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The Swedish Organic Food

Market - A Competitor and Industry Analysis -

Bachelor’s thesis within Business Administration

Author: Jonas Deichmann

Sarah Fitz-‐Koch

Samuel Gauger

Tutor: Hamid Jafari

Jönköping May 2012

Acknowledgements

We would like to take the opportunity to thank everyone that contributed to the completion of our thesis.

First of all, we would like to thank our supervisor, Hamid Jafari, who always gave us constructive feedback and guided the whole thesis-writing process in a very good and helpful manner.

Second, we are very thankful for all the companies and their respective spokes-persons that we interviewed and to which we sent our questionnaire. Without their help, the content and validity of this thesis would have been poorer.

Last but not least, we are grateful for all the feedback we got from our fellow stu-dents.

Jonas Deichmann Sarah Fitz-Koch Samuel Gauger

Jönköping International Business School, May 2012

Bachelor’s Thesis in Business Administration Title: The Swedish Organic Food Market

Author: Deichmann Jonas, Fitz-‐Koch Sarah, Gauger Samuel

Tutor: Hamid Jafari

Date: 2012-‐05-‐10

Subject terms: Competition, Swedish Organic Food Market, Strategy, Strengths

and Weaknesses, Positioning

Abstract The organic food market in Sweden has grown continuously in the last decades. This led many retailers and small stores to start selling organic food as well as ex-‐tending their organic food assortment and variety extensively. In this thesis our purpose was to analyse the Swedish organic food market in terms of competition and business level strategy. The two main players in the market (ICA and Coop) were chosen to be analysed in more detail as well as a local store (Bikupan). The results of the local store were generalized for other small and local stores in Sweden. This was done to get a better picture of the market and about how the companies in the Swedish organic food market compete with each other.

Our data was collected by doing three semi-‐structured interviews, two with Coop and one with Bikupan. Furthermore, we sent out one questionnaire to ICA. In the case of Coop, we interviewed the manager for sustainable development and one specific Coop store due its interesting concept “Green Room” where almost only organic food is sold. The answers were then linked with our general findings about the market as well as our theoretical framework and the following findings were made:

o ICA and Coop are the main competitors followed by Axfood o there are not many differences between ICA and Coop o competition is to some extent based on price o increasing pressure on small, local stores due to the main players’ ever in-‐

creasing market coverage o ICA is closest to be the cost-‐leader, whereas Coop is somewhat more focus-‐

ing on differentiation. Small, local stores are truly differentiated compared to Coop and ICA.

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Table of Contents 1 Introduction........................................................................................................ 1

1.1 Background...................................................................................................................... 1 1.2 Problem Discussion ..................................................................................................... 2 1.3 Purpose ............................................................................................................................. 3 1.4 Research Questions...................................................................................................... 3 1.5 Perspective ...................................................................................................................... 3 1.6 Definitions........................................................................................................................ 3

1.6.1 Organic food................................................................................................... 3 1.6.2 KRAV.................................................................................................................. 4

1.7 Methodolgy...................................................................................................................... 4

2 Frame of References ...................................................................................... 5 2.1 Retail channels ............................................................................................................... 5 2.2 Porter’s Five Forces ..................................................................................................... 6

2.2.1 Threat of New Entrants............................................................................. 8 2.2.2 Rivalry among existing competitors.................................................... 9 2.2.3 Bargaining Power of Buyers .................................................................10 2.2.4 Bargaining Power of Suppliers ............................................................10 2.2.5 Threat of Substitute Products ..............................................................10

2.3 The Components of a Competitor Analysis .....................................................11 2.4 SWOT................................................................................................................................13 2.5 Porter’s Generic Strategies .....................................................................................14

2.5.1 Cost leadership strategy .........................................................................15 2.5.2 Differentiation strategy...........................................................................16 2.5.3 Focus Strategies..........................................................................................17 2.5.4 The pursuit of more than one generic strategy ............................18

2.6 Summary of Frame of References........................................................................19

3 Method .................................................................................................................20 3.1 Choice of method.........................................................................................................20

3.1.1 Literature review.......................................................................................20 3.1.2 Case study .....................................................................................................21

3.2 Interviews ......................................................................................................................21 3.2.1 Interview selection....................................................................................23 3.2.2 Observations................................................................................................24 3.2.3 Data collection.............................................................................................24

3.3 Method for analysis....................................................................................................25 3.4 Evaluation of method ................................................................................................27

3.4.1 Practical Problems ....................................................................................27 3.4.2 Validity & Reliability of the Methods.................................................27

4 Empirical Findings ........................................................................................29 4.1 Background....................................................................................................................29

4.1.1 Case 1: ICA ....................................................................................................29 4.1.2 Case 2: Coop .................................................................................................30 4.1.3 Case 3: Bikupan ..........................................................................................30

4.2 Competition in the Swedish organic food market ........................................31 4.2.1 ICA’s competitive situation....................................................................31

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4.2.2 Coop’s competitive situation ................................................................32 4.2.3 Bikupan’s competitive situation..........................................................32

4.3 Strategic positioning..................................................................................................32 4.3.1 ICA’s strategic positioning .....................................................................33 4.3.2 Coop’s strategic positioning..................................................................33 4.3.3 Bikupan’s strategic positioning ...........................................................34

5 Analysis ...............................................................................................................36 5.1 Competition in the Swedish organic food market ........................................36 5.2 SWOT analysis..............................................................................................................39

5.2.1 Opportunities and threats in the external environment...............................................................................................................39 5.2.2 ICA’s strengths and weaknesses .........................................................40 5.2.3 Coop’s strengths and weaknesses ......................................................41 5.2.4 Bikupan’s strengths and weaknesses ...............................................41

5.3 Strategic positioning..................................................................................................44 5.3.1 ICA ....................................................................................................................44 5.3.2 Coop.................................................................................................................45 5.3.3 Bikupan ..........................................................................................................45

6 Discussion ..........................................................................................................48 6.1 Suggestions for further research..........................................................................48 6.2 Limitations.....................................................................................................................48 6.3 Recommendations......................................................................................................49 6.4 Conclusion......................................................................................................................50

List of References .................................................................................................52

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Figures Figure 2-‐1 Porter’s Five Forces (Porter, 2008).................................................7 Figure 2-‐2 The Four Elements of a Competitor Analysis (Porter, 1980)..........12 Figure 2-‐4 Porter’s Generic Strategies (Porter, 1998) ....................................15 Figure 5-‐1 Cross Case Analysis: SWOT...........................................................43 Figure 5-‐2 Strategic Positioning of the analysed companies ...........................44

Tables Chart 3-‐1 Overview of interviews .................................................................22 Chart 3-‐2 Reasons for choosing the specific cases ..........................................23 Chart 3-‐3 Seven steps process (Marshall & Rossman, 2006) for analysing

research methods..........................................................................25 Chart 4-‐1 Overview of organic food at selected retailers/stores (based on

KRAV’s marknadsrapport 2012 and interviews (Appendix))..........31 Chart 5-‐1 Overview of Porter’s Five Forces applied in the Analysis................39 Chart 5-‐2 Cross Case Analysis: Generic Strategies .........................................47

Appendix Appendix 1: The Swedish organic food market (2004 – 2020).........................57 Appendix 2: Price comparision between ICA Maxi and Coop Forum in Jönköping....................................................................................58 Appendix 3: Interview guide...........................................................................59 Appendix 4: Interview with Bikupan...............................................................60 Appendix 5: Interview with Coop Forum Sisjön (Green Room) ........................64 Appendix 6: Interview with ICA ......................................................................67 Appendix 7: Interview with Coop....................................................................70

Deichmann, Fitz-‐Koch & Gauger

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1 Introduction In this Introduction chapter, we will present the background and problem on which the purpose and research questions of our thesis are built. A short section about delimitations in this paper and a definition finish the chapter.

1.1 Background

The sales of organic food in Sweden are setting new records. In 2010, sales of or-‐ganic food and non-‐alcoholic beverages rose by six per cent compared to the fig-‐ures from 2009 (Statistics Sweden, 2011). This figure was almost doubled in 2011, when the sales of organic food rose by eleven per cent to a total of 9.2 billion SEK (Ekoweb, 2012). That implies that the organic food segment takes an ever-‐increasing share of the food sales in Sweden. According to Ekoweb (2012), today’s turnover of 9.2 billion SEK will be almost doubled in just eight years, with the food retailing industry being the one with the highest potential. The increasing business with organic food is illustrated in Appendix 1.

One of the main factors behind this trend is that consumers have become more concerned about environmental, fair trade and health issues (Magnusson et al., 2001; Hughner et al., 2007). KRAV (see definitions, 1.6.2) found that consumers’ willingness to buy organic food has been increasing steadily (KRAV, 2012). One of the obstacles for buying organic food is high prices. The prices for organic food have decreased considerably during the last years (Magnusson et al., 2001; ICA 2011). This is due to the fact that Swedish retailers keep on introducing new or-‐ganic food articles to the market, both national and private brands, and at the same lowering the prices of some of the products (see Table 1-‐2; ICA, 2012; KF, 2011). A private brand is a retailer’s own brand that helps it to differentiate itself from its competitors (Levy & Weitz, 2009).

In order to win more customers for the organic food segment, several Swedish re-‐tailers introduced new private brands such as ICA’s “I love eco” or Coop’s “Ängla-‐mark”(ICA, 2011; KF, 2011). The advantage with these private brands is that the retailers can offer organically produced food at a lower price and at the same time having more control over the market and products. Furthermore, it enables them to more easily reach the consumer, by having no entry barriers (Hultman et al., 2008; ICA, 2011). One of the main advantages by having private brands is the potential to gain higher margins in contrast to the sales of national brands. Private brands also help retail-‐ers to differentiate from others (Gullstrand & Jörgensen, 2011). Hultman et al. (2008) predict that there still is a lot of potential for private brands in the Swedish market and thus underlined their importance for competition among the players in the Swedish organic food market. In the following section we will take a closer look at the Swedish food retail mar-‐ket, before we introduce the organic food segment of the market in more detail. The Swedish food retail market is highly concentrated, meaning that only a few firms account for a large share of the market. Swedish food retailing chain ICA makes up 49 per cent of the Swedish market alone. Together with the other two


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big players, Coop (20%) and Axfood (16%), 86 per cent of the Swedish market is covered. By including the small chains (Bergendahls, Netto, Lidl), almost the entire market, 98 per cent, is covered (Gullstrand & Jörgensen, 2011).

The trend in Sweden is towards larger but fewer grocery stores. Larger stores tend to have lower prices than smaller ones which is one of the reasons for this trend (Gullstrand & Jörgensen, 2011). Thus, small stores often need to differentiate themselves well in order to survive. However, Gullstrand and Jörgensen (2011) found that competition among Swedish food stores is local, implying that consum-‐ers’ primary grocery store is closely located to their homes. Therefore, competition differs from region to region, and city to city in Sweden. A good example is Coop Forum Sisjön’s concept “Green Room”, which is an organic store in the main gro-‐cery store, that would not be successful in other regions in Sweden, due to a lack of demand and less affluent consumers. We will introduce the concept in more detail in our case study about Coop.

When it comes to the sales of organic food, the market looks somewhat different. ICA’s, Coop’s and Axfood’s market share of the Swedish organic food market is not as high as in the Swedish food retail market. Together they stand for around 50 per cent (KRAV, 2012; Ekoweb, 2012).

Besides the traditional organic food retailers and stores, an increasing number of online stores open that sell organic food on the Swedish market.

However, in this thesis we will focus on the two biggest players in the Swedish or-‐ganic food market: Coop and ICA, and will not go into more detail concerning or-‐ganic online stores. Even though Axfood sells a higher number of organic food pro-‐ducts than ICA (Chart 1-‐1), we decided to focus on ICA instead, since they are the market leader in organic food sales (turnover) and total food sales. Furthermore, we will have a closer look at how a small and local organic store, Bikupan in Jönköping, competes on the market. This is linked to Gullstrand’s and Jörgensen’s (2011) finding that Swedish food retailers compete on a local level rather than on a national one.

1.2 Problem Discussion

The Swedish organic food market is expected to grow in a similar pace in the com-‐ing years as it used to in previous ones (Appendix 1). This attracts competitors, and makes existing ones to invest more resources in the field.

One of the indicators for an increasing competition within organic food is the fact that ICA decreased prices for its private brand last year to reach an even bigger customer group (ICA, 2011). Additionally, the increasing number of Coop’s and ICA’s assortment and variety (defined under 2.1.5) of their private organic food brands could be an indicator that competition is shifting towards price. This is partly based on Zanoli’s and Naspetti’s (2002) findings that many Swedish con-‐sumers perceive organic food products to be too expensive and thus price is the main barrier for many consumers to buy organic food. At the same time, Coop is aiming to increase the share of organic food of total food sales to ten per cent in 2012 (KF, 2012) and might thus strengthen its position as the retailer with the largest assortment and variety (defined under 2.1.5).


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Increasing competition among the market leaders as well as the trend towards lar-‐ger but fewer grocery stores (Gullstrand & Jörgensen, 2011) puts also pressure on small and local organic food stores such as Bikupan. Therefore, new ways to differ-‐entiate or to exploit a niche have to be found in order to be successful. Further-‐more, a competitor’s current positioning strategy is crucial to know for a company in order to plan competitive actions. Consequently, a company needs to be aware of its capabilities, as well as opportunities and threats in the Swedish organic food market. This implies that a company needs to know who their competitors are, how they compete, as well as how it should act in response to their actions and the company’s own goals.

1.3 Purpose

The purpose of this paper is to analyse the Swedish organic food market in terms of competition and business-‐level strategy.

1.4 Research Questions

1. How does competition look like in the Swedish organic food market? 2. What are the capabilities of Coop, ICA and Bikupan and how can they ben-‐

efit from external market developments? 3. What kind of generic strategy is being pursued by ICA, Coop and Bikupan in

order to compete successfully in the market?

1.5 Perspective

This thesis is written in the firm’s point of view and thus helps managers to better know about competition and firm strategy in the Swedish organic food market.

1.6 Definitions

1.6.1 Organic food

In this thesis we focus on organic food retailers and stores. We are aware of the fact that there are other organic products sold in grocery stores, such as organic detergents or soaps. We refer to these other organic categories several times. Nevertheless, we found that it is less confusing when we only focus on organic food. The reason for that is that the research is divided in organic food and organic products. We decided to focus on organic food because it has the largest share of the assortment and variety of organic food products in ICA, Coop and Bikupan.

Organic food is produced according to certain criteria that support sustainability and to keep the ecological system in balance. For example, pesticides, antibiotics, growth hormones or the use of genetically modified food is not allowed (Honkanen et al., 2006).


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1.6.2 KRAV

KRAV is a Swedish organisation that develops organic standards. The organic food products that comply with these standards are allowed to carry the KRAV label (KRAV, 2012).

1.7 Methodolgy

With regard to epistemology which deals with the creation and construct of know-‐ledge (Mathison, 2011), we believe that the reality is a social and subjective con-‐struction and not a construct that can be objectively created. This means that any type of knowledge is rested upon personal experiences which are influenced by our social attitudes. With this perception in mind, we take our readers through an interpretative and qualitative approach. We have applied an interpretative approach, since we believe it is the most suit-‐able approach for our study, for three reasons: Firstly, interpretation has a crucial role for this thesis, since it emphasizes the per-‐sonal involvement in the data gathering process. Secondly, interpretation does not want to delineate clear relations between statis-‐tical analysis and objective facts. It rather attempts to understand the reality through a more sensitive process (Carson et al., 2001). Thirdly, interpretation often takes a qualitative approach (May, 2002). The qualita-‐tive approach can be comprised of different methods, such as for example in-‐depth interviews or focused groups (Carson et al., 2001). We will explain the qualitative approach that we are going to apply in our thesis in more detail in our method chapter.


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2 Frame of References In the frame of references we will present theories and research which has been done previously and which will be applied during our analysis. We will mention re-‐tailing theory but our main focus will be on competition and strategy theory since this is of most usefulness, considering our purpose. Of special importance for our paper is the work done by Michael Porter who is according to Bailey (2007, p. 48) “a world authority on strategy and competitive advantage”. In order to analyse competition we will use his Five Forces Model. Furthermore, Porter’s three generic strategies will be applied with regard to Coop’s, ICA’s and Bikupan’s positioning strategies in the Swedish organic food market. In addition to Porter’s theories we will also use a SWOT analysis to determine the strengths and weaknesses of the chosen companies and analyse their fit with the external environment. We will not make use of a PESTEL because of the limited scope of this thesis.

