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 and priorities 2019

Closer to our customers

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


Strategic priorities 2019

  • Online: Continue rapid growth, expand offering and strengthen last mile to win online
  • Store network & concepts: Develop our store network and format strategy with focus on convenience, urban areas and the hypermarket of the future.
Trusted & relevant

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


Strategic priorities 2019

  • Personalisation & loyalty: Scale up smarter personalized offerings, improve the loyalty program and launch new digital services in our eco system
Empowered organisation

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


Strategic priorities 2019

  • Ways of working & competence: Improve and scale agile ways of working, collaboration between our businesses, and build critical competences e.g. IT development and advanced analytics
Always better

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


Strategic priorities 2019

  • Core processes: Increase stability and cost efficiency in our core processes with particular focus on logistics and common sourcing
  • Automation & AI: Expand process automation and implement first AI/Data Science use cases for increased efficiency and optimized business processes
A positive force

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


Strategic priorities 2019

  • Climate & health: Drive our sustainability work "For a good tomorrow" with a particular focus on health and climate

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 2018

Growth for ICA Sweden’s stores in 2018 was slightly higher than the preliminary market growth data indicated. Apotek Hjärtat’s sales in 2018 were in line with market growth, while Rimi Baltic’s sales, affected by store conversions in Estonia and Latvia increased at a slightly 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 2018

The operating margin was slightly lower in 2018 than in the previous year. Positive volume and price effects were offset by higher logistics costs and multiple large improvement and development projects under way on a broad front within the Group. Reserves for ICA Sweden’s structural costs affected the operating margin in the amount of –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 2018

Return on capital employed was slightly lower in 2018 due to significantly lower capital gains from property sales than in 2017 and significantly higher impairments in 2018. The difference in these items amounted to SEK –731 million net between the years.

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 2018

ICA Gruppen’s Annual General Meeting 2019 (AGM) approved the proposed dividend of SEK 11.50. This is an increase of SEK 0.50 or 4.5%, making the dividend percentage 63% for 2018.

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 2018

The key ratio is at the same level as in 2017. The net debt is lower due to a sustained strong cash flow from operating activities. At the same time, EBITDA was lower, mainly due to the previous year’s high capital gains from property divestments.

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 goal of limiting global warming, ICA Gruppen has set an ambitious climate target. The target places high demands on equipment maintenance, operation, contracts and knowledge. The climate impact that cannot be eliminated from operations by 2020 will be offset. In 2018 ICA Gruppen’s overall climate ambition was approved by the Science Based Targets initiative.
 

  Jul 2018 – Jun 2019
Jul 2017 – Jun 2018
Decrease in emissions compared to 2006  -62% -58% 



Outcome 2018
In 2018 ICA Gruppen’s direct emissions of greenhouse gases were reduced by 61% compared with the base year of 2006, thanks to longterm efforts in the areas of energy, refrigerants and goods transports. The main reasons for the reduction are transition to renewable energy, renewable fuels and refrigerants with a lower climate impact.

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

It is ICA Gruppen’s firm conviction that all commercial activity must include humane conditions. To ensure that the products sold are produced in an acceptable way in terms of human rights, there are special provisions for this in sourcing agreements. Social audits are conducted on site for suppliers in high-risk countries that produce ICA Gruppen’s corporate brand products. The audits are to be performed according to a model approved by the Group or using ICA Gruppen’s own social audit tool.

  Jul 2018 – Jun 2019
Jul 2017 – Jun 2018
Outcome 95% 96%

 
 
Outcome 2018
The outcome for the target of 100% of ICA Gruppen’s corporate brand suppliers in high-risk countries undergoing social audits was lower at the end of 2018 than the previous year. This is due to a change in the supplier base, and is a result of a changed risk classification for high-risk countries and subsequent delays in internal follow-up processes. The process following changes in risk classification is a long one, and the outcome was adversely affected.

At least 90% of ICA Gruppen’s corporate brand suppliers in high-risk countries will have a valid follow-up social audit by year-end 2020

In 2018, ICA Gruppen adoped a new target, that at least 90% of ICA Gruppen's corporate brand suppliers in high-risk countries will have a valid follow-up social audit by the end of 2020. Follow-up social audit must be done within a set timeframe that is based on the initial audit result. Since the target was adopted in 2018, the rolling 12-month outcome can therefore not be compared with previous periods due to lack of data.
 

  Jul 2018 – Jun 2019
Jul 2017 – Jun 2018
Outcome 82% n.d.
90% of ICA Gruppen’s corporate brand suppliers will be quality certified by year-end 2020

Customers should feel safe shopping with ICA Gruppen. The quality work is based on 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. 100% of ICA Gruppen’s corporate brand food suppliers are to be quality-certified, but to allow for a wider range within the category non-food and to enable there to be small local food suppliers as well, the overall target is 90%. In 2018 the target was adjusted upwards from 80%.

  Jul 2018 – Jun 2019
Jul 2017 – Jun 2018
Outcome 86% 87%

 
 
Outcome 2018
The outcome for the target at the end of 2018 was slightly lower than the previous year. The reason is a change in the supplier base and delays in internal follow-up processes.

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. Performance in relation to the target is monitored in customer surveys.

Outcome 2018
During the year ICA Gruppen continued its efforts to inspire customers to have a healthy lifestyle. A few examples are special Halloween and Easter lines at ICA Sweden to encourage children to eat more fruit and vegetables, a 30% reduction in sugar in ICA’s soft drinks, cordials and fruit drinks, more Minutkliniken clinics and investment in Min Doktor. Rimi Baltic has also implemented numerous activities to inspire people to be active, exercise and eat healthy food. In the 2018 Customer Satisfaction Index, ICA Sweden came in third place among the Swedish retailers and Rimi Baltic came in first place among the retailers in the Baltic region when respondents answered the question “Who inspires me to eat healthily”. Apotek Hjärtat came in first place in the pharmacy industry in the survey Nepa Brand Attribute in November 2018 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, compared with the base year 2016

In 2019, ICA Gruppen adopted a new target to reduce food waste. The food waste from warehouses and stores in Sweden and the Baltic countries will be cut in half by 2025 compared with the base year 2016. A few key aspects for achieving this new target include smarter purchasing algorithms, the creation of so-called circular products, and routines and tools for being able to identify at an early stage foods that are at risk of being wasted.

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