Digitalization and e-commerce in the forefront of it have been the major drivers shaping the Swedish retail market over the last decade. The Swedish e-commerce turnover almost quadrupled in the 2010s, culminating in the pandemic years with accelerating growth rates hitting new records. Today, the nearly three decades long consecutive growth in the Swedish retail has ended and e-commerce growth has bounced back from the figures boosted by the pandemic.
E-commerce has opened new growth and internationalization opportunities for brands and retailers in Sweden and globally. Compared to its neighbouring Nordic-Baltic countries, Sweden has been several years ahead in the e-commerce development. Being a forerunning market in the region has created opportunities, but also higher expectations for companies expanding to Sweden.
Localised offering, including language, marketing, customer service, and payment and delivery options, is basics for companies planning for internationalisation. The Swedish consumer is demanding, and the level of service and user experience throughout the customer journey need to be top notch to meet the local standards. However, to gain attention and trust among the Swedish consumers and to succeed in Sweden, companies need to look beyond e-commerce.
Sell brand and values, not products
What value will you add to the market? That’s a question all companies planning an expansion should consider. The competition in Sweden is tough, and to have a strong brand, an appealing story and a clear concept is extremely important to manage to stick out from the crowd. It is essential to understand that compared to the neighbours in the region, Swedish consumers make emotionally driven decisions. In Sweden, consumers buy brand and values, and product into the bargain. Thus, a concept that works perfectly in markets where the product itself and its functionalities are highly valued doesn’t sell by itself in Sweden.
Swedish digital native brands and e-tailers have been successful in finding unaddressed opportunities in the market, for example in terms of price point or target group and creating well-packaged concepts around them. Focusing on a niche category has been a successful strategy for many brands. For example, in the early 2010s the watch brand Daniel Wellington and the sneaker brand Axel Arigato, or the phone case brand Ideal of Sweden and the eyewear brand Chimi Eyewear more recently, have all in common a clear concept with a focus on a narrow product category and a target group. All these brands have also been forerunners in using social media channels, especially Instagram, as their key marketing platform.
For e-tailers, finding the right niche is equally important, and it doesn’t have to be about the products or the assortment. Apotea, an online pharmacy, has been one of the most popular e-commerce stores because of their strong focus on logistics and delivery. For many years, Apotea was setting the standard for fast and smooth customer experience in Sweden. On the other hand, two beauty e-tailers, Lyko and SkinCity, have created a concept around experience, inspiration and high level of service.
Herd instinct
Swedish consumers are trend sensitive and tend to show herd behaviour. It turns out that in one of the world’s most individualistic countries, the consumption is relatively collectivist. Swedes like to buy same products and services as everyone else, which makes trends fast spreading and powerful.
Because of the emotionally driven decision making and the tendency to herd behaviour, building relationship with consumers is extremely important. Over the last decade, e-commerce brands have built relationship with customers primarily on social media, although other channels have also gained popularity especially in the most recent years. For example, Matilda Djerf, an influencer who started her own brand Djerf Avenue in 2019, has created her own community, Angels Avenue, in connection to her web shop to enable interaction between the brand’s fans and the brand. Similarly, Lyko, the beauty retailer, has created Lyko Social, an online meeting place for their beauty interested customers.
Taking the brand experience and the relationship building to a next level, many Swedish e-commerce brands and e-tailers are going from clicks to bricks and investing in physical places, by opening pop-up or flagship stores or creating collaborations with selected physical retailers. For example, the aforementioned Djerf Avenue has had popular pop-ups in Stockholm and in New York, Lyko is opening a flagship store in a prime location in Stockholm later this year, and the sneaker brand Axel Arigato is using their stores to create inspiring events and experiences for customers.
As a final word, the ability to be agile, quickly adapt to trends and renew in the changing environment is essential for long-term success. And long-term should be the only existing time perspective for companies aspiring to gain a foothold in Sweden and to create traction in the challenging market.
Vilma Rissanen
Senior Advisor
Business Finland
Sweden