2.1 Retail channels

There are several different channels retailers can use to sell their merchandise or service to customers. The most common one is the store channel, which does ac-‐cording to Brynjolfsson et al. (2009) still vastly outsell other channels in most pro-‐duct categories. The store channel offers a variety of benefits, that other channels do not offer. Many shoppers do not know the exact item they want but rather have a general idea about their wants. In a store they can browse the store and see what is available before they decide what to buy. Furthermore, it is possible to touch and feel products, get personal service by sales associates and decide whether to pay in cash or by credit. The physical presence of a store also limits the perceived risk for customers since they are less worried about the possibilities of returning an article (Levy & Weitz, 2009). Today, the internet has become an important channel over which companies sell their goods and services to consumers. In Sweden 53 per cent of the population bought something over the internet during the last 3 months prior to a survey by the European Commission (Eurostat, 2012) and the tendency is that this will grow even further. Buying over the Internet offers the convenience that it can be done from home. Furthermore, Internet channels often offer a wide variety and informa-‐tion that can help consumers during the buying process and retailers are able to personalize their offers for the customer (Levy & Weitz, 2009). Nonetheless, ac-‐cording to Brynjolfsson et al. (2009), the internet channel is mostly used for selling specialized and niche products but struggles to compete with brick-‐and-‐mortar companies when selling mainstream products. Besides those channels, there are other channels retailers can use to sell their pro-‐ducts such as personal selling, vending machine, catalogues or kiosks (Levy & Weitz, 2009). Today, many companies do no longer only use one retail channel but use instead multichannel retailing which is a combination of two or more channels (Levy & Weitz, 2009). According to Schramm-‐Klein & Morschett (2006), different channels can offer different advantages to customers and therefore, the total benefit for cus-‐


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tomers can be larger, especially, when the different channels are well integrated in the multi-‐channel system. There are several types of retailers operating through store channels. Most con-‐sumers buy their food in conventional supermarkets even though other types of retailers are becoming more common. Conventional supermarkets are self-‐service food stores which offer all different kinds of groceries and some limited non-‐food items such as beauty products and general merchandise. Hypermarkets are an-‐other type of retail store which are characterised by being very large and offering a broader variety than conventional supermarkets. Their product assortment con-‐sists usually of 60-‐70 per cent of food but also of general merchandise such as hardware, appliances, electronics and furniture (Levy & Weitz, 2009). Finally, there are speciality stores, selling organic products to customers. Speciality stores are relatively small and serve only a specific market segment by offering a limited number of merchandise categories and usually offering a high level of ser-‐vice (Levy & Weitz, 2009).

2.2 Porter’s Five Forces

According to Porter (1980), five competitive forces shape competition within an industry. These forces are: Bargaining Power of Buyers, Bargaining Power of Sup-‐pliers, Intensity of Rivalry, Threat of New Entrants and Threat of Substitute Pro-‐ducts (Fig. 2-‐1). Porter’s five forces have an impact on costs, prices, as well as re-‐quired investments of the firms in an industry, and therefore condition industry profitability. However, Miller (1992), found some additional fields of “uncertainty” that charac-‐terize an industry. Especially one field is stressed out by Miller to be of importance when analysing an industry. This is the one of “unexpected changes in the demand for the goods or services” that a firm is producing. Such an unexpected change can reshape an industry. “Technological uncertainty” is a further important field to be aware of when analysing an industry, since a firm is uncertain about when its competitors will introduce an innovation to the market. One should be aware of that an innovation can lead to a change in the competitive landscape. This “uncer-‐tainty” is closely linked to Porter’s force “Rivalry among existing firms” (Miller, 1992). The German discount supermarket chains ALDI and LIDL found many innovative ways to save money which had a noticeable impact on the food retailing industry and created uncertainties among their competitors. One of this innovations is to leave many of the articles they sell in cartoons rather than placing them on a shelf with the latter taking more time and being more costly. Furthermore, they have a limited assortment which helps them to save space and service costs. Miller’s (1992) findings are closely connected to Achrol and Stern’s (1988), who stress the point that interdependence among competitors in an industry raises the level of decision uncertainty. This interdependence can be in the form of a shared


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customer group, such as consumers who buy organic food but who do not care much about the retail store where they buy it.

Figure 2-‐1 Porter’s Five Forces (Porter, 2008)

Depending on the industry and its structure, the strength of the five forces can be stronger or weaker. In most of the industries, only a few of these forces are of im-‐portance when analysing the industry competition. Stonehouse and Snowdon (2007) criticise the fact that Porter implies that the five forces fit equally well to all the firms within an industry. The strength of a specific force depends much more on each individual firm within an industry, rather than the industry overall. This difference might be, among other things, due to differences in firm size (Stone-‐house & Snowdon, 2007). Overall, the Five Forces Model helps firms to figure out the most crucial features of the industry structure in order to be profitable in the long-‐run (Porter, 1998). On the contrary, Rumelt (1991) points out that an industry has less impact on a firm’s profitability than firm-‐specific factors do.


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2.2.1 Threat of New Entrants

The threat of new entrants relies upon the existing entry barriers in an industry, as well as the reactions which are expected from existing companies in that industry in case of a newcomer. Besides high barriers of entry, strong expected retaliation leads to a low threat of entry. The following barriers to entry are the main ones ac-‐cording to Porter. However, one should keep in mind that entry barriers can change (Porter, 1980).

-‐ Economies of Scale -‐ Product Differentiation -‐ Capital Requirements -‐ Switching Costs -‐ Access to Distribution Channels -‐ Cost Disadvantages Independent of Scale (brand identification, competitors’

experience and networks in the industry etc.) Porter points out several ways to overcome entry barriers cheaper than competi-‐tors do. When a firm comes up with an innovative and differentiated product or service, it can direct attention to itself and thus overcome differentiation barriers (Porter, 1980). Low-‐cost airline Ryanair was able to offer lower-‐priced tickets than its competitors and thus overcame entry barriers to the highly competitive airline industry. This was achieved by, among other things, flying to smaller air-‐ports located further away from major destinations than the big airports. Ryanair found a niche in the market which is another way to overcome entry barriers. By developing a new way to market the firm’s product or service, such like having offensive marketing campaigns that make people talk about your brand, is a fur-‐ther suggestion for how to overcome entry barriers (Porter, 1980). The importance of finding ways to overcome entry barriers is mirrored in Lippman and Rumelt’s (1982) findings, who state that it is difficult for a firm to copy a com-‐petitor’s successful strategy. This holds even true for a firm that has total transpar-‐ency of a competitor’s strategy. In order for a firm to find out about the reaction of existing firms in an industry, it can pay attention to four characteristics (Porter, 1980). If existing firms have an-‐swered new entrants with strong retaliating actions, such as price cuts or exten-‐sive marketing campaigns, a firm can be sure about that it would not be different in the case of that firm entering the industry. Second, the level of resources available to retaliate a newcomer’s entry is a further characteristic that a firm should be aware of. This can be in the form of savings or other unused resources such as power over suppliers. The level of retaliation will also be higher, the more import-‐ant that industry is for the incumbents. The fourth characteristic is that of slow in-‐dustry growth which implies that an entrant cannot grow without decreasing its competitors’ market share (Porter, 1980).


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2.2.2 Rivalry among existing competitors

Firms in an industry are usually dependent on each other, which implies that ri-‐valry occurs when, for example, one or several of these firms try to gain a bigger market share. Depending on what the firms are competing on (price, advertising etc.), the industry might be better or worse off. There are numerous indicators in an industry that can give an idea about how intense rivalry is among the firms in that industry, such as slow industry growth, shift in rivalry, lack of differentiation, high strategic stakes or high exit barriers. For example, when the competing firms in an industry are relatively equal in terms of their size, it might lead to a more in-‐tense fight for market dominance, since they have similar levels of resources avail-‐able for action and reaction (Porter, 1980). In order to understand the level of rivalry among firms in an industry, one should also look at the dimension on which competition is based. One dimension can be price, which can have a severe impact on the profitability of an industry. Price re-‐ductions by one competitor often lead to retaliation actions by the others and thus can start a price war. Customers tend to focus more on the price of the products and less on its features and services when competition is based on price. Competi-‐tion based on price often occurs when the products are perishable (Porter, 1980; Porter 2008). Before retailers end up throwing away milk products that expire soon, they try to sell them for a reduced price to capture some of the value. Another indicator that competition is likely to be based on price is when the pro-‐ducts or services being sold by competitors are very similar to each other. Many grocery retailers sell the same food brands to almost identical prices which en-‐courage some of them to cut prices to win new customers (Porter, 1980; Porter 2008). On the other hand, competition that is rather based on dimensions like the level of service or product features such as “locally produced” does normally not have the same negative impact on profitability. This is because these dimensions justify a retailer to charge higher prices and at the same time, customers get more value in return. Therefore, these dimensions can be used to create entry barriers against newcomers and substitute products. A situation where many rivals compete on the same dimensions and target the same customers, zero-‐sum competition can be the result. This means that profitability is decreasing and that all the competitors are worse off. Consequently, positive-‐sum competition is much more likely to occur when every competitor within an industry targets a specific customer group and specific needs in the market (Porter, 1980; Porter, 2008). Chen (1996) points out that the relationship between pairs of firms should be re-‐garded when analysing industry competition, rather than all of a firm’s competi-‐tors or groups of firms at the same time. This is due to the fact that there are dif-‐ferences within the market, meaning that some competitors are more similar to a firm and thus a bigger rival.


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2.2.3 Bargaining Power of Buyers

Buyers try to reap the biggest benefits from the goods and services they buy. This can be for example in the form of price reductions or better service conditions. Consequently, industry profitability can be significantly reduced depending on the level of the bargaining power of buyers (Porter, 1980). Several conditions signify whether the bargaining power of buyers is weak or in-‐tense. For example, if a large portion of a supplier’s sales go to one retailer, the chances are high that this retailer possesses bargaining power. One mean to de-‐crease bargaining power of buyers is by increasing the service and thus raising the buyers’ switching costs (Porter, 1980; Porter, 2008). Grundy (2006) argues that there are a lot of interdependencies between Porter’s five forces that one should be aware of. One of these interdependencies is between bargaining power of buyers and threat of new entrants. Buyers can have the power to spur new companies to enter an industry and hence decrease entry barriers (Grundy, 2006).

2.2.4 Bargaining Power of Suppliers

The threat of rising prices and/or the reduction of the quality of the products a supplier leverages to its buyers, are means to gain bargaining power over firms in an industry. Just like under a condition where there is bargaining power of buyers, suppliers’ power can lead to a severe reduction of industry profitability. A situation where there are only a few suppliers and a more disconnected buyer group, raises the bargaining power of that supplier group. In addition to that, the importance of the supplier’s product for the buyer should be regarded. The more important it is, the more vulnerable the buyer is to actions benefiting the suppliers (Porter, 1980). Of significant importance is the threat of forward integration into the buyer’s mar-‐ket (Porter, 1980). According to Levy and Weitz (2009, p.7), “forward integration occurs when a manufacturer undertakes retailing activities”. Chocolate and confec-‐tionary producer Lindt is one of those producers who integrated forward into its buyers’ business by opening small stores where exclusively Lindt chocolate and confectionary is being sold. On the other hand, backward integration occurs when a retailer enters the market of its suppliers and manufacturers (Levy & Weitz, 2009).

2.2.5 Threat of Substitute Products

Substitute products are those that are similar to the ones produced within an in-‐dustry. The breadth and depth of the merchandise offered by retailers are of im-‐portance when identifying substitute products. The breadth of merchandise, also known as variety, is the amount of merchandise categories that are covered in a re-‐tailer’s offering. Assortment on the other hand, is the synonym for the depth of merchandise, and refers to the aggregate of different articles within a specific mer-‐chandise category (Levy & Weitz, 2009).Especially the depth of the merchandise might be deeper in certain merchandise categories. For instance, the assortment of


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conventional pasta sauces in Swedish retail stores is deeper than the one of or-‐ganically produced pasta sauces. Substitute products can decrease the price level that firms in an industry have as their target. The more similar a substitute product is to a firm’s product, the less freedom that firm has to alter the price setting as it wishes. A mean to decrease the threat of substitutes is by adding new features and value to the product or service being offered (Porter, 1980). Well-‐educated employees that have extensive pro-‐duct knowledge, such as in a speciality store, is an example for good service. Pri-‐vate brands, a firm’s own brand, are another way to decease the threat of substi-‐tutes. This is due to the fact that these private brands create uniqueness for a re-‐tailer as well as store loyalty among its customers (Levy & Weitz, 2009). Moreover, firms should always pay attention to changes in other industries that have some relatedness to their own. This is due to the fact that technological im-‐provements or changes in customer preferences can lead to the fact that an in-‐dustry’s products can suddenly become a substitute for the ones of another in-‐dustry (Porter, 1980; Porter, 2008). However, the identification of a firm’s product’s substitutes is not that easy, due to the fact that there are direct and indirect substitutes. For example, a supplier’s ser-‐vice sold to a retailer is threatened when the retailer is acquired by another com-‐pany with an already existing supplier of that service (Porter, 1998). One does not immediately think of milk to be a substitute to Coca Cola. Nevertheless, both are beverages and the sales of Coca Cola can be negatively affected by a large market-‐ing campaign that highlights the healthy ingredients of milk against the unhealthy ones of soft drinks. Porter (1980) identified three characteristics that make up the function of the threat of substitution. These are first, the costs that occur when switching to a substitute, second, the tendency of the buyer to buy the substitute product and third, the difference in value and price between a substitute and the current product. Based on the knowledge about these five forces, a firm better knows in which areas it can make use of its core competencies and compete against its rivals as well as in which areas it should avoid competitive actions (Porter, 1980). This goes in line with Hatten’s and Hatten’s findings (1987), who point out that a successfully im-‐plemented strategy of firm A might not work for firm B due to differences of firm B’s resource capabilities. However, the analysis of the five forces should be linked to factors outside of an industry, such as legal and economic factors, in order for a firm to get a better picture of the competitive landscape in which the industry is embedded (Grundy, 2006). When regarding these factors, and understanding the five forces that shape its industry, a firm can successfully reshape the industry structure.

2.3 The Components of a Competitor Analysis

The reason why a competitor analysis is of importance is due to the fact, that it gives a better idea about the likelihood of a competitor’s possible strategic moves and reactions, based on changes in the competitive industry environment. A com-‐


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petitor analysis can help a firm, among other things, to more easily figure out what a certain strategic move of a competitor implies for its own strategy, which area and/or competitors it should tailor its strategic moves for, and which competi-‐tor(s) it should avoid to attack. At the same time, a firm can use this framework for self-‐assessment (Porter, 1980).

Figure 2-‐2 The Four Elements of a Competitor Analysis (Porter, 1980)

Figure 2-‐2 shows the four elements of a competitor analysis, namely the current strategy, capabilities, assumptions and future goals. Having analysed these four elements, a firm will better understand, how a competitor might respond and act now, as well as in the future (Porter, 1980). A competitor’s future goals give an idea about the likelihood of a change in its strategy and the level of retaliation, given a strategic action taken by one of its competitors. This is because future goals can predict whether a firm is satisfied or not with its current situation and results and in what market position it wants to see itself in the future. In order to avoid strong competitive actions and reactions due to a new market entrant, a firm may investigate if there is a position in the market that does not directly threaten its competitors (Porter, 1980). Assumptions about a competitor can be drawn by looking at facts like its values, beliefs about its market position or its history. For example, a firm may look at one of its competitor’s areas in which that competitor has been successful, and may thus be able to assume what that competitor is going to do next (Porter, 1980).


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A competitor’s capabilities show its strengths and weaknesses and thus the level of power to act and respond. These capabilities help a firm to determine whether a competitor is able to adapt to a new entrant’s way of doing business. This way of doing business can be related to many aspects, like for example cost, service, pro-‐duct or marketing. In addition to that, the level of a competitor’s financial strength is a further characteristic worth investigating. It can give a firm a good picture about how the rival will act in terms of fierce competition and retaliating actions (Porter, 1980). Based on the results of the analysis of these four elements, a firm can create a competitor’s response profile (Porter, 1980). Chen et. al. (1992) did some further research on how competitive actions impact firm rivalry, which builds on Porter’s findings related to the five forces and a competitor’s response profile. The time lag between a competitor’s move and its competitors’ responses was investigated. Chen et al. (1992) found that it depends whether a competitor’s move is strategic or tactical. Strategic actions require more firm resources and have a greater impact on the business than tactical actions. The latter leads to more responses by com-‐petitors in a shorter period of time. Strategic actions on the other hand can reduce the number of competitive responses and can take the competitors a longer time to respond. This is due to the fact that it takes more time to implement a strategic ac-‐tion in comparison to a tactical one (Chen et al., 1992). Market commonality and resource similarity are two more measures that are of importance when doing a competitor analysis. Both of them are closely linked to Porter’s five forces (Fig. 2-‐1) and Porter’s four sources of a competitor analysis (Fig. 2-‐2). Market commonality, is a measure about the number of markets in which a firm and a rival are competing in, as well as the importance of the markets to each of them. Sweden’s food retailers ICA and Coop for example compete in sev-‐eral markets, such as in Sweden and Norway, groceries and home ware. Resource similarity is the degree to which two firms’ resources are similar to each other in both type and number of resources (Chen, 1996). This can be for example in the form of the similarities between two retailers’ suppliers like Arla or Axa that both supply Coop and ICA with organic food products among other things.

2.4 SWOT

The SWOT analysis is a tool to analyse the broader environment of an organization. According to Dyson (2004),the SWOT analysis combines internal and external fac-‐tors and is useful for analysing the fit between an organization’s capabilities and its external environment. Furthermore, it is, according to Mintzberg et al. (1998), a powerful tool in the strategy development process. Therefore, we will use it to ana-‐lyse and develop a strategy for our cases.

SWOT stands for strengths, weaknesses, opportunities and threats. It includes the internal capabilities of an organization in terms of strengths and weaknesses, as well as the external business environment in terms of opportunities and threats (Fleisher & Bensoussan, 2003). According to Fleisher and Bensoussan (2003), strengths are those capabilities and resources which help an organization to be


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more competitive against their competitors and to reach its objectives in terms of performance. This includes for example the organizational culture, human re-‐sources and products. On the other hand, the weaknesses of an organization are a limitation or the lack of a capability or resource. Such a limitation or lack can make it harder to achieve its performance objectives. On the other hand, this could be a capability of a main competitor that the organization does not have like for exam-‐ple the lack of competent staff or the lack of an innovative culture.

