Customers should feel safe shopping with ICA Gruppen. ICA Gruppen’s focus on quality includes ensuring that suppliers have safe production processes. This is done through provisions in agreements with all suppliers. Suppliers of the Group’s corporate brand products are also required to have certification according to a standard accepted by the Group.

  Oct 2019 – Sept 2020
Oct 2018 – Sept 2019
Outcome 91% 86%

 
 
Outcome 2019
The outcome at the end of the year was 87%. During the year operations has focused on reaching the target which has affected the trend positively. Further force will be added to reach the target at the end of 2020.

By 2020 ICA Gruppen will be perceived by consumers as the actor in the market that is best at helping them make healthy choices

Helping customers to feel good and guiding them to make healthy choices is a priority for ICA Gruppen, partly because customers call for it and partly because the Group, as a major player, has a great opportunity to positively impact people’s health. Success in achieving this goal is monitored through customer surveys.


Outcome 2019

In the 2019 Customer Satisfaction Index, ICA Sweden came in second place among Swedish grocery retailers when respondents answered the question “Who inspires me to eat healthily”.
According to a Nielsen Omnibus survey in November, Rimi ended up in second place in Estonia and Lithuania and first place in Latvia when respondents associated a grocery retail actor with the claim “Offering healthy products and guiding customers to choose a healthier lifestyle”.
Apotek Hjärtat came in second place in the pharmacy industry in the Nepa Brand Attribute survey in the end of 2019 when the respondents were asked to associate a pharmacy with the claim “Easy to make healthy choices”.

ICA Gruppen’s food waste from warehouses and stores will be cut in half by 2025

Food accounts for about a quarter of humanity’s total impact on the climate and it is therefore of utmost importance to take care of and properly handle the food that is produced. Accordingly, in 2019 ICA Gruppen decided to adopt a new Group target: to cut food waste from warehouses and stores in both Sweden and the Baltic countries in half by 2025 compared with the base year 2016. Food waste will be measured using an international standard created by the FLW Protocol (Food Loss and Waste Protocol). A few important factors in order to reach the new target include smarter algorithms for sourcing, producing circular products and having procedures and tools for early identification of food that is at risk of being wasted.


Outcome 2019

In 2019, a method for monitoring and reporting has been developed. A zero measurement for 2016 has also been carried out to be used as the base year and starting point for the target. Work to reduce the occurrence of food waste has continued, among other things through better purchasing processes and registration, follow-up and cause analysis of food waste. Since the base year 2016, food waste from warehouses and stores has been reduced by 7%.

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