Chief Strategy & Digital Officer ICA Sweden
We intend to grow step by step by adding new services
ICA Gruppen is currently investing heavily in automated warehouses, an entirely new e-commerce platform and significant efforts for the last mile. How would you describe ICA Gruppen’s overall ambitions for its online solutions?
Peter Muld: All of our efforts are based on the vision of making every day a little easier for our customers. To succeed we need to be able to meet them in the locations and channels where they are and where they want to be – whether it’s in a physical store or pharmacy, or online. The goal is to be the leading omnichannel actor.
Tony Holmberg: The investments we’re making now have multiple objectives. One of the main objectives is to strengthen loyalty to our businesses and at the same time create the right conditions for e-commerce that provides long-term profitability for the independent ICA retailers. From a consumer perspective the goal is to provide a personalised, easy and inspiring shopping experience. Simply put, we want to offer the best experience around food online. By allowing physical and digital channels to work together – and by fully leveraging the strength of our corporate structure – we will develop ecosystems that have entirely new types of services.
What will these ecosystems look like?
Peter Muld: Here and now we’re focusing on being able to offer a broad, attractive and value-for-money range of food and meal solutions as well as near-food and non-food products. Then we intend to grow step by step by adding new services and a complementary assortment of products – within our own operations or together with partners. A good example of this is the new home mortgage offering that ICA Bank has launched. Members of ICA’s Stammis loyalty programme will of course receive a discount on their home mortgage. Other potential services include an expansion of joint deliveries between ICA and Apotek Hjärtat, and various types of delivery subscriptions.
ICA Gruppen has invested heavily in online-related investments. What are the largest projects?
Tony Holmberg: The largest projects are ICA Sweden’s investment in a new, automated customer fulfilment centre and a brand new e-commerce platform. Both the automation technology and the new platform have been developed in close partnership with Ocado, a world leader in e-commerce solutions for food. Other major investments include ICA Sweden’s new customer fulfilment centre in Gothenburg and Apotek Hjärtat’s customer fulfilment centre in Norrköping.
At the end of 2021 ICA Sweden’s brand new, fully automated customer fulfilment centre was opened in Brunna outside Stockholm. What does this mean for customers and ICA retailers?
Tony Holmberg: The new automated customer fulfilment centre will enable us to meet rapidly growing demand for online food shopping in the Stockholm-Mälaren region for many years to come. In combination with Ocado’s automation solution, the new warehouse is making it possible to offer a significantly larger assortment online and to achieve longterm profitability for e-commerce. It’s also the first warehouse of its kind in Sweden, which is extra exciting.
The process of migrating ICA stores to the new e-commerce platform, Ocado Smart Platform, is currently under way as well. What will be the difference in the experience for customers and ICA retailers?
Linda Widlund: The main benefits for us as retailers include a marked increase in flexibility and entirely new opportunities for continuous development. It provides us with new tools that will take the customer experience to a new level – especially in terms of our ability to adapt our offering based on specific customer needs. For example, the new system keeps track of what customers usually buy, how often and what “others like you” are buying.
Sales of groceries and pharmacy goods online have grown sharply in recent years. How do you see growth going forward?
Peter Muld: Over the past two years e-commerce growth has been extremely strong. In 2020 and 2021 e-commerce increased by 95% and 24% respectively. For ICA the growth has been even stronger at 117% and 22% respectively. Obviously one of the drivers was the pandemic, which resulted in entirely new groups starting to shop online. But what we saw in 2021 was that some of our online customers – primarily older ones – found their way back to stores and also that customers are increasingly switching between the two channels. This is a trend we believe will continue. E-commerce has big advantages, but so do the physical stores. As we look to the future we expect continued growth, although not quite at the same pace as over the past two years. But it’s obvious that e-commerce is now established at a new, significantly higher level that before.
Monika Magnusson: Within pharmacy retail the growth online has been even stronger and we believe this will continue. We see great opportunities going forward to link our strong pharmacy network with online shopping to an even greater extent. Today the pharmacies are already functioning to some degree as local warehouses for online sales. Customers can, for example, shop online but opt to pick up their purchase from the pharmacy of their choice just a couple of hours later. In big cities express home delivery is also offered, with products being picked, packed and sent directly from larger pharmacies within just a couple of hours.
In 2021 ICA’s and Apotek Hjärtat’s market share online was lower than in physical retail channels. What are your ambitions here?
Tony Holmberg: Despite tough competition from pureplay e-commerce operators, both ICA and Apotek Hjärtat have grown faster than the market in general in recent years. The goal going forward is to continue to grow and increase our market share. Over time we intend to have the same market share online as in the physical channels.
Monika Magnusson: Of course, we want to be just as strong regardless of where the customer chooses to shop. And we really are in the very best position – what we can offer together is very difficult for anyone else to achieve.
What is ICA Real Estate doing to facilitate e-commerce?
Maria Kristensen: E-commerce brings with it entirely new types of needs in terms of both the location and the design of warehouses as logistics hubs. At the corporate level we’re doing our part by securing access to appropriate properties in the right locations. We’re also actively supporting the ICA retailers in the process of adapting existing stores and marketplaces. This involves everything from developing and setting up collection points to adapting the refrigeration and storage areas at the stores so that they’re efficient for both normal in-store and online shopping. We’re doing all this to make it as easy as possible for customers to collect pre-ordered bags of groceries and pharmacy items as well as post and parcels.
How are things developing in the Baltic countries?
Zane Ermansone: Here, too, the market picked up significantly during the pandemic. Compared with Sweden, e-commerce is at a lower level as a percentage of total grocery sales – but the number of actors is growing fast, resulting in tough competition. Rimi Baltic is, however, clearly one of the actors driving this. Since spring 2020 we’ve been offering online shopping in all three Baltic countries and it’s been growing rapidly, albeit from low levels. In 2021 we saw growth of a just over 130% and online sales accounted for 2.6% of our total sales. In 2020 the online share was 1.2%.
What does the future look like? Which activities have top priority in 2022?
Peter Muld: 2022 will be an intense year with a big focus on getting the new automated warehouse in Brunna fully operational. We’ll also continue to migrate ICA stores to the new e-commerce platform, which is the basis for everything we’re planning to do in the future – in the form of new services for both retailers and customers. We can only really get going on this journey once this is in place.
Chief Strategy & Digital Officer ICA Sweden
Director of eCommerce, ICA Sweden
Director of Sales & Operations, Apotek Hjärtat
ICA retailer ICA Supermarket Sjöstaden, Stockholm
Acting Digital Development Director, Rimi Baltic
Director Lease Location and Warehouse, ICA Real Estate