Whereas both strengths and weaknesses are internal and depend on the organiza-‐tion, opportunities and threats are in the external environment in which the orga-‐nization operates. Opportunities are current or future conditions in the external environment, which are beneficial for the organization and give a chance to im-‐prove its competitive position. This includes for example increasing demand for a product the organization offers or a newly available technology. Threats, on the other hand, are those current or future conditions which are potentially harmful to the organization, such as increasing market saturation or unfavourable gov-‐ernment policies (Fleisher & Benoussan, 2003).

By identifying their strengths and weaknesses the organization can strategize on increasing their strengths and decrease or even remove their weaknesses. Fur-‐thermore, by analysing external opportunities and threats, the organization can find ways to better exploit opportunities and defend itself against threats. There-‐fore, it is a powerful tool to develop future strategies and courses of action (Dyson, 2004).

Fleisher and Bensoussan (2003) further argue that a SWOT analysis does not pri-‐oritize between the different parts of the analysis. It is rather open to the analyst to find the most important aspects of the external and internal factors and make sure that no factor has been overlooked. This flexibility and the rather easy application make it a valuable tool for a wide variety of uses.

2.5 Porter’s Generic Strategies

A competitive strategy is essential for a company’s relative position within a spe-‐cific industry. Positioning decides if a company performs above or below its rivals’ performance in the industry. When positioning is well chosen, a firm can outper-‐form its rivals even though the industry structure is unfavourable (Porter, 1998). However, the fundamental objective of using any type of strategy is to gain long-‐term strategic competitiveness, a sustainable advantage over competitors and extraordinary revenues (Porter, 1980). Mankins and Steele (2005) confirm Porter’s theory: they consider these purposely chosen business-‐level strategies as crucial since long-‐term performance is related to a company’s strategy. Porter’s strategies further finds encouragement from Hough (2006), who argues that a business level strategy is a necessary set of activi-‐ties to capture a competitive and sustainable advantage by making use of core competencies in a certain industry. Two basic forms of competitive advantage, which are integrated in the competitive scope of actions for which a company strives, result in three generic strategies:


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cost leadership, differentiation and focus. When companies choose a strategy, they evaluate two forms of potential competitive advantage. First, competitive advan-‐tage based on costs, which means to have lower costs than competitors. Second, competitive advantage based on uniqueness, which is the capability to differentiate the company and/or its products or services from competitors. The focused strat-‐egy targets cost leadership or differentiation in a narrow market, while the other two strategies target a broad range of segments (Porter, 1980). The key to success is superior integration of the strategies, which can create unique value for a firm (Hitt et al., 2009).

Figure 2-‐3 Porter’s Generic Strategies (Porter, 1998)

2.5.1 Cost leadership strategy

According to Porter (1998), the cost leadership is clearer than the differentiation strategy. The strategy aims at overall cost leadership in a specific industry by the usage of a set of integrated functional activities (Porter, 1980). A great emphasis towards cost control is required to achieve this basic objective. Hence, cost leaders search continuously for worthwhile ways to reduce costs. This can be done through the precise reflection of inbound and outbound logistic ac-‐tions by for example using facilities in inexpensive locations. Moreover, it can be done through a careful examination of support actions, which contain potential cost reductions. However, the origin of cost advantages varies between industries and the strategy may also target economies of scale. The latter is usually achieved by producing standardized products (Porter, 1980). Supporting Porter’s theory, Burns (2007) also claims that the establishment of ec-‐onomies of scale is necessary to reach cost leadership. In addition to that he con-‐siders permanent investments in new technology as vital.


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Obtaining a lower cost position allows companies to achieve above-‐average re-‐turns. Furthermore, the cost leadership position protects against competitors in two ways. First, the low cost structure still provides profit after rivals have com-‐peted away their own revenues. Second, it protects against powerful buyers and suppliers (Porter, 1980). Walmart is a good example for a retailer that successfully focuses on cost leadership. By having a very efficient supply chain, Walmart was able to make savings that were passed on to consumers in the form of lower prices. Being the world’s largest retailer also implies to have a lot of power over its sup-‐pliers (bargaining power of buyers) and thus Walmart is often able to get the mer-‐chandise cheaper than competitors do.

However, the cost leadership strategy is not without any risks. The main problem for a cost leader is to uphold the strategy successfully in the long run. According to Porter (1980), one of the main factors that lead to a failure of this strategy are the risk that rivals might be able to imitate the strategy. Another problem is the ina-‐bility to recognize demand changes and technology changes since the attention is only drawn to costs (Porter, 1980).

2.5.2 Differentiation strategy

The strategy is a set of activities taken to offer products or services which buyers perceive as different and important for them. When using differentiation strat-‐egies, companies aspire to be unique in their industry along a number of dimen-‐sions. These dimensions can for example be technology, the dealer network, cus-‐tomer service, design, or a firm’s brand image. In the ideal case, the firm is distin-‐guished from rivals through more than one dimension. Firms using the differenti-‐ation strategy should focus on investing in and creating attributes, which differ-‐entiate a product or service in a manner that buyers appreciate rather than focus-‐ing on costs. Nevertheless, the strategy does not allow neglecting costs (Porter, 1980). Thus, firms using the differentiation strategy supply non-‐standardized pro-‐ducts to buyers who perceive differentiated attributes as more important than low costs (Hitt et al., 2009). Ashmos Plowman et al. (2007) developed this model further by stating that long-‐term success with this strategy will be achieved if the company continuously im-‐proves differentiated attributes that buyers appreciate or that give new value without having a significant growth in costs. It is essential to understand that the differentiation strategy has to be specific for every market. If the company understands what its target group appreciates most, it can build on a unique feature and thus can be able to earn above-‐average re-‐turns. This can only be achieved if the incremental cost of being unique is covered by a premium price. Differentiation creates a defensive mechanism against rivals through the brand loyalty by buyers. Furthermore, the higher margins delete the necessity for a low-‐cost position and allow companies to cope with suppliers (Por-‐ter, 1980). Robert Talbott is a good example for a company that is highly differentiated. Robert Talbott is a known brand for high-‐end clothing such as neckwear. Differ-‐


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entiation is created by selling clothing made of the most exclusive and finest fab-‐rics and custom-‐made neckwear and shirting’s. However, there are also risks connected to the differentiation strategy. The main problem is to sustain the competitive advantage against the imitation of rivals. A further threat is a change in customers´ preferences that a firm cannot meet or recognize in time. Moreover, the buyers’ decision that the differences between the differentiated product and the cost leader’s product is not worth a premium price anymore can be regarded as a threat (Porter, 1980).

2.5.3 Focus Strategies

The only distinction between a focus strategy and the two general strategies is the competitive scope. The focus strategy searches for competitive advantages by ser-‐ving a specific objective very well. Companies apply the focused strategy to exploit their core competencies in order to meet the needs of buyers in a specific industry segment or niche to the exclusion of other buyers. To reach these advantages, firms normally specialize to be able to supply their particular segment more efficiently. As a result, the specialized firm either reaches a low cost position in serving its ob-‐jective when using the focus strategy or differentiates through a more successful satisfaction of costumers´ needs or both. In other words, the focused strategy makes use of sub-‐optimization and incurs advantages underlying this factor, whereas the rivals that focus on a broader scope fail to adapt to the specific seg-‐ment’s needs (Porter, 1980). A firm can choose between two types of focus strategies: the focused cost leader-‐ship and the focused differentiation. The actions needed to exploit both focus strategies are virtually identical with those of the cost leadership and differenti-‐ation strategy in a wide scope. Furthermore, cost leaders benefit from lower costs and take advantage of them in a specific segment. By the usage of economies of scale a company can supply a product or service at a lower cost. The differentiation focus takes advantage of special needs of customers in specific segments instead of concentrating on costs (Porter, 1980). If the focused strategy is applied successfully, companies can often reach a com-‐petitive advantage in specific segments or market niches. Furthermore, they may earn above-‐average returns even though they do not hold an industry-‐wide com-‐petitive advantage. The essence of focused strategies is to operate in a special seg-‐ment of an industry more effectively and successfully than industry-‐wide rivals do (Porter, 1980). Focused strategies also implicate the risks of being imitated by rivals and hence losing the competitive advantages in the long run. Moreover, rivals may succeed better by supplying an even smaller determined market segment. Also the equali-‐zation of preferences of buyers in an industry –wide market and narrow market segment – is a potential risk (Porter, 1980).


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2.5.4 The pursuit of more than one generic strategy

Each generic strategy is different in terms of the approach of how to create a com-‐petitive advantage. In order to prevent being “stuck in the middle”, a company should choose one of the approaches. When “stuck in the middle”, a company is in a very poor strategic position and thus does not possess a competitive advantage. Hence, low profitability is the consequence (Porter, 1998). A firm either loses cus-‐tomers who require low prices or it loses its profit since it wants to stand out from low-‐cost firms. Furthermore, the firm has to compete with rivals which focus on high margins. Thus, the company will compete at a disadvantage because the cost leader, differentiator or focuser will have a superior position to compete in any segment. Moreover, a blurred corporate culture without a clear strategic vision can lead to a situation where a firm is “stuck in the middle” (Porter, 1980). Miller (1992) who criticizes Porter’s generic strategies argues that if a company uses this model when strategizing, the company’s options will be very limited. Fur-‐thermore, it will cause inflexibility and force the company to narrow its strategic vision.With a narrow strategic vision a firm is not able to response to envi-‐ronmental uncertainties (Miller, 1992). A firm with a broader strategic vision holds more flexibility and together with that the ability to set up with uncertain, con-‐siderable and fast upcoming environmental changes (Aaker & Mascarenhas, 1984). Due to high consumer expectations (low-‐priced and differentiated products and services), there exist several companies that are using an integrated cost leader-‐ship and differentiation strategy. On the contrary, Hitt et al. (2009) claim that firms which successfully pursue more than one strategy are more flexible as well as able to adapt changes in the fast changing environment. To achieve this flexibility, firms usually possess strong relationships with external parties which sometimes exe-‐cute a number of the primary and support actions (Dyer & Hatch, 2006). Such ne-‐cessary activities may be inbound or outbound logistics, service or also marketing and sales.For example, Toyota could achieve a relational competitive advantage by exploiting its knowledge assets with its automotive supplier network. As a result of their greater knowledge sharing, Toyota’s U.S. supplier could reduce defects by 50 percent for Toyota, against only 26 percent for its biggest customer(Dyer & Hatch, 2006). The fashion shop Zara is a great example which follows successfully an integrated cost leadership and differentiation strategy. The firm is vertically integrated and manages its assortment from the design to sale. Furthermore, it sources much merchandise locally which helps them to respond fast to market changes. Addi-‐tionally, this strategy allows Zara to produce quality products which are sold at af-‐fordable prices (Hitt et al., 2009). Dess and Miller (1993) see the generalizability as well as the accuracy of Porter’s (1980) strategies as questionable. Their research showed that a combination of the different approaches is possible and also profitable. Nevertheless, they confirm that the model holds a high level of complexity and hence is useful in characteriz-‐ing complex strategies (Dess & Miller, 1993).


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In addition, Wright argues that it is not entirely correct to say that a firm will have a successful business when competing on the foundation of one of the three ge-‐neric strategies. Wright points out that companies do not really have the option to select one of the generic strategies. The selections have limitation boundaries in respect to the size of a company and its access to resources, industry and competi-‐tive analyses. Larger companies with better access to resources tend to strive for the cost leadership or the differentiation strategy (Wright, 1987).

2.6 Summary of Frame of References

In the frame of reference we display theories that are useful to reach our purpose and answer our research questions.

In order to answer our first research question and to analyse how competition looks like in the Swedish organic food market we will mostly use Porter's (1980) five forces framework. Furthermore, to get a deeper understanding of the competi-‐tive situation, we will also use the theories by Chen (1996) and Grundy (2006) as well as Porter's (2008) more recent work on competition. To analyse the data con-‐cerning our second research question we will use a SWOT analysis (Dyson, 2004; Fleisher & Benoussan, 2003) which will help us to analyse how the capabilities of different companies fit with changes in the external environment. Finally, we will analyse what generic strategies several players in the Swedish organic food market are pursuing in order to compete successfully and answer our third research ques-‐tion. To achieve this we will use Porter's (1980) theory about generic strategies and Miller (1992) who found some drawbacks of Porter's work. Furthermore, we will use Levy’s and Weitz’ (2009) work about retail channel strategy in order to analyse what channels can be used to compete successfully.


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3 Method In this section of our paper we want to describe the kind of research we will make use of to achieve our purpose. We have decided to make three case studies in order to deepen our understanding of the Swedish organic food market and how those companies position themselves or should position themselves in relation to com-‐petitors. The case studies will be mainly based on primary research in form of four interviews with executives of the respective companies. During our interviews we will use a qualitative, semi-‐structured approach since we believe that this will help us most to collect the data we need to reach our purpose.

Furthermore, we will use secondary data in form of books, academic articles, stat-‐istics and websites to broaden our knowledge about the industry and get an over-‐view about the theories and research which has already been done.

3.1 Choice of method

According to Miller and Salkind (2002), the choice of method and its design is of high importance to establish validity and test theory.

There are two different types of methods one can use, a qualitative or a quantita-‐tive approach. It depends on the purpose and type of research one pursues whether a quantitative or a qualitative approach is adequate and therefore the type of method has to be aligned with the purpose in order to fulfil its objectives (Bryman& Bell, 2007).

The intention of our thesis is to analyse the Swedish organic food market in terms of industry, competition and business-‐level strategies. In order to get a close understanding of how the firms apply strategy, as well as how they interpret the market, we believe that a qualitative method is more appropriate and useful for our research than a quantitative.

According to Bryman and Bell (2007), the aim of the qualitative method is to inves-‐tigate a question in more detail and to analyse the outcomes afterwards. Therefore, it is often applied for issues which are larger and broader. The main advantages of this type of research method are the openness towards information (Jacobsen, 2002) and its richness in information (Creswell, 2003). Because of these advanta-‐ges, we believe that a qualitative method enables us better to collect extensive and relevant data from proficient people and gain in depth knowledge about our topic which is crucial to reach our purpose.

3.1.1 Literature review

In order to get an overview of the organic food market in Sweden and the research which has already been done within the field, we used books, journals and aca-‐demic articles.

Course books and more specific books were found in the university library or bor-‐rowed from our thesis tutor. We used those mostly to broaden our own knowledge about the subject and to find basic theories for our theoretical background. Never-‐theless, most of our research was done via the Internet since we were looking for academic articles with more specific theories. This was done by search engines


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such as Google scholar or Scopus and in academic journals such as the Harvard Business Review.

Especially in books but also in academic papers, we were confronted with the problem that much of the research which has been done is not the authors work but rather an interpretation of work done by others. In order to avoid a bias here, we always went back to the original data and looked what was written there. By doing so, we could make our own interpretation of the data rather than interpret-‐ing someone else's opinion.

3.1.2 Case study

The decision whether a case study should be done or not depends on the purpose and research questions. According to Yin (1994), a case study is for example ap-‐propriate when “how” or “why” questions need to be analysed. Furthermore, case studies are useful when different forms of evidence such as interviews, articles or observations are being analysed at the same time or if the research analyses cur-‐rent events (Yin 1994). George and Bennett (2005) further write that case studies possess strengths where statistical methods have limited applicability and are of-‐ten useful to test hypothesis or develop theories. Moreover, case studies are strong in picturing things which are unclear or difficult to understand. This is done in a way that makes it easier to interpret them (Eriksson & Kovalainen 2008).

Considering these advantages, we believe that a case study is suitable for our the-‐sis and helps us to reach our purpose. However, we are aware of the limitations of case studies. According to George and Bennett (2005), errors in the selection of cases often lead to biased results. Furthermore, they stress the lack of universal applicability of case studies since they might treat a point or subject which is very different from others.

3.2 Interviews

We decided to collect our primary data with the technique of semi-‐structured interviews. This technique is a combination of structured but also open questions (Gillham, 2005). The researcher holds a list of questions which have to be covered even though the questions can differ from interview to interview. The chronology of the question can also vary depending on the process of the conversation (Lewis et al., 2009). According to Williamson (2002), the main advantage of a semi-‐structured interview is that the interviewer is in the position of asking additional questions, in the case that the result is not satisfying. This enables the interviewer to guide the interview and get a homogenous coverage of the area of interest (Gill-‐ham, 2005). Chart 3-‐1 gives an overview of the interviews.

Our aim for the interview is to reach a flowing conversation with the respondent and adapt the interview to the responses we get during the interview. Therefore, we decided to do semi-‐structured interviews since we believe that this approach is best in order to collect reliable data which is useful for reaching our purpose. Es-‐pecially the above mentioned advantage of semi-‐structured interviews, that the interviewer can ask additional questions during the interviews, is of high import-‐ance for us. Furthermore, semi structured interviews enable us to clarify the re-‐spondent’s answers by asking control questions and repeating important informa-‐


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tion. According to Steinar (2012), this helps to facilitate the correct interpretation of a statement and increases the validity of the data.

Chart 3-‐1 Overview of interviews

Nevertheless, there are some potential bias when conducting a qualitative inter-‐view and we are aware of those. As we will do multiple interviews, there is the danger that the interviews become less comparable when we are adapting the interviews to the respondents answers. Furthermore, we will deepen our know-‐ledge during the interviews and can use this knowledge during the following inter-‐views. Even though this makes the interviews less comparable, Steinar (2012) points out that exploratory studies can be continuously improved as the re-‐searcher finds out more during the process. Therefore, we will try to use the addi-‐tional information we gain during our research process to improve our data collec-‐tion.

Moreover, one should not ignore that answers can differ relating to the tone of voice the interviewer applies during the conversation. The result can also be inter-‐fered by the way how the questions are interpreted by the interviewee and also the interviewer. Age, educational level, sex and race are personal characteristics which may lead to a biased result of the interview (Williamson, 2002).

Another potential bias is the respondents’ comment of the language in question. To avoid a bias here we decided to conduct the interviews in Swedish rather than English. This is the mother tongue of our respondents and we believe that this makes the results less biased since we can be sure about a good command of the language in question. Furthermore, the respondents might feel more comfortable to respond in their own language which further increases the validity.

Finally, we decided to tape record our interviews. This is in line with Lewis et al. (2009) who suggest that the conversations should be recorded by audio-‐recording or by note taking so that the interviewer can go back and listen to them for doing a thorough analysis. Hence, we will not lose any detail of the data we will collect. Furthermore, audio-‐recording has the advantage that it avoids the diversion of


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note taking and enables us to concentrate completely on our respondents and questions. Moreover, it will provide us with the exact statements and not only with an interpretation we made rapidly during the interview (Williamson, 2002).

3.2.1 Interview selection

To reach our purpose and collect detailed and reliable information from our re-‐spondents, we decided to select samples from various firms in the industry. These include interviews with ICA and Coop, the two main players in the market, but also with the small organic food store Bikupan which has only a few hundred custom-‐ers. Reasons for this selection were that ICA and Coop are not only the two largest companies but also have a high influence on the market in terms of setting an in-‐dustry standard and price level which is accepted by customers. Furthermore, ICA and Coop are operating all over Sweden and are selling organic food in almost every town or village in Sweden.

Bikupan, on the other hand, has low significance on the Swedish market. Neverthe-‐less, we chose to interview the company since there are many similar stores in other Swedish cities which have similar resources and compete on the same bases as Bikupan. Therefore, the findings from Bikupan can to some degree be trans-‐ferred to those companies and it was more convenient to interview a company based in Jönköping rather than somewhere else in Sweden. Moreover, competition in the organic food market in Sweden is to some degree local. This means that small organic food stores such as Bikupan might have importance in some regions but less so in other regions.

During our analysis we found out that a Coop Forum in Gothenburg opened an or-‐ganic food store inside the supermarket and decided to do an interview with the shop manager. The reason for this is that we believe that such a store would be a strategic option for Coop as well as ICA. With the collected data from the interview we will have relevant information to better analyse if such a strategy could be suc-‐cessful. Chart 3-‐2 lists the reason why we chose these four cases.

We decided to interview all the mentioned companies rather than just one. Accord-‐ing to Yin (1994), multiple cases are more robust than single ones and we believe that we can limit the bias by doing several cases since we limit the risk that one company is an extreme case and therefore not representative for the industry. Chart 3-‐2 gives a short overview about the reasons for choosing the specific cases.

Chart 3-‐2 Reasons for choosing the specific cases


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3.2.2 Observations

Before the interviews we also visited stores of ICA, Coop and Bikupan. During our visits in the stores we were looking around to get knowledge about the stores, how organic products are presented and how they are priced. Consequently, we could develop specific questions about the shops which we could later ask during the interviews. Furthermore, we could find out basic information like pricing during our visits so that we did not have to ask those questions during the interviews and instead focus on more specific questions.

In the case of Bikupan the interview was held in the store. This had the advantage that our interviewee Stefan could use the store to clarify some things by showing us for example the merchandise.

3.2.3 Data collection

We tried to do our interviews in a relaxed environment and tried to limit the inter-‐ference of the environment. In the case of Bikupan which is situated in Jonkoping, we went there personally in order to talk to Stefan, the vice chief of Bikupan. The interview was held in the store with three interviewers and one interviewee. This had the advantage that Stefan could show us the shop and explain some points bet-‐ter by referring to the shop setting. Nonetheless, we are aware that the envi-‐ronment did to some degree interfere in the interview, for example when a cus-‐tomer entered the shop.

Due to distance and the preferences of our other interviewees, we conducted phone interviews in the other cases. The time of the interview was always agreed upon in advance so that the interviewee could be prepared for the interview and limit interactions with the external environment. Furthermore, we send the inter-‐view questions to the interviewees in advance. In the case of ICA we had scheduled a phone interview with their manager of environment and social responsibility. Due to her tight schedule she had to cancel the phone interview and offered in-‐stead to answer our questions via e-‐mail. This meant that in the case of ICA we were not able to ask questions to respond to her answers since we did have to send her all questions In advance.

With the exception of ICA the interviews were voice-‐recorded and later written down by us for later analysis. This enabled us to go back to the original data later during our analysis and allowed us to interpret the collected data again. The tran-‐scripts of the interviews can be found in the appendix. To get a better overview of the interviews, please refer to Chart 3-‐1.

We did also send the transcripts of the interviews to our interviewees prior to starting our analysis. We asked them to read the interview transcript and agree that it reflects the interview. Furthermore, we asked their permission to use the interview for our thesis and put the transcript in our appendix. In all cases we got their permission. In the case of Bikupan which was held in person, we asked the interviewee directly after the interview for his permission and he agreed on it. Once we are finished with the thesis, we will also send a copy of it to each of our interviewees.


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3.3 Method for analysis

The analysis of empirical data from a case study, which consist of semi-‐structured interviews, is intricate and complex since the results of the interviews rest on the awareness and experience of the interviewees. Furthermore, Yin (1994) asserts that the analysis of a case study displays the least developed part of this research method. To get a comprehensive idea of our empirical data, we decided to base our analysis on the seven step process for analysing research methods by Marshall and Ross-‐man (2006). Chart 3-‐3 Seven steps process (Marshall & Rossman, 2006) for analysing research methods

We believe that these steps provide a great level of quality and dependability since Marshall and Rossman (2006) establish their interpretation upon a list of many relevant and important authors. Furthermore, their interpretation is in line with our perception. Before we made use of the seven step process by Marshall and Rossman (2006), we started to transcribe the recorded data in order to get a better overview of the interviews. However, a disadvantage of transcription is the sacri-‐fice of our data with regard to how the words were pronounced and in what speed and tone (Gillham, 2005). When performing the first step of the process, we put the information in order and tried to find out which of the information is relevant for each level of our analysis and which information is not applicable. Subsequently, we edited the residual in-‐formation through the allocation of headings and notes, to make the information more manageable and less overwhelming (Marshall & Rossman, 2006). The second step addresses a deeper insight into the residual data. In order to gain a deep understanding and to get familiar with the information, we read the infor-‐mation thoroughly various times. This step may be seen as simple and redundant, but it is of high importance for making the coming stages feasible (Marshall & Rossman, 2006).


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Following the deeper insight into the residual data, we attempted to originate categories and themes. To achieve this, we tried to discover patterns. Recurring events like experience, ideas or language helped us to identify patterns. Addition-‐ally, we questioned the collected data in connection to our framework to engage both dimensions in interactivity regarding our analysis (Marshall & Rossman, 2006). Furthermore, Bailey (1996) characterizes patterns as analytic assistive equipment. He claims that, under close observation, a great amount of indistinctive behaviours can in fact create such patterns (Bailey, 1996). Hence, we will observe the order of appearing events carefully, to discover the veiled patterns. Neverthe-‐less, Marshall and Rossman (2006) point out that one has to be cautious in order to generate the perspective of the research object and not an interpretation of the re-‐searchers. The fourth step is the process of coding the information. There are different forms of codes, like abbreviations of keywords or numbers, and it is up to the researchers to select one (Marshall & Rossman, 2006). We divided our data into categories in relation to our theoretical framework. We believe our process created an equal ef-‐fect, since Marshall and Rossman (2006) consider coding as the process of marking passages in the information. In addition to that, our process can be adapted to our approach to research. One negative aspect is that this process might be more time consuming, but we do not see that as an important constraint. The next step concerns the interpretation. At this stage we connected the themes and categories as well as established a story line existing of what we have learned and what makes sense. In other words, we attempted to attach importance to what was encountered. Furthermore, we tried to assess the centrality and the utility of our information (Marshall & Rossman, 2006). The sixth point offers the opportunity to look for alternative understandings. There are always several understandings when it comes to patterns and trends. Even the patterns that seem to be the clearest have a number of different interpre-‐tations (Marshall & Rossman, 2006). Hence, we were performing this stage with the awareness of the existence of multiple views, understandings as well as inter-‐pretations. As a result of these multiple interpretations we can better argue why our chosen perception is the most proper one. The last step deals with the engagement “in the interpretive act, lending shape and form–meaning–to mountains of raw data” (Marshall & Rossmanm, 2006, p.162). To be more precise, this section is about writing the report and Marshall and Rossmanm (2006) further claim that this stage is inseparable from the whole an-‐alysis when applying the qualitative method. The objective of our analysis is to find links between our theoretical framework and our empirical findings that help us to get a better picture of the Swedish or-‐ganic food market.


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3.4 Evaluation of method

When newly acquired data is enclosed to the interviews, the level of comparability of the interviews decreases. During our interviews, we could not find many aspects that had been altered. Therefore, we decided not to change the questions and structure of our interviews in a great manner which enabled us to hold an analogical way to generate out-‐comes of the same sort from the various interviews. Hence, comparability between the several interviews is ensured, since no newly acquired information was added which would affect our research to a large extent.

3.4.1 Practical Problems

When performing the data gathering process we faced two considerable practical problems. One significant problem was to gather desired confidential information through the interviews. The interviewees answered our questions carefully and deliberately in order to not to disclose competitive information. However, the interviewees provided us with adequate information to get a good overview of the market. The second problem concerns the quality of our telephone interviews. Since the phone connection was not always satisfying, we had to take a loss of some words and also the way of how the words were avowed. However, the loss of words and intonations were minimal and did not affect the quality of our analysis, so that we do not consider this point as an important implication.

3.4.2 Validity & Reliability of the Methods

Validity of research depends on which type of method is used for the information collection. According to Saunders, Lewis, and Thornhill (2003), validity assesses the connection between what is measured and what was intended to measure. Findings need not only be valid, the findings should also be reliable. Svenning (2003) explains reliability as a situation in which nothing has been altered within a sample. Two researches with the same method and objective should supply the same outcomes. In other words, reliability is defined by the researcher’s bias (Saunders et al., 2003). Since our interviewees, except of one, were geographical widespread, we conducted phone interviews. For a better implementation and in order to not confuse the interviewee, only one person from our research team per-‐formed the interview. Nevertheless, a second person was present to listen and come up with additional questions if necessary. As a consequence, the interpreta-‐tion of the conversation may be somewhat biased. Such examples, leading to bias, could be the tone and pace as well as the wording. Depending on how the speaking was interpreted the interview took its course. There are, however, limitations for our chosen method and thus we highlight the issues in the following. As mentioned earlier there is a potential bias if the number of cases is small (Yin, 1994). Since we have not many cases there is the risk that our point of view of the market might be biased. Nonetheless, we believe that our selection of cases gives a good representation of the market as argued earlier.


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The analysis of our research is an interpretation of our empirical gathered infor-‐mation and not a calculated scientific result. As our empirical information is ac-‐quired from interviews, it is difficult to determine the correctness. One cannot say if the interviewees remember everything correctly, exclude partitions of the truth, or just do not tell the truth because of his or her own interests. Mentioned items are not extraneous, since our interviewees keep high and important positions within the firms and as a result may want to retain certain aspects for themselves. Besides, the interviews may contain biased and limited information, since our interviewees might be stressed and also have limited time windows for interviews. Furthermore, when collecting our empirical data, we applied semi-‐structured interviews. Semi-‐structured interviews do not provide a detailed procedure for an interview. Hence, the interviews differ from each other to some degree, concerning the questions. Finally, all interviewees permitted to include the information of the conducted interviews in this thesis which increases the validity of our statements.


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4 Empirical Findings In this part of our paper we are presenting the findings we got by applying the method discussed earlier. First, we will start by presenting some background in-‐formation about the companies we selected for our cases. Second, we will present the results we got in terms of the companies’ strategic positioning and business-‐level strategies in relation to its competitors.

We believe that giving the reader this background information helps to put the in-‐formation into a context and makes it easier for the reader to evaluate the validity of our analysis and findings.

4.1 Background

In the background part we will present the companies chosen in more detail. This includes for example the size, financial performance and history of the respective companies. Furthermore, we will explain the context and setting in which the interview with the respective company was taken.

4.1.1 Case 1: ICA

The ICA group is Sweden's largest food retailer and one of the largest retailers in Northern Europe. The company was founded 1917, is based in the Swedish city Solna and operates around 2125 retail stores in Sweden, Norway and the Baltic countries of Estonia, Lithuania and Latvia. ICA is a joint venture owned to 60 per cent by the Dutch company Royal Ahold N. V. and to 40 per cent by the Swedish company Hakon Invest AB (ICA, 2012).

In 2011, ICA had a turnover of 95179 million SEK and made a profit of 2505 mil-‐lion SEK. ICA's main business is within food retailing were they made around 96 per cent of their turnover. Many of the ICA stores are at least partly owned by the company but some of the stores are also franchising stores which are licensed by ICA. The profit comes from sales of their own stores and royalty fees from the fran-‐chised stores. Moreover, the company sells its products and services like logistics and education to the stores (ICA, 2012).

Besides retailing the company also diversified into banking and makes a profit through their real estate branch. Furthermore, ICA has started a new concept and opened ICA to Go in Stockholm, small shops were consumers can find pre-‐packed food, sandwiches or coffee on the go. Nonetheless, those branches are relatively small with together just 4 per cent of the company's annual turnover (ICA, 2012).

In Sweden, ICA is the leader in the food retail market with a market share of 49 %, far ahead of Coop with a market share of 21 per cent (Gullstrand & Jörgensen, 2011). In terms of organic food, ICA is also the market leader with a turnover of 2 billion SEK but is behind Coop concerning the variety and assortment of organic food with an offering of around 1100 different organic products (Chart 4-‐1). Nevertheless, this number can differ significantly between different ICA stores since they are managed independently and some stores have a larger offering of organic products than others.


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4.1.2 Case 2: Coop

Coop is the second largest food retailer in Sweden behind ICA (Gullstrand & Jör-‐gensen, 2011). The company is based In the Swedish city Solna and operates 760 retail stores in Sweden. Today the company has around 7300 employees all over Sweden. Coop is owned by its parent company KF, which is the Swedish coopera-‐tive Union, a federation of 42 consumer societies (Coop, 2012).

In 2011, Coop had a turnover of 32 billion SEK of which most came from the food retailing. Coop is divided into the different retailing chains Coop Forum (hyper-‐market), Coop Extra, Coop Konsum, Coop Nära and Coop Bygg which are all offer-‐ing slightly different product ranges depending on the target market. Besides these stores, Coop also runs the Dagslivs chain and Mataffären.se, an online store which delivers a broad range of commodities to the Stockholm and Uppsala region (Coop, 2012).

Coop has a market share of 21 per cent in the Swedish food market, second behind ICA. The same is valid in terms of organic food products with a turnover of 1.6 bil-‐lion SEK. Nevertheless, Coop offers a larger product range with around 2600 or-‐ganic food products in their Coop Konsum stores (Chart 4-‐1). One should however keep in mind that Coop includes both organic food and non-‐food articles in that number. Therefore, Coop has actually less than 2600 organic food products and ICA’s and Coop’s numbers are more similar to each other than these official num-‐bers might suggest. Coop was selected to be Sweden’s most sustainable brand in both 2011 and 2012 (Swedish Institute, 2011).

A new concept which is used in several Coop stores is Coop Green Room. So far the concept exists in Sisjön close to Gothenburg and some other stores like one in Norrland. The concept might be used in other Coop stores in the future. Coop Green Room is a shop which sells only organic food products and is based within a normal Coop Forum store. Coop Green Room also offers, with around 1400 organic food products, a wider product range than conventional Coop stores. However, its share of total sales of Coop Forum Sisjön is very small.

4.1.3 Case 3: Bikupan

Bikupan is a small-‐size retail store in Jönköping which provides solely organic and fair trade products to customers from the city and its surroundings. The store is a cooperative that was established in 1989 from around 200 members to meet the demand for organic food. In 2011, it had a turnover of 1.4 million SEK (Chart 4-‐1). The main object is to promote the local organic production. The store has two permanently working employees who manage the daily operations. However, a lot of work is done by members on a voluntary basis (S. Rydberg, personal communi-‐cation, 2012-‐03-‐26).

The cooperative Bikupan is not profit-‐orientated. However, the profit is used to pay the two employees, to keep the store running and do occasional events and marketing. When more profit is made than usual, the surplus never goes to a pri-‐vate person but is instead used in a way which reflects the interest of all members.


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The assortment of Bikupan contains around 500 products. However, the store of-‐fers a large variety of fruits and vegetables as well as goods which range from freshly baked bread, chocolate, tofu and spices to cleaning and hygiene products. The diversity also depends on the season since Bikupan purchases most of its as-‐sortment from local producers (S. Rydberg, personal communication, 2012-‐03-‐26).

Chart 4-‐1 Overview of organic food at selected retailers/stores (based on KRAV’s marknadsrapport 2012 and interviews (Appendix))

4.2 Competition in the Swedish organic food market

In this part of our paper, we will present who the main competitors of our cases are. This is related to our first research question: How does competition look like in the Swedish organic food market?

4.2.1 ICA’s competitive situation

ICA is the market leader in terms of organic food as well as overall food sales in Sweden (Statistics Sweden, 2011; Ekoweb, 2012). When thinking about their com-‐petitive situation, the company does not differentiate between organic and non-‐


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organic products. According to Ulrica Bergdahl (U. Bergdahl, personal communica-‐tion, 2012-‐04-‐04), ICA's main competitors are the other supermarket chains such as Coop and Axfood. Nevertheless, she stresses that ICA does compete with all ac-‐tors who sell food in Sweden. This does not only include supermarkets and small shops but even restaurants.

Competition can vary significantly between different ICA stores depending on lo-‐cation and consumers in the surrounding area. All ICA stores in Sweden are man-‐aged independently and can even compete against each other for example on price or on different purchasing practises.

4.2.2 Coop’s competitive situation

Coop is second behind ICA in the Swedish organic food market in terms of turn-‐over, even though they have a larger product range. According to Louise König (L. König, personal communication, 2012-‐04-‐11), Coop does not think that much in terms of local competition. Therefore, she clearly states that the main competitors of most Coop stores are the other supermarket chains ICA and Axfood. Neverthe-‐less, this situation depends on location and can differ for some Coop stores. Small stores which sell organic products such as Bikupan are not seen as big competitors even though they have some share of the local markets. She stresses that Coop welcomes small businesses which sell organic products since Coop wants to de-‐velop the organic food market in general.

Even though Coop thinks less in terms of local competition, the strategy can vary depending on the customer base within a specific area. This is made clear by Anna Hammarstrand from Coop Sisjön (A. Hammarstrand, personal communication, 2012-‐03-‐27), who states that the Green Room concept does not work in every Coop store but rather depends on the target market in the area where the store is located. In other words, customers are normally more affluent and more conscious about what they eat.

4.2.3 Bikupan’s competitive situation

Bikupan is only little concerned about competition since they want to increase the consumptions of organic products in general which means they are satisfied if other shops sell more organic products. Other stores which sell organic food such as Bikupan are not present in Jönköping. Those other stores selling organic food like Coop or ICA are competing on a different level and are not seen as a threat. Bi-‐kupan’s purpose is far-‐ reaching. The cooperative sees itself as a pioneer and be-‐yond that as an inspiration for those stores that want to sell organic food. Bikupan is rather glad when the demand for and the supply of organic food rises. However, Bikupan does not deny that all grocery stores that sell organic food products are rivals in general (S. Rydberg, personal communication, 2012-‐03-‐26).

4.3 Strategic positioning

In this section of our paper we will present how the different actors position them-‐selves on the market In relation to their competitors. This is related to our third research question: What kind of generic strategy is being pursued by ICA, Coop and Bikupan to compete successfully in the market? Furthermore, it is related to our sec-‐


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ond research question: What are the capabilities of Coop, ICA and Bikupan and how can they benefit from external market developments?

4.3.1 ICA’s strategic positioning

Like the other supermarket chains in Sweden, ICA does not only offer organic pro-‐ducts. However, they have around 1100 organic food products in their large pro-‐duct range. Furthermore, since ICA stores are managed independently, some stores might have an even larger assortment of organic food products. This num-‐ber is high in comparison to small stores and some other supermarket chains. Nonetheless, Coop does offer more than twice as many products than ICA.

Besides products of conventional producers of organic food, ICA has its own brand "I love eco" which is sold only at ICA. This brand is in some categories significantly cheaper than conventional organic food brands and makes organic food an option even for more price conscious consumers." I love eco" is the by far fastest growing part of ICA's organic food section with a growth of 23 per cent only in 2011 (ICA, 2012). Our price comparison between ICA Maxi and Coop Forum in Jönköping con-‐firmed that ICA is the cheaper retailer concerning organic food (Appendix 2).

ICA tries to sell organic products which are produced In Sweden or at least in the European Union. According to Ulrica Bergdahl (U. Bergdahl, personal communica-‐tion, 2012-‐04-‐04), all organic meat which is sold by ICA is produced in Sweden. Nevertheless, the origin of other organic products can vary significantly and many products have ingredients from outside Europe.

Moreover, ICA presents its organic products in the store together with non-‐organic ones. The same is valid for ICA's marketing where the company does usually not market organic products separately. This makes it harder to find organic food pro-‐ducts for consumers who are especially looking for them. On the other hand, it is convenient for consumers who do not only want to buy organic food products but rather want to add some organic food products whilst also buying non-‐organic products during the same shopping. According to Ulrica Bergdahl (U. Bergdahl, personal communication, 2012-‐04-‐04), this is one of the weak points of ICA In terms of organic food. She stressed that in order to get even more consumers to buy organic food, ICA should highlight their organic food products more in the shop as well as in marketing.

4.3.2 Coop’s strategic positioning

Coop does not only offer organic food products but also non-‐organic in their stores. Nevertheless, they offer around 2600 different organic food products, around 1500 more than ICA. Referring back to what we mentioned earlier, Coop does in con-‐trast to ICA not differentiate between organic and eco-‐labelled (miljömärkt) and therefore, their organic food assortment and variety is actually smaller than the stated number.

Coop does not only sell organic food produced by conventional producers but also has its own brand "Änglamark" which is only sold at Coop stores. Like ICA's brand "I love eco", "Änglamark" products are in some categories cheaper than other


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brands and make organic food more affordable for price-‐conscious consumers. Nevertheless, Anna Hammarstrand (A. Hammarstrand, personal communication, 2012-‐03-‐26) mentioned that organic food products which are labelled with "KRAV" are more expensive than non KRAV-‐labelled products. According to her, those products should be more expensive and consumers need to feel and know the difference so that they are willing to pay the higher price. In comparison to ICA, Coop sells more KRAV-‐certified organic food products (KRAV, 2012).

According to Louise König (L. König, personal communication, 2012-‐04-‐11), it is not possible to see the origin of an organic food product by just looking at the numbers. It rather depends on every specific category. Therefore, it is not possible for us to know how much of Coop's organic products are produced locally and how much those come from outside Sweden.

In most of its stores Coop presents organic and non-‐organic food on the same shelf. Nevertheless, organic food products are clearly labelled with a green tag that helps the customer to find those products more easily. This is however also done in sev-‐eral ICA stores. In those shops which have the Green Room concept, organic food products are presented in a special department of the store which makes it very easy and convenient for customers to find them. Furthermore, customers can com-‐bine buying organic and non-‐organic products in the same store. In their market-‐ing campaigns, Coop highlights organic food and has for example weekly organic offers and information about organic food on their website. Furthermore, Coop does offer all of its employees basic training in the area of ecology and organic food so that they are at least to some degree able to consult customers if they have questions about organic food. Similarly, ICA offers all of its officials and employees in their stores the possibility to get educated within organic in spring 2012.

4.3.3 Bikupan’s strategic positioning

Bikupan puts quality over quantity. Hence, the number of products in comparison to the supermarket chains like Coop or ICA is significantly lower and most pro-‐ducts are also more expensive. On the other hand, any wishes of customers con-‐cerning the extension of the product range will be implemented if possible and there are some products which Bikupan can provide at a competitive price. As a result the store sells also en masse and additionally customers possess the possi-‐bility to buy amounts that are suitable for them. Also, Bikupan supports trade based on solidarity and environmental aspects. Unnecessary packing that adds costs and wastes resources is avoided. Thus, as a customer of Bikupan, one can al-‐ways be sure to buy products that are truly organic, locally produced if possible and environmental friendly (S. Rydberg, personal communication, 2012-‐03-‐26). Bikupan does not stock a private brand like ICA with “I love eco” or Coop with “Änglamark“. The organic store wants to support small producers and companies since it believes that it is crucial that those are represented by their own brands and do not stay anonymous. The cooperative prefers to purchase from local pro-‐ducers or to purchase goods produced in Sweden. If products are not available in Sweden, Bikupan purchases products from neighbouring and near situated count-‐ries like Denmark or Germany, in order to prevent long delivery channels. Many of the products are purchased from small producers and the store provides only a


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small number of each product on the shelf which gives the store flexibility in the array of products (S. Rydberg, personal communication, 2012-‐03-‐26). Many of the customers are also members of the store and are involved in several activities. This includes for example meetings and information about organic food. Furthermore, the cooperative sends a magazine to its members on a regular basis. The employees and voluntary workers are highly involved with organic food and are convinced that they are selling the right thing. Moreover, they have the time and willingness to consult customers about the products they have (S. Rydberg, personal communication, 2012-‐03-‐26).


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5 Analysis In our analysis section we will link our empirical findings with the frame of refer-‐ences as well as the introduction chapter. The analysis is divided into three main sections that are giving respective answers to our three research questions. We start with the industry analysis, before we take a closer look at the chosen com-‐panies ICA, Coop and Bikupan by doing a SWOT analysis. Finally, we will analyse, which generic strategy these companies pursue or should pursue in order to be successful in the Swedish organic food market.

5.1 Competition in the Swedish organic food market

This section focuses on the analysis of the competition in the Swedish organic food industry. Porter’s Five Forces as well as his Components of a Competitor Analysis will be the primary theories that we build our analysis on (Porter, 1980). Never-‐theless, one should keep in mind that we only focused on the two biggest players and one local firm within organic food and that our findings therefore can be somewhat biased.

Our interviews confirmed that ICA and Axfood are Coop’s main competitors within organic food. For ICA this looks similar as it regards all of its competitors within re-‐tailing as its main competitors. This will not change much in the near future as Coop’s and ICA’s future goals predict (Porter, 1980). Coop wants to defend its lead-‐ing position as the number one concerning the assortment and variety of organic food (KF, 2011). Similarly, ICA wants to continue to increase its assortment and variety to defend its position as number one regarding the turnover within organic food (ICA, 2011).

The organic food market keeps on growing in a similar high pace as in previous years and is therefore not an indicator for slow industry growth. Slow industry growth could have been an indicator for a higher level of rivalry (Porter, 1980). On the other hand, we found out that there is some lack of differentiation between ICA’s and Coop’s organic food products, which is one of Porter’s (1980) indicators for a more intense rivalry. This is based on the respective answers we got on the questions of how Coop’s/ICA’s organic food products differ from one another and if there is a difference in how they sell it. One of the differences is ICA’s and Coop’s respective private brands “I love eco” and “Änglamark” as ICA mentioned. A fur-‐ther differentiation factor is the fact that Coop had been chosen to be the most sus-‐tainable brand in Sweden in 2011 and 2012 (Swedish Institute, 2011; Coop, 2012). Even though there are differences, we can argue that the two companies’ organic food items are relatively similar to each another.

The relative market commonality of ICA and Coop might be an indicator that com-‐petition between these two retailers is to some extent based on price (Chen, 1992; Porter, 1980). However, because of the limited scope of our thesis we could not look into that specific characteristic of competition in more detail and are thus not able to say how extensive it is. In line with a growing organic food market and an ever-‐increasing organic food assortment and variety in ICA and Coop but also Ax-‐food (see table 1-‐2), prices for organic food go down for some items (ICA’s price reductions of “I love eco" in 2011). This can be regarded as a further indicator that


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rivalry is based on price and furthermore could lead Coop or another main com-‐petitor to respond by also decreasing prices.

As mentioned by Bikupan, small cooperative stores are not harmed in a bad way by these developments since they support a rising awareness for organic food (S. Rydberg, personal communication, 2012-‐03-‐26). On the contrary, other small and local speciality stores that are no cooperatives and thus have another vision might be affected negatively by the big player’s cheaper prices and their ever-‐increasing assortment and variety. This is due to the fact that they might lack the capabilities to decrease prices. Therefore, the development of a well thought through differ-‐entiation strategy might become increasingly important for small stores in order to stay competitive. In contrast to the bigger players, small stores like Bikupan are competing on quality and differentiation, by for example selling organic food from small local farmers.

The trend towards larger but fewer grocery stores in Sweden is another factor that threatens small organic food speciality stores due to the fact that these larger stores are able to sell their items at a cheaper price because of their bigger size (Gullstrand & Jörgensen, 2011). At the same time it is difficult to say if this argu-‐ment is valid since consumers might still prefer the speciality stores. The reason for that is that the staff in speciality stores often can offer a better service concern-‐ing organic food. Furthermore, it is often easier to find organic food products in a speciality store than in a big supermarket.

These factors help speciality stores to decrease the threat of new entrants. It is an important thing to do for small and local stores since they face a higher threat of substitute products. Their smaller size and limited resources limit their capabili-‐ties to respond to substitutes from for example ICA or Coop. Organic food products that can be found in both small and local organic food speciality stores and Coop and ICA are generally cheaper in ICA and Coop while offering the same value.

At the same time, the switching costs that occur from switching from ICA’s to Coop’s organic food products or the other way round are not very high for the con-‐sumers. However, it depends on some factors such as the question if both an ICA and a Coop store are present in a consumer’s neighbourhood. The tendency of a loyal buyer of a speciality store to switch to the organic food products of a big player might be much lower (Porter, 1980). Concerning this force, Bikupan is re-‐garded as a representative for other small local stores that sell organic food in Sweden. In this way, Coop Green Room is a direct substitute for the organic food speciality stores in Gothenburg. For ICA and Coop the threat of substitutes is much lower

Gullstrand’s and Jörgensen’s (2011) findings that rivalry on the Swedish organic food market is local, was confirmed to some extent by our interviewees. Coop Green Room in Sisjön mentioned that such a concept (Green Room) does only work because they have a very affluent customer base in that local area, besides having had some space available in their store. The fact that every ICA store in Sweden is managed independently implies that every store can sell as many or-‐ganic food products as it wishes and that different ICA stores compete with each


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other locally. Therefore, competition within organic food differs in assortment and variety, in both ICA and Coop stores, based on local demand for organic food.

An ever increasing assortment and variety at ICA, Coop and Axfood also leads to increasing interdependencies among the competitors in the form of a shared cus-‐tomer and supplier group. This brings us back to the rise of private label brands that help them to differentiate themselves to some extent from each other. Accord-‐ing to Hultman (2008), there is considerable potential to grow within this category. However, small stores do not have the capabilities to develop their own private brands. Cooperatives such as Bikupan are not doing it because they do not want to take away business from suppliers and producers and drive out small ones (S. Rydberg, personal communication, 2012-‐03-‐26). The attempt of Coop and ICA to control an ever increasing part of the market (also suppliers) is a further remark concerning rivalry within the industry and brings us directly to the bargaining power of suppliers.

Backward integration of the major players in the form of having their private label brands is a sign of weakening bargaining power of certain suppliers (Levy & Weitz, 2009; Porter, 1980). By having more and more organic food products replaced by private ones, the threat of backward integration for the suppliers raises. This is one of the opportunities linked to our SWOT analysis and shows the increasing power of the big chains within organic food.

The continuous positive growth figures of the market indicate that the threat of new entrants persists. Nevertheless, there has not been a market entry of another big player in the past years. Moreover, ICA’s and Coop’s increasing investments in the sales of organic food might discourage potential entrants. This is also linked to the fact that prices at the big retailers are lower than in speciality stores due to their size. Consequently, new entrant might find it hard to compete on price. As pointed out by Magnusson et al. (2001), price is one of the biggest obstacles for Swedish consumers to buy organic food. Therefore, the threat of new entry is big-‐ger for smaller stores (Miller, 1992). ICA’s price cuts for its “I love eco” products in 2011 can be regarded as an attempt to decrease the chances of a new market en-‐trant and also to gain a bigger share of the market (Porter, 1980).

Porter (1980) pointed out that rivalry is likely to be decreased when the respective players focus on some diverse positions in the market. As stated under 5.3, ICA is focusing more on price reductions than Coop does, as ICA’s price reductions for some of its “I love eco” products from 2011 show (ICA, 2011). On the other hand, Coop focuses more on sustainability and quality. Coop was selected to be the most sustainable brand in Sweden in both 2011 and 2012 (Coop, 2012). Furthermore, it has a higher number of KRAV-‐certified products than ICA or Axfood (KRAV, 2012). Therefore, ICA and Coop focus on some diverse aspects. Despite this fact, they are very closely positioned as figure 5-‐1 shows.

Bargaining power of buyers is higher for small cooperatives such as Bikupan since a large share of the customers are members and have thus a direct influence on the price-‐setting (Porter, 1980).


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The following table (chart 5-‐1) gives an overview over the five forces (Porter, 1980) analysed with regard to each company. Due to the type of data we collected, the force of rivalry among existing competitors was analysed most extensively. The force of Bargaining Power of Buyers could not be analysed in a thorough way be-‐cause the focus of this paper is not directed towards the consumer and buyer side.

Chart 5-‐1 Overview of Porter’s Five Forces applied in the Analysis

∗extensive analysis

5.2 SWOT analysis

5.2.1 Opportunities and threats in the external environment

The organic food market has been changing rapidly during the last decade and is expected to continue this way. According to Ekoweb (2012), the market for organic food in Sweden rose by 11 per cent in 2011 and is expected to almost double in the coming eight years. This market development gives large opportunities for com-‐panies who have the capabilities to satisfy consumer's preferences.

Whereas much of this growth is expected to come from large supermarket chains that can offer organic food to a large amount of consumers it also offers opportuni-‐ties for smaller stores such as Bikupan to successfully exploit a market niche (Ek-‐oweb, 2012).

Environmental issues, fair trade and concern about health issues have become more important to many consumers (Magnusson et al., 2001; Hughner et al., 2007). All those factors contribute to an increasing awareness of organic food as well as a higher willingness to buy organic food. Even though all factors contribute to the acceptance of organic food, the concern for health issues is the main reason for most consumers to buy organic food instead of non-‐organic (Hughner et al., 2007). Therefore, companies who can successfully convince consumers that their food is healthier, traded in a fair way and not harmful to the environment have the oppor-‐tunity to gain a large share of this increasing market segment.

Even though many consumers have a positive attitude towards organic food, its market share is still very low. This is mostly due to the perceived high prices of or-‐ganic food which is the main obstacle for consumers to buy organic food (Magnus-‐son et al., 2001; Zanoli & Naspetti, 2002). This development offers large opportuni-‐ties for companies that are able to lower the prices of organic food. One way to do this successfully is for example the introduction of private brands such as ICA's "I love eco" or Coop's "Änglamark" brand. On the other hand, companies that are not


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able to lower their prices face the threat of losing price conscious customers who will switch to competitors.

Besides price consciousness, more consumers are looking for the country of origin of their food. Especially in the case of organic food it is important to many consum-‐ers that the food is locally produced rather than imported (Magnusson et al., 2001). Those consumers want not only support local farmers but also limit the pol-‐lution caused by long-‐distance transport of imported food. This offers opportuni-‐ties for smaller stores and chains which are able to source locally. Nevertheless, the importance of local production is far less important to consumers than the price and therefore, offers a smaller opportunity (Magnusson et al., 2001).

5.2.2 ICA’s strengths and weaknesses

ICA is the market leader in terms of turnover in both the organic food market as well as general food sales in Sweden (Gullstrand & Jörgensen, 2011). Furthermore, ICA has with 2125 retail stores the most shops of all retail chains in Sweden (ICA, 2012). This enables the company to sell to consumers all over Sweden and makes it easy to reach an ICA store since most Swedes have such a store close to their home. Due to their size and sales volume, ICA also has large resources which can be used to promote their organic food.

A strength of ICA is its own brand "I love eco", which it offers in its stores and sold in large volumes. This enables the company to offer its brand to lower prices than other brands or stores. As mentioned before, the main barrier to buy organic food is for many consumers the higher price of organic food (Magnusson et al., 2001). Due to its strength to offer its own brand at relatively low prices ICA has the capa-‐bility to exploit this opportunity and sell organic food to those consumers who are not willing to pay the high prices of other national brands. As mentioned in the empirical findings, our price comparison between ICA Maxi and Coop Forum in Jönköping confirmed that ICA is the cheaper retailer concerning organic food (Ap-‐pendix 2). However, as this is the case for Jönköping only these findings have to be regarded cautiously due to the fact that competition in Sweden differs locally.

In its stores, ICA offers organic food together with non-‐organic products and not in a special department. This means that customers find organic food presented to-‐gether with non-‐organic articles of the same category. On one hand, this makes it harder to find those products for consumers who only want to buy organic. On the other hand this can be a strength since many consumers want to buy some organic food but are not willing to pay more for other conventional articles. In ICA, as well as in Coop they can find almost everything and combine buying organic food with non-‐organic products.

According to ICA, the company tries to purchase its organic food locally. Nonethe-‐less, much of it is not locally produced but still produced in Sweden. Due to the large amounts they sell for example of their "I love eco" brand, ICA needs to buy from larger suppliers rather than small farmers. Even though many operations are centralized, ICA stores in Sweden are managed independently and stores for ex-‐ample purchase some of the products independently. Therefore, the degree to which its organic food is produced locally can differ from store to store and some


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ICA stores might sell more organic food produced by local farmers. Nevertheless, compared to small stores such as Bikupan, ICA's organic products might be less appealing to consumers who want to buy locally produced organic food and are willing to pay more for it. This is due to the fact that ICA cannot source organic food from very small local suppliers due to the limited supply that is often only suf-‐ficient for a small store such as Bikupan.

5.2.3 Coop’s strengths and weaknesses

Coop is the second largest food retailer in Sweden and has like ICA shops all over the country (Gullstrand & Jörgensen, 2011).Coop offers organic as well as non-‐organic food products and is therefore an option for consumers who want to buy both types of products at the same purchase. Nevertheless, Coop has the greenest image of the large Swedish food retailers and has been elected Sweden's most sus-‐tainable brand (Swedish Institute, 2011). Furthermore, a strength of Coop is its large organic food assortment and variety which is larger than the ones of ICA and Bikupan and offers consumers a wide range of organic food. Coop's "Änglamark" brand is offered at lower prices than other brands. This strength enables the com-‐pany to sell organic food to the price sensitive consumers.

Most of the Coop stores do not have a special area where they sell organic food only such like it is done in Coop Forum Green Room in Gothenburg. In these stores that do not have such a section, green labels on the shelf help consumers to more easily find organic food products. However, the advantage by having a special de-‐partment within the store where primarily organic food is sold, is that it is easier for customers to find organic food without having to look for them.

5.2.4 Bikupan’s strengths and weaknesses

Bikupan is a small store in Jönköping and as such has a limited customer range. The main strength of the store is that it is truly organic. According to Bikupan 95% of the food products sold at Bikupan are organically produced. Moreover, locally produced organic food products are preferred whenever possible and the organic food is often sourced from small farmers of the surroundings of Jönköping (S. Rydberg, personal communication, 2012-‐03-‐26).

Another strength of Bikupan is its good service. All employees have a passion and good knowledge about organic food and are able to give competent consulting to customers. Since Bikupan is a cooperative, many customers are members of the cooperative and know each other. This gives the store a personal atmosphere and increases the shopping pleasure. Bikupan also involves its members by regular meetings and offers a magazine informing about organic products. This helps the cooperative to retain customers and many of its regular customers have been buy-‐ing their organic food at Bikupan for more than a decade.

A weakness of the store is its location. The store in the “Tändsticksområdet” (an area in Jönköping where the match museum is located) is for many consumers not as easy reached as for example an ICA or Coop store. Some consumers are not will-‐ing to invest much time to reach a store for buying their food and thus might go in-‐stead to a closer shop even though they like Bikupan.


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Bikupan's relatively small size and product range is another weakness of the store. With around 500 organic food products they offer a much smaller amount of or-‐ganic food products than Coop and ICA. Even though the store offers not only food but also other organic food products, there are things which cannot be found at Bi-‐kupan and therefore customers who want to buy everything at the same store will struggle to do so at Bikupan.

Its greatest weakness is the relatively high prices of its food which might be above the threshold of many shoppers. Compared to the prices of other players, espe-‐cially the ones of ICA's and Coop's private brands "I love eco" and "Änglamark", the prices at Bikupan are significantly higher. As mentioned earlier high prices of or-‐ganic food are the main barrier for many consumers to buy organic (Magnusson et al., 2001). Bikupan does not have the capabilities to develop its own private brand and reduces prices to the level of Coop and ICA. The "I love eco" and "Änglamark" brands have had strong growth during the last years and are likely to grow further (Hultman et al., 2008 ; ICA, 2012). This gives a price pressure on Bikupan and is a threat for the cooperative since a large share of consumers bases its buying deci-‐sion on prices.

Due to the high prices Bikupan does not have the capabilities to serve the large share of customers who are price sensitive and therefore cannot compete with Coop and ICA on this basis. Nevertheless, Bikupan has the capabilities to success-‐fully serve a market niche since it offers a superior shopping experience to those consumers who want to buy organic, environmental friendly produced food and are willing to spend more for it.


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Figure 5-‐1 Cross Case Analysis: SWOT


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5.3 Strategic positioning

This section focuses on the analysis of the generic strategy pursued by our studied companies to compete successfully in the Swedish organic food market. Porter’s generic strategies model will be the primary theory that is used for the analysis of strategic positioning (Porter, 1980).

Figure 5-‐1 below gives an overview of the positioning strategies actually applied by the three companies in question:

Figure 5-‐2 Strategic Positioning of the analysed companies

5.3.1 ICA

When establishing a strategic position on the organic food market, we can recog-‐nize that ICA makes use of the cost leadership strategy (Porter, 1980). ICA strives to become the low-‐cost retailer within organic food which can be seen by the re-‐duction of the prices of its private brand as well as our price comparison (see Ap-‐pendix 2). Nevertheless, only our cases were included in our research and not the whole organic food market. Therefore, there might be other players which are even cheaper such as for example Axfood. Products of the home brand “I love eco” are considerable cheaper than other national organic food brands. The company does not apply a focused strategy as it sells the organic products in the shelf together with the non-‐organic products. This also gives customers who actually did not intend to purchase organic food the op-‐portunity to resort to organic food and furthermore, the significantly cheaper prices makes organic food an option even for more price sensible consumers. The origin of cost advantage varies between industries (Porter, 1980), and the es-‐tablishment of economies of scale is often necessary to reach cost leadership (Burns, 2007; Porter, 1980). ICA has large resources available, due to their size and


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sales volume. This gives the company the opportunity to make use of economies of scales and ICA can sell large volumes of its brand “I love eco”. Furthermore, obtain-‐ing a lower cost position allows ICA to achieve above average returns, as Porter’s model (1980) implies. ICA has a turnover of 2 billion SEK, in terms of organic food and thus the company is the market leader in terms of organic food as well as of overall food sales in Sweden. ICA is however, not focusing on cost leadership only but also on differentiation. As the questionnaire confirmed, ICA tries to purchase its organic food locally or at least produced in Sweden. Furthermore, the store wants to continue to increase its assortment and variety to defend its position as a market leader in turnover (U. Bergdahl, personal communication, 2012-‐04-‐04).

5.3.2 Coop

Coop tries to be more oriented towards sustainability and to be the number one concerning the assortment and variety of organic food. In fact, the company has a significantly higher assortment and variety of organic food than its main rival ICA. Therefore, we believe that Coop is slightly more differentiated than ICA. It is also not pursued a focused strategy, as the organic food products are offered together with non-‐organic food products. However, Coop is just like ICA not focusing on dif-‐ferentiation only but also on costs to some extent as its private brand shows (Por-‐ter, 1980). Coop tries to different itself from the other big players as it aspires to be more sus-‐tainable and conscious about organic food. In order to do so, Coop offers for exam-‐ple more KRAV products, which are of very high quality due to KRAV’s standards (KRAV, 2012). Another dimension which differentiates Coop from its competitors is the fact that it had been chosen to be Sweden’s most sustainable brand in both 2011 and 2012 (Swedish Institute, 2011).

Coop pursues more than one generic strategy successfully. Coop’s Green Room concept is an example of how Coop adapts to (local) consumer demand. This con-‐cept which cannot be found in any ICA store yet, is another factor of how Coop dif-‐ferentiates itself from its competitors.

5.3.3 Bikupan

Bikupan clearly conducts a focused differentiation strategy. This is not stated per se by Bikupan, but by analysing their business level strategy we can recognize clear similarities to Porter’s model (1980). Bikupan aspires to serve what its target group appreciates the most. Thus, the store invests in attributes that fulfil the spe-‐cial needs of its buyers, rather than focusing on costs. One indicator that Bikupan does not focus on costs is the fact that it does not have a private brand. Since the focal point is quality and not quantity the cooperative cannot achieve economies of scale and thus lower prices (Porter, 1980). In contrast, Bikupan can offer several dimensions which make it unique and different. These dimensions are the store’s customer service, small local suppliers and a unique brand image by being a co-‐operative.


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Bikupan’s customer service is another factor that helps the cooperative to differ-‐entiate from the big players. Its employees usually know more about organic food than employees in ICA or Coop. However, there are exceptions and an employee in for example Coop Green Room might know more than one in Bikupan (S. Rydberg, personal communication, 2012-‐03-‐26). Moreover, the cooperative maintains an extensive personal relationship with its buyers and members that helps to retain satisfied customers. The involvement of its members by regular meetings and the offering of a magazine to inform about organic products are valuable. Furthermore, the fact that Bikupan can offer organic food from small, local suppliers and producers helps the store to differentiate the assortment even further from the big players. The big chains are often not able to obtain only locally produced organic food since they need larger amounts than small suppliers can offer (S. Rydberg, personal communication, 2012-‐03-‐26).. Furthermore, the store offers customers the opportunity to buy tailored amounts. Open sacks and huge bags allow customers to buy several products in quantities that are suitable for them (S. Rydberg, personal communication, 2012-‐03-‐26). Another aspect which differentiates Bikupan is the store’s supplier network. The cooperative tries to buy from small local suppliers whenever possible. In cases where it is not possible, organic food is sourced from closely located countries like Denmark and Germany (S. Rydberg, personal communication, 2012-‐03-‐26). ICA and Coop cannot feature such a local supplier network to the same extent as Biku-‐pan does since they often need higher numbers of organic food that cannot be pro-‐vided by a small local producer. However, there are exceptions. As mentioned be-‐fore ICA stores are operated individually and thus some of them might be able to take in similar amounts of organic food from small local suppliers. This holds also true for Coop.


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Chart 5-‐2 Cross Case Analysis: Generic Strategies


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6 Discussion This thesis focuses primarily on the analysis of the Swedish organic food market from a firm’s perspective. However, while writing our thesis, we encountered sev-‐eral other thoughts and ideas that we believe can be further investigated and de-‐veloped in the future.

6.1 Suggestions for further research

One of the major arguments and findings, that competition within organic food is to some extent based on price, needs to be further developed and investigated in order to be a valid argument. Reasons for that are given in the following limitations section. By combining our firm-‐based analysis with a consumer analysis of the market, more reasonable conclusions can be drawn. We tried to incorporate some research that looked at the consumer side by using Magnusson et al’s (2001) work. Nevertheless, it needs to be done in more detail in order to get a deeper under-‐standing about how both organic food consumers as well as conventional food consumers perceive the organic food market and act on it. For example it could be analysed whether consumers prefer locally produced organic food and how much more they are willing to pay for it compared to organic food sourced from other countries. Moreover, a new consumer research has to be undertaken since Mag-‐nusson et al. (2001) research is already 10 years old and the market has been de-‐veloping rapidly.

Gullstrand’s and Jörgensen’s (2011) findings that competition in Sweden is local, needs to be extended and linked to the consumer side in the Swedish organic food market. One area that we suggest could be further focused on is whether there is an on-‐going trend among consumers to buy locally produced food. Depending on the result, the market players could be better prepared to respond to the possible phenomenon in a strategically smart way. Similarly, research could be drawn to the consumer analysis that investigates how a typical consumer that buys organic food in a speciality store looks like and the one buying at Coop or ICA. One could also investigate whether the number of consumers who buy at speciality stores is rising or falling. Another question that we find to be very interesting to investigate, is to find out if there is a connection between the relative interdependencies among competitors based on the customer group and the rise of private labels.

6.2 Limitations

The purpose of our thesis was to analyse the competition in the Swedish organic food market. Therefore, we did not put much focus on the consumer side. Never-‐theless, it would have been a good and complementing thing to do since it would have broadened our perspective and reasoning. This is for example connected to interdependencies among firms based on a shared customer group that could have been evaluated in further detail as mentioned before.

In this thesis we did not consider macroeconomic factors that have an influence on the Swedish organic food market. The reason is that we had a limited scope for the paper and therefore had to prioritize other theories and conceptualizations. How-‐ever, a PESTEL analysis could have given a broader insight into the Swedish or-‐


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ganic food market in terms of macroeconomic factors. Another aspect that we did not consider in this thesis is that of direct and indirect competition. This aspect can be of importance when taking a closer look at the level of local competition that can make a local farmer an indirect competitor of Coop or ICA. The reasons for not choosing this aspect are the same as for the PESTEL.

Connecting to what we mentioned about competition based on price in our sugges-‐tions for further research, our reasoning is primarily based on the actions by the main players ICA and Coop. More specifically, we based our reasoning on the fact that ICA did some major price cuts of its private label “I love eco”, as well as on the ever increasing assortment and variety of ICA’s, Coop’s and Axfood’s private labels. This implies that our reasoning might be somewhat biased towards the cases of ICA and Coop even though Bikupan also observed a falling price-‐level within or-‐ganic food. In order to analyse the market even better, Axfood could have been in-‐cluded as a case, since they also are an important player on the organic food mar-‐ket.

Furthermore, we did not go very deep into the price analysis due to the fact that in order to do so one should also visit different stores of ICA and Coop as well as local stores in different regions of Sweden. This is due to the fact that competition is local and for example ICA stores set their prices individually which implies that some ICA stores might be more expensive than others. However, with these limita-‐tions in mind, we believe that the price comparison of ICA Maxi Jönköping and COOP Forum Jönköping is suitable due to their similar size and location.

6.3 Recommendations

The main barrier for consumers to buy organic food is the higher prices compared to conventional food (Magnusson et al., 2001). Therefore, we believe that further reductions of prices are essential in order to increase the share of consumers who buy organic food. One successful way to do so is backward integration, by selling organic food under a private brand such as ICA and Coop do. However, there are other possibilities to successfully lower prices such as for example an improved inventory management.

Even though price is of high importance, there is the possibility to differentiate and successfully serve a niche market. This could be a successful strategy for small stores which cannot compete on price but instead offer superior value to consum-‐ers who are willing to pay higher prices.

Today organic food is mostly sold via brick and mortar channels but introducing new channels such as the Internet can be a successful strategy to differentiate. Fur-‐thermore, co-‐branding or ingredient branding could be a way to increase the visi-‐bility and marketing effect. Nevertheless, additional research has to be done to de-‐termine this.

We believe that a company should have a clear strategy but still should fulfil the threshold in each aspect. This means that a company should find out what the maximum price is which consumers are willing to pay and the minimum quality features they expect.


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For the analysed companies we recommend the following:

We believe that in the future ICA should continue to put focus on the cost leader-‐ship strategy, in order to keep its competitive advantage regarding its turnover within organic products. ICA has already an edge in cost leadership due to its size and as ICA has relative similar resources and products like Coop, competition will be mainly based on price (Porter, 1980; Chen, 1992). However, differentiation should not be neglected since competition in the Swedish organic food market is not based on price only but also other factors such as locally produced. Coop should keep on pursuing an integrated cost leadership and differentiation strategy in order to stay competitive. Since high prices are the main obstacle to buy organic food, further investments in the assortment and variety of its private brand "Änglamark" are crucial in the future. However, Coop should continue to put efforts on attributes which allow differentiating the chain from the other main players such as its Green Room concept in Gothenburg. In order to stay competitive, Bikupan and other small organic food stores should continue to develop attributes which fulfil the special needs of the target custom-‐ers. Long-‐term success with the differentiation strategy will be achieved if the company continuously improves differentiated attributes that buyers appreciate or that give new value (Ashmos, Plowman et al., 2007).

6.4 Conclusion

The purpose of our paper was to analyse the Swedish organic food market in terms of competition and business-‐level strategy. Three research questions were used to find answers for our purpose. With regard to our first question, concerning the competitive situation on the Swedish organic food market, we came to the conclu-‐sion that ICA and Coop are the main competitors, followed by Axfood. A lot of focus was put on Porter’s (1980) force of rivalry in comparison to the other forces. One major finding was that ICA and Coop do not differ much from one another concern-‐ing organic food. The main difference we could find was that Coop is the more sus-‐tainable brand with a larger assortment and variety of organic food that is KRAV-‐certified. On the other hand ICA is focusing slightly more on prices (lower) and has the industry’s highest turnover within organic food. The increasing number of private label brands, resource similarities and market commonalities, as well as decreasing prices for organic food, makes us suggest that competition is to some extent based on price. However, further research has to be done to confirm this finding.

This development increasingly puts pressure on the small organic speciality stores. They cannot compete on the same level as the big chains do since they lack the ne-‐cessary capabilities. Coop’s Green Room concept as well as the private brands of ICA and Coop are signs for the major players’ attempt to cover an ever-‐increasing market area for the costs of some suppliers and small and local stores. Therefore, we came to the conclusion that the threat of new entrants is bigger for smaller stores and suppliers than for the big chains.


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Our second research question, the SWOT Analysis of the chosen companies, helped us to get a better picture of these companies. This was helpful for our third re-‐search question linked to the positioning strategies of the companies in question. Falling prices for organic food enable more consumers to buy it. This is an oppor-‐tunity that the big chains are focusing on, by continuously increasing the assort-‐ment and variety of their private brands, that are often cheaper compared to national organic food brands. In comparison to the big players, small, local stores such as Bikupan have the strength to offer a better service than many of the big chains concerning organic food. Furthermore, they have more opportunities to take in products from small local producers and suppliers that lack the capabilities to deliver in higher volumes to bigger chains. Finally, they have almost only or-‐ganic food in the store. Thus, differentiation is the very important strategy that these local stores should build on.

However, competition on the Swedish organic food market is expected to intensify, with ICA being closest located to cost-‐leadership from all the companies investi-‐gated. ICA’s strengths are especially the resources available due to its market-‐leading position (turnover), whereas Coop has the advantage to be perceived as the most sustainable brand as well as having the largest assortment and variety within organic food. These findings led us to the conclusion that Coop is somewhat more focused on differentiation than ICA is.

To sum up, we can say that there is a lot of potential to grow for the players in the Swedish organic food market. Especially the big chains are expected to attract an ever-‐increasing number of customers. In order to stay competitive, small stores need to differentiate themselves well from these chains

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Appendix 1: The Swedish organic food market

Fig. 1

Fig. 1: Per centage of organic food and non-‐alcoholic beverages of the total food -‐ and non-‐alcoholic beverages sales 2004 and 2010 (Statistics Sweden, 2011).

Fig. 2

Fig. 2: Turnover of the Swedish organic food market (in billion SEK). Forecasted figures for 2012 and 2020 (Ekoweb, 2012).

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Appendix 2: Price comparision between ICA Maxi and Coop Forum in Jönköping

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Appendix 3: Interview guide

Questions asked in all interviews

More specific questions related to every single company were asked in the respec-‐tive interviews.

1) Who do you regard to be your main competitor(s) in the Swedish organic food market?

2) What is the difference between Coop’s, ICA’s and Bikupan’s organic food pro-‐ducts and how they are sold?

3) How do you think the Swedish organic food market is going to develop (oppor-‐tunities and threats)?

4) Which are your strength and weaknesses within organic food (compared to your competitors)?

General questions asked in questionnaire and interview with ICA and Coop

1) Regarding Coop Room:

-‐ Do you plan to introduce a similar concept? (ICA)

-‐ Do you plan to expand this concept? (Coop)

2) Do you plan to cover categories with organic food and organic products that are not covered yet?

3) Do you regard small local organic food stores as competitors?

4) What do you need to improve in order to get even better within organic food?

5) Where do you get your organic food from? Mostly from Sweden or also local suppliers?

6) Are you going to invest more in your private label brand (”I love eco”/ ”Ängla-‐mark”)?

7) How do you set prices? Benchmarking?

8) Do you educate your employees within organic food or are you planning to do so?

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Appendix 4: Interview with Bikupan

Respondent: Stefan Rydberg, vice chief of Bikupan = S

Interviewers: Samuel Gauger = Sam, Jonas Deichmann = J, Sarah Fitz-‐Koch = Sarah

Date: March 26, 2012

Type of interview: Face-‐to-‐face

Sam: När grundades Bikupan? Var det 1989?

S: Ja, 1989.

Sam: Var ni lika stora som ni är nu eller expanderade ni under åren?

S: Ungefär samma under alla åren. Vi är ett kooperativ ägt av medlemmarna och det har varit cirka 200 medlemmar under större delar av den här tiden. Det har va-‐rit lite mer i början men det har legat ganska konstant nu.

Sam: Så medlemmarna har minskat?

S: Det kommer nya och försvinner.

J: Hur många av kunderna är medlemmar och hur många inte?

S: Mindre än hälften är nog medlemmar i alla fall. Så det är ungefär 200 medlem-‐mar just nu.

Sam: Vi kommer fråga lite om era konkurrenter först nu: vilka ser ni som era störs-‐ta konkurrenter?

S: Nu är det alla livsmedelbutiker för att det finns ekologisk mat i alla butiker. Men vi har aldrig sett någon som konkurrent utan vi ser oss som inspiratör för att få dem att ta in ekologiskt i sitt sortiment. Så det finns lite pionjärsanda i det här.

Sam: Hur ser ni på Coops och ICAs ekologiska varor? Finns det någon skillnad på vad de säljer eller är det samma kvalitet? Har ni lite högre krav på varorna som ni tar in än dem?

S: Det tror jag inte. Vi försöker att undvika genmodifierat, det kanske de inte är så noggranna med. Sen tycker vi att det är bra med småskalighet och närodlat och så-‐dant. Det tycker de säkert också men det kan vara svårt för dem att få tag i tillräck-‐liga kvantiteter och få in och säljer dem.

Sam: Så era grönsaker är lokalproducerade?

S: Ja så långt det går men vi tycker att det är bra med småföretagande och därför har vi inga produkter som vi vill kalla Bikupans. Jag menar ICA har ju sitt eget I love eco och sådant och alla har sina egna serier men då plockar man bort varu-‐märket från de som verkligen producerade.

Sam: Tycker ni inte att det är så bra för att det blir kommersiellt då?

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S: Nej vi tycker att producenten får stå med sitt namn. Och så är det inte när de kör med sina egna serier som heter till exempel ICA, Coop eller Willys. De tar även över namnet från producenten så att producenterna blir anonyma.

Sarah: Ni tar också in produkter från Tyskland såg vi.

S: Det gör vi. Tyskland ligger väldigt långt fram när det gäller ekologiska livsmedel. Så det finns till exempel en grossist som heter ”Biova” i Skåne som nästan bara har tyska varor och en väldig stor mängd. Så i början, då var inte jag här, men då vet jag att de hade svårt att få tag i alla olika varor just ekologiskt och nu finns det massor. Så det skulle lätt vara möjligt att ha hur stora butiker som helst som bara säljer ekologiskt. Vi skulle kunna köpa från Biova men vi har kvar våra gamla grossister från tidigare.

Sam: Finns det stora prisskillnader mellan era varor och de som säljs på ICA, Coop, Willys?

S: Kan det göra. Det är så olika på olika varugrupper. Men ja ibland kan det skilja ganska mycket och ibland inte alls så mycket. Men de andra större butikerna har möjlighet att sänka priserna mer på ekologiska varor än vad vi kan göra. Till exem-‐pel om de höjer sitt pris med 50 öre per kilo på vanliga bananer, så kan de sänka priset på ekologiska bananer med 10 kronor per kilo, alltså en intern subvention.Vi kan inte göra så för att vi måste lägga på våra pålägg på inköpspriset som vi har. Så som det är just nu så kostar våra bananer mer in än vad många andra tar ut. Men då är det ju också andra saker där vi kan hålla låga priser, till exempel så köper vi in säckar och påsar själva. Vi säljer också i lösvikt där man kan ta en påse och kan fylla på själv så mycket man vill ha.

J: Vet du om det finns flera kooperativa butiker i Sverige som Bikupan?

S: Ja det gör det. I Göteborg finns en som heter ”Fram” och det finns i Uppsala och på flera andra håll. Jag känner inte till alla men det finns säkert i Stockholm också.

J: Samarbetar ni med dem?

S: Vi har haft lite samarbete med en som heter ”Stig in” i Vetlanda. Jag tror inte att det är kooperativ längre där men jag tror att den finns kvar i alla fall.

Sam: Tänkte ni öppna en till butik i Jönköping eller någon annanstans?

S: Nej det finns inga sådana planer. Det är rätt så mycket att sköta med en butik.

J: Vad gör ni med vinsten? För som kooperativ har ni ju inte som mål att göra en vinst.

S: Nej det är inte vinstdrivande utan vi är två som är anställda på deltid och så är det en styrelse som skötar företaget men om det blir vinst så går det in i verksam-‐heten och om det blir större vinst fördelar vi det på något annat sätt men det tillfal-‐ler aldrig några privatpersoner.

Sam: Jag vet inte om du har läst om det men Coop har öppnat en butik-‐i-‐butiken som heter ”Green Room” och säljer bara ekologiska varor. Tror du att det kommer

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påverka hur ni jobbar eller att andra stora kedjor som ICA kommer göra samma sak? Ökad konkurens?

S: Ja. Intresset för ekologisk mat har ju ökat hela tiden och jag tror att det kommer fortsätta öka och sen om det är rätta vägen att ha butik-‐i-‐butiken så kan jag säga att det kan vara rätt för den stora kunden att hitta ekologiskt lättare, men så är det hela tiden här att det finns allt på ett ställe.

Sam: Du svarade redan lite på frågan hur den ekologiska marknaden ska utvecklas i Sverige. Kan du säga lite mer om detta?

S: Ja jag tror att det kommer bli ett ökat intresse och när utbudet blir större så blir också prisskillnaden mindre och det är fortsatt ökat intresse. Det handlar om både hälsan och miljön så det är nödvändigt att öka den ekologiska andelen av livsmed-‐len.

Sam: Tror du att ni har en bra position på marknaden? För det kanvara en fördel att inte sälja stora märken som ICAs ”I love eco” eller något sådant.

S: Jo jag tror att de som vill ha något annorlunda kommer gärna hit. Och vi kör också mycket med närproducerat och rättvisemärkt så det är lite olika bitar vi job-‐bar med.

J: Har ni också några events eller något likadant eller hur marknadsför ni Bikupan? Genom annonser?

S: Ja precis. Vi gör det genom annonser i tidningar och så vidare.

Sam: Var ser ni era starka och svaga sidor?

J: Om ni jämför det med ICA och Coop till exempel. Vad är det som ni gör bättre och vad är det vad de är bättre med?

S: Vi är rätt flexibla för att vi kan rätt så snabbt byta sortimentet och sen så behö-‐ver vi inte ha så stora producenter för att vi säljer mindre. Så är det någon som producerar i liten skala så behöver vi inte fundera på om det räcker till utan kan bara ta in det. Jag vet inte hur det fungerar på de stora kedjorna om de också kan göra så men det känns lite som att vi är lite mer flexibla. Vi handlar gärna med lo-‐kala producenter.

J: Vilka är era svaga sidor jämfört med de andra?

S: De har större resurser vad gäller marknadsföring och är därför bättre på detta. Det vore bra med lite mer marknadsföring av Bikupan men vi har inte resurserna för detta.

Sam: Men ni marknadsför bara i Jönköping?

S: Ja. Det talas mycket om Tändsticksområdet just nu och det kommer folk särskilt från stan som är intresserade av själva området

Sam: Och ni som jobbar här, får ni en utbildning inom ekologiskt eller får ni bara jobba utan att ha fått en?

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S: Nej, oftast är det att man har ett intresse för ekologisk mat, vi som jobbar här.

Sam: Ja vi har nog frågat allt viktigt vi ville veta. Men du kanske kunde säga lite mer om era huvudleverantörer. Är det mest bönder här i området eller var får ni era varor ifrån?

S: Ja det får vi. Just nu är det bara potatis och rödkål som är närodlat. Men oftast så är det så att de hör talas om oss och så tar de kontakt med oss. Så provar vi med dem och tar in deras varor. Har de en KRAV certifiering så får de bevisa det, har de inte ett certifikat som visar att de odlar ekologisk så får vi inte sälja deras varor som ekologisk utan som närodlat. Så det är ganska stränga reglar.

Sam: Och har de blivit fler, närproducerade odlare?

S: Ja det har de.

J: En fråga till om era medlemmar. Du sa att antalet medlemmar är ganska konstant men betyder det att de flesta har varit medlemmar i 10-‐15 år eller är det lite mer rörelse bland medlemmar?

S: Vi ligger någonstans på 600-‐700 i medlemmsnummer nu. Det har varit några som har gått ur under de senaste två, tre åren så jag hoppas att det också kommer några nya till.

J: Men hur många har redan varit medlemmar i 10-‐15 år, och är ganska trogna?

S: Det finns en del som är kvar från början också men är det också många som har blivit gamla har gått bort och ungdomar som flyttar härifrån för att studera.

Sam/J/Sarah: Tack så jättemycket för intervjun.

S: Det var så lite.

We called Stefan Rydberg on April 19 to ask him about how many organic products Bikupan sells. He answered that they sell approximately 500 organic food pro-‐ducts. The share of organic food of total sales is 95 per cent.

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Appendix 5: Interview with Coop Forum Sisjön (Green Room)

Respondent: Anna E. Hammarstrand = A Chief Sales Officer for Food (Säljchef för food), Coop Forum Sisjön, Green Room

Interviewers: Samuel Gauger = Sam

Date: March 27, 2012

Type of interview: Telephone interview.

Sam: Varför öppnade ni Green Room?

A: Vi hade en yta över. Där vi har Green Room idag hade vi haft djurmat innan men vi tyckte att det inte förtjänar en sådan bra plats så vi flyttade det och fick en yta över som är ytterligt viktig i butiken. Och då tänkte vi att öppna upp Green Room för att vi har alltid varit stort inom ekologiskt och tänkte att vi kan ha alla ekolo-‐giska produkter på samma ställe för att göra det lättare för kunden att hitta de.Om vi inte hade haft en yta över hade vi nog inte öppnat på samma vis. Vi har 300-‐400 kvadratmeter här. Det är stort.

Sam: Och har ytan och sortimentet blivit större under åren eller har det varit sam-‐ma storlek?

A: Vårt sortiment har ökat men inte ytan.

Sam: Vet du om ni ska öppna likadana butiker på andra Coop butiker i Sverige?

A: Jag kan inte svara på det men det jag kan svara på är att det finns andra Coop butiker som är lite liknande för att de samlar ekologiskt på en hylla men inte ett helt rum. Jag tror inte att det finns yta för det. Försäljningen har inte gått uppåt så mycket så att man skulle satsa en yta på det.

Sam: För vi tyckte att det är en riktig bra idé, det ni gör i eran butik, för man ser inte sådant i Sverige.

A: Alltså det ligger inte i början av butiken utan lite inklämt mellan två avdelningar. Det mest optimala hade varit om det låg i början av butiken så att man kommer rakt in i det.

Sam: Jag undrar om det bara är ekologisk mat i Green Room som ni säljer eller säl-‐jer ni också lite Fairtrade och annat?

A: Det ska helst vara ekologiskt.

Sam: Är det bara mat som ni säljer eller är det också andra ekologiska varor som ekologisk kosmetik eller tvål eller något liknande?

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A: Ja det gör vi. Vi säljer inte bara mat och dryck utan också tvättmedel, sköljmedel, tvålar eller tröjor till exempel.

Sam: Och hur ser det ut med priserna? Är ni lite billigare än andra Coop butiker inom ekologiskt eller är det samma priser ungefär?

A: Det är samma priser.

Sam: Hur hög andel av omsättningen står Green Room för jämfört med andra av-‐delningar i butiken?

A: Den är inte hög. Det är ingen volym försäljning utan en nisch försäljning. Kanske en, två procent just bara Green Room och sen har vi ordinarie också.

Sam: Det förvånar mig. Vi trodde att det var en större del av eran butik.

A: Ja det är en prisfråga också. Varorna och produkter kostar mer. Du kan betala en tusenlapp lätt härinne för en kasse mat. Vi har en bra kundkrets här som inte bryr sig så mycket om vad det kostar. Skulle man sätta Green Room någon annanstans där inte kassen är lika mycket värd så skulle det nog inte funkaför att du har lägre värde på matkassorna.

Sam: Tror du inte att en sådan kundkrets även finns i Stockholm eller någon an-‐nanstans?

A: Bromma södra kan jag tänka mig.

Sam: Tror du att någon av era konkurrenter som till exempel ICA kommer att kopi-‐era detta?

A: Jag har jobbat på ICA tidigare och jag tror inte att de skulle göra det om de inte hade haft yta över. Däremot så tror jag säkert att de kommer utöka sitt ekologiska sortiment men inte på det sättet som vi har gjort för de är lite mer fokuserade på vinsten än vad vi är. Coop står mer för etik och miljö.

Sam: Var ser du era starka och svaga sidor? Alltså vad tycker du att ni kan förbättra och vad är ni bra på, på Green Room?

A: Det vad vi kan förbättra är att få ännu fler kunder att få upp ögonen för det. Styrkan som vi har är att ta in nya leverantörer för att konkurrera med. Sen har vi även vårt egna Coop Änglamark som vi brukar lägga in ibland också. Det gör att vi har en bra blandning och det är en styrka för att kunden har mer att välja på här.

Sam: Hur sätter ni era priser? Jämför ni era priser med andra butiker som säljer ekologiskt i Göteborgs regionen, gör ni benchmarking?

A: Nej utan jag lägger på en marginal eller vad leverantörerna tycker att de andra ligger på.

Sam: Får er personal en utbildning inom ekologiskt eller hur mycket vet de om själva produkterna som ni säljer?

A: Det beror lite på. Biofood fyller på själva, där äger vi inte lagren. Vi betalar bara för det vi säljer. De äger ytan av de sektionerna där de säljer. Och när de kom in så

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fick de ett rum som var lite för stort. Och då hade vi en utbildning för personalen. De flesta som jobbar här vet ganska mycket om ekologisk mat. Dessutom så kan alla medarbetare på Coop få en grundläggande utbildning i miljö och ekologi på nä-‐tet, en e-‐learn utbilding.

Sam: Sista frågan då. Hur tror du att den ekologiska marknaden kommer utvecklas i Sverige?

A: Jag tror att den ekologiska marknaden kommer gå uppåt. Jag pratade med VDn på en av de största matproducenterna i Sverige och han trodde att den minskar. Ändå så tror jag på en ökning för vi ser att det ökar i rummet och vi får mer och mer kunder medvetna. Man kan se tydligt hur intresset för ekologiska varor ökar. Vi har fått massor som har kommit in och frågat ”om vi har det” och ”har ni det”. Kunderna blir mer medvetna och mer hälsosamma och bryr sig mer om vad de äter.

Sam: Ok. Tack så mycket för intervjun och att du hade tid att prata med oss.

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Appendix 6: Interview with ICA

Respondent: Ulrica Bergdahl= U Manager Environment & Social Responsibility Interviewers: Samuel Gauger, Jonas Deichmann, Sarah Fitz-‐Koch Date: April 04, 2012 Type of interview: Questionnaire (via email)

1) Vilka ser ni som era huvudkonkurrenter inom ekologiskt?

SVAR: Vi tittar egentligen inte enbart på det ekologiska sortimentet utan ser gene-‐rellt att vi konkurrerar med alla aktörer som säljer mat, även restauranger. Hu-‐vudkonkurrenter är våra medaktörer inom dagligvaruhandeln.

2.) Har ni hört om Coops nya koncept som heter “Green Room”? Planera ni att göra något likadant?

SVAR: Vi har idag inga planer på att göra en shop-‐in-‐shop för ekologiska produkter utan tror att vi kan få fler kunder att flytta handen till en ekologisk produkt om alla produkter av samma sort står i samma hylla.

3.) Coop har branschens högsta andel ekologisk försäljning och det största ekolo-‐giska sortimentet (2600 produkter enligt deras hemsida och 1400 på Coop Green Room). Vill ni bli större inom ekologiskt än Coop någon gång?

SVAR: ICA har idag Sveriges högsta försäljning av ekologiska varor, för 2011 drygt två miljarder kronor för det centrala sortimentet (COOP nådde 1,6 miljarder för både ekologiska och miljömärkta produkter, ICA räknar inte in de miljömärkta). Därtill ska läggas försäljningen för de produkter butikerna köper in direkt från le-‐verantör. Vår ambition är att ha ett brett utbud av prisvärda ekologiska produkter med god kvalitet, baserat på våra kunders efterfrågan.

Under 2011 hade vi cirka 1100 ekologiska produkter i vårt centrala sortiment. Ef-‐tersom alla ICA-‐butiker i Sverige ägs och drivs av egna handlare köper många buti-‐ker in ytterligare ekologiska varor på egen hand, ofta från lokala aktörer. Det gör att många butiker har ett ännu större utbud av ekologiskt än vad som finns hos ICA centralt. Antal produkter beror också på hur man mäter, vi mäter exempelvis varje produkt med unikt EAN-‐nummer, vilket minskar risken att man räknar samma produkt flera gånger.

4.) Hur skiljer sig ICAs ekologiska varor från Coops? Finns det någon skillnad i hur ni säljer dem?

SVAR: ICA I love eco, som är vårt eget varumärke, säljs enbart i ICAs butiker.

5.) Planera ni att expandera ert ekologiska sortiment även till andra kategorier (inte bara mat utan också andra produkter som ekologisk kosmetik, hushållspap-‐per…)?

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SVAR: ICA har redan idag flera ekologiska produkter inom dessa kategorier, exem-‐pelvis hygienprodukter med ekologisk bomull samt hudvård och schampo/balsam med ekologiska ingredienser. När det gäller pappersprodukter använder vi miljö-‐märket Svanen samt FSC som är en miljömärkning som står för hållbart skogsbruk.

6.) Ser ni små butiker som främst säljer ekologiska varor som era konkurrenter?

SVAR: Alla ICA-‐butiker ägs och drivs av enskilda handlare. Hur konkurrenssitua-‐tionen ser ut varierar beroende på läge och kundunderlag.

7.) Vilka är era svaga och starka sidor inom ekologiskt?

SVAR: Vi har ett bra och prisvärt utbud av ekologiska produkter men det finns po-‐tential för utveckling inom flera kategorier. Personligen skulle jag gärna se att det ekologiska sortimentet lyftes mer, både i marknadsföring och i butik, så att vi får fler av våra kunder att välja ekologiskt. Det finns många engagerade ICA-‐handlare som tillsammans med sina medarbetare jobbar hårt för att lyfta ekologiska och miljömärkta varor i sina butiker. Tack vare handlarens lokala förankring är det många som köper in lokala ekologiska produkter direkt från leverantörer i sitt närområde och på så vis blir utbudet dynamiskt och lokalt anpassat.

8.) Vad måste ni förbättra för att bli ännu bättre inom ekologiskt?

SVAR: Vi behöver sätta måltal för ekologisk försäljning och andel av försäljning för att ha något att jobba mot samt öka marknadsföringsinsatserna för detta sorti-‐ment. Under 2011 utökade vi sortimentet, bland annat när det gäller sop-‐por/buljonger, matoljor och barnmat, något som vi ser stärker oss på marknaden. För ICA kommer sortimentsutveckling även framöver att vara ett sätt att möta den ökande efterfrågan på ekologiska produkter.

9.) Hur tror ni att den ekologiska marknaden kommer utvecklas i Sverige (möjlig-‐heter, hot)?

SVAR: Vi ser att det ekologiska sortimentet har en stark ställning på marknaden och det är särskilt roligt att vårt eget märke ICA I love Eco uppvisar en så bra ut-‐veckling. Ekologiska livsmedel har blivit en naturlig del i kundernas köpmönster. Ökningstakten för ekologiskt är inte lika stor nu som för tre, fyra år sedan men det är fortfarande en tydlig trend uppåt och vi tror på en fortsatt stark utveckling.

10.) Var får ni era ekologiska varor ifrån (mest från Sverige eller importerar ni, lo-‐kala leverantörer)?

SVAR: Det är svårt att svara generellt på denna fråga, det beror på typ av produkt. Exempelvis vår ICA I love eco Fruktmüsli, som är Krav-‐märkt. Vår müsli produce-‐ras i Sverige med svensk havre, svenska vete-‐ och rågflingor, kornflingor från Tyskland, russin från Syd Afrika, solrosfrön från Kina och kokos från Sri Lanka. ICAs egna ekologiska kött har alltid svenskt ursprung och är KRAV-‐märkt, efter-‐som de djuromsorgsreglerna är strängare än de EU-‐ekologiska.

Så långt det går köper vi nära våra hemmamarknader och mat köper vi till största delen från Sverige och inom EU. Titta gärna på hur fördelningen ser ut för alla våra

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egna varor, som utgör cirka 30% av vårt totala sortiment: http://reports.ica.se/ar2011sv/Start/Hallbarhet/Etisk+handel/Leverantorskarta

11.) Hur går det med försäljningen av ICAsegna märke ”I love eco”? Ska ni satsa mer på det märket (större sortiment, minska andelen ”national brands”)?

I de svenska ICA-‐butikerna har det centrala sortimentets ekologiska försäljning mer än fördubblats sedan 2007. 2011 ökade den totala försäljningen av ekologiskt med 4,3 procent och vårt eget varumärke ICA I love Eco steg med 23 procent i Sve-‐rige.

12.) Hur sätter ni era priser? Benchmarking?

SVAR: ICA i Sverige består av cirka 1 300 egna företagare som konkurrerar med varandra och med andra aktörer genom egen prissättning, servicenivå och butiks-‐läge. Varje ICA-‐handlare bestämmer över sitt eget sortiment och anpassar sin verksamhet och erbjudanden till den egna marknadens efterfråga.

13.)Undervisar ni eller planera ni att undervisa era anställda inom ekologiskt så att ni kan leverera ännu bättre kundservice?

SVAR: Vi stöttar våra butiker med kompetensutbildning på flera sätt, bland annat genom utbildningar och information. Under våren kommer alla tjänstemän och bu-‐tiksmedarbetare erbjudas att genomgå en grundläggande miljöutbildning, där ekologiskt är en av delarna.

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Appendix 7: Interview with Coop

Respondent: Louise König = L Manager of Sustainable Development (Chef Hållbar Utveckling), Kooperativa Förbundet (KF)

Interviewer: Samuel Gauger = Sam Date: April 11, 2012 Type of interview: telephone interview.

Sam: Vilka ser ni som era huvudkonkurrenter inom ekologiskt?

L: Det är ICA och Axfood.

Sam: Hur skiljer sig Coops ekologiska varor från ICAs? Finns det någon skillnad i hur ni säljer dem?

L: Det ena är egna varumärken och de utvecklar vi för att vi tycker att det finns ett värde i det. Det är bra att ha fler alternativ till kunderna där det finns hål i utbudet av andras varumärken. ICA kanske inte använder KRAV lika mycket som vi gör utan de kanske använder EU certifieringar snarare än KRAV. Dessutom, så kan man säga att vårt ekologiska sortiment är ganska stort, både det ekologiska och miljö-‐märkta sortimentet. Miljömärkt är icke mat produkter.

Sam: Tänker ni bli ännu större inom icke-‐mat produkter?

L: De kategorierna är redan utvecklade. Det finns redan kosmetik och hudvård och det finns toalettpapper, hushållspapper och hygienartiklar.

Sam: Vad exakt är skillnaden mellan miljömärkta varor och ekologiska varor? För det var inte riktigt tydligt för oss när vi läste igenom er hållbarhetsredovisning.

L: Ekologiska varor är till exempel mat, och miljömärkta varor följer olika typer av miljömärkningar men det är oftast non-‐food. Det är mer hur vi mäter och följer upp i våra system.

Sam: Vi har läst om ert nya koncept ”Green Room” på Coop Forum i Sisjön. Ska ni satsa på fler ”Green Room” butiker i Sverige?

L: Det är någonting Coop Forum själva har gjort. Det finns även i andra butiker till exempel uppe i Norrland. Man kan fråga sig om en butik-‐i-‐butiken är ett bättre sätt att sälja de ekologiska och miljömärkta produkterna. Det är också ett utrymmes-‐perspektiv då det är lättare med ett Green Room på Coop Forum än Coop Nära. Det är generellt lätt att hitta ekologiska och miljömärkta varor i våra butiker för att vi har gröna hylletiketter på alla ekologiska och miljömärkta varor.

Sam: Vi tycker att Green Roomär ett jättebra koncept och undrar om ni inte vill göra det någon annanstans i Sverige också? Alltså tror du att ni kommer satsa mer på en butik-‐i-‐butiken i framtiden?

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L: Jag kan inte svara på det.

Sam: Vi läste en artikel som säger att man konkurrerar mycket lokalt i Sverige. Till exempel om en liten butik i Jönköping säljer mycket ekologiskt och även Coop i Jönköping så skulle de butikerna konkurrera. Ser ni små butiker som främst säljer ekologiska varor som era konkurrenter?

L: Vi ser dem inte som konkurrenter. Visst så konkurrerar vi men samtidigt så har Coop drivit utvecklingen både av ekologiska och miljömärkta produkter så vi väl-‐komnar konkurrenter. Vi tycker att det är bra att det finns små butiker och därför skulle jag inte uttrycka det som att vi ser ett problem att vi konkurrerar. Vi väl-‐komnar att allt fler säljer ekologiskt, hållbart och rättvisemärkt. Och det är också för att vi nästan överallt ser att den ekologiska marknaden framförallt kommer att utvecklas positivt även om den fortfarande har en väldigt liten del av hela markna-‐den. Det är fortfarande bara kring 2 miljarder kronor för Coop. Men vi ser en kon-‐tinuerlig ökning och det finns plats för de stora men även de mindre mer nischade butikerna.

Sam: Vilka är era svaga och starka sidor inom ekologiskt?

L: Vi har varit stora inom ekologiskt i drygt 30 år nu och har ett stort sortiment av ekologiska och miljömärkta varor. Våra svaga sidor är att vi måste bli ännu kon-‐kurrenskraftigare.

Sam: Vad tror du ni måste förbättra för att bli ännu bättre inom ekologiskt?

L: Våra produkter ska bli ännu konkurrenskraftigare och det är inom ekologi och hållbarhet. De stora hållbarhetsprodukterna (ekologi, miljömärkt och fairtrade) måste bli mycket mer kommersiella. Det är viktigt att kunden verkligen känner att det är värt att betala mer och att ser vilket mervärde det ger.

Sam: Tror ni att ni når det målet? Vill ni nå det genom att satsa mer på marknads-‐föring eller hur vill ni få kunderna att tänka om?

L: Jag kan inte riktigt svara på det, men naturligtvis med kommunikation ut till kunden på olika sätt. Vi har exempelvis ett ekologiskt erbjudande i våra vecko-‐kampanjer nästan varje vecka. Vi kan kommunicera ute i våra butiker, genom mat-‐inspiration, recept och bloggar. Genom att kommunicera via våra vanliga kanaler med fokus på matinspiration kan vi göra väldigt mycket

Sam: Hur tror ni den ekologiska marknaden kommer utvecklas i Sverige? Ser du något hot mot den positiva utvecklingen?

L: Jag vet inte om jag skulle uttrycka det som hot men ett hot kan vara hur den glo-‐bala marknaden kommer att utvecklas och den kan påverka den svenska markna-‐den. Man kan säga efterfrågan och priset.

Sam: Var får ni era ekologiska varor ifrån? Är de mest från Sverige eller importerar ni mycket? Kommer ni importera mer i framtiden?

L: Jag kan faktiskt inte riktigt svara på det för att jag inte kan se ursprungs-‐siffrorna. Det beror på vad det gäller för någonting. Det är en sak om man kollar på

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frukt och grönt, det är en annan sak om man tittar på kolonialvaror. Jag kan tyvärr inte riktigt svara på den frågan för vi samlar inte in data på det sättet.

Sam: Hur går det med Coop’s egna märke ”Änglamark”? Ska ni satsa mer på det märket eller vill ni ta in fler national brands som Arla till exempel?

L: Vi har inga planer på att minska sortimentet just nu. Vi tittar på olika inriktning-‐ar kopplat till hur vi ska öka vår ekologiska och miljömärkta försäljning. Vi kan göra det genom att bredda sortimentet eller genom att fokusera på ett visst sorti-‐ment. Och det kan jag inte ge dig svar på för det är en del av våra strategier som vi jobbar på just nu.

Sam: Undervisar ni/planerar ni att undervisa era anställda inom ekologiskt?

L: Vi har Coops egna introduktionsutbildningar och där erbjuds man att lära sig grundläggande fakta och kunskaper kring hållbar utveckling. Vi har också e-‐learn utbildningar på nätet. Detta betyder att alla medarbetare faktiskt kan få en grund-‐läggande utbildning i hållbarhetsutveckling och miljö och ekologi om de vill.

Sam: Har ni funderat på att satsa även mer på kundservice inom ekologiskt, så att ni kan bli ännu bättre? Alltså om jag till exempel handlar i en Coop butik och frågar en anställd om en ekologisk produkt så att den anställda kan svara väldigt bra på min fråga.

L: Frågan blir då hur man mäter en sådan sak, det vore väldigt svårt. Det är klart att vi alltid ska tillhandahålla bra svar både genom Coop kundkontakt och i det per-‐sonliga mötet med kunden i våra butiker. Det är många i våra butiker som kan ganska mycket om hållbarhet, ekologi och miljömärkta produkter redan men det är klart att man skulle vilja att alla kunde svara på frågorna som berör kunden di-‐rekt. Om de inte kan svara så skickas kundens fråga alltid vidare till Coop kundkon-‐takt där vi har specialister som svarar. Genom Coop kundkontakt får vi väldigt många frågor som rör hållbar utveckling.

Det är klart att man alltid kan bli bättre, men sen är frågan som sagt hur man mäter det, för det är också så att ju mer öppen och transparent man är desto högre krav har konsumenterna och desto mer djupgående frågor ställer de. Man får helt enkelt prioritera vilka frågor man vill kommunicera till kunden.

Sam: Tack så mycket för intervjun och att du tog dig tid för oss.

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