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Insights from Picnic’s CTO: Mastering Retail Resilience

Daniel Gebler, co-founder and CTO of online food shopping giant Picnic, provides valuable insights on how to build a resilient retail organization through the concept of anti-fragility. He also shares how Picnic navigated through black swan events with the anti-fragility mindset, leveraged customer feedback to revamp systems and processes, and improved the organization’s safety and sustainability scores with technology.  

 

RETHINKING THE ONLINE GROCERY DELIVERY SYSTEM

 

Generally, online food shopping hasn’t taken off with high delivery costs and wait times as major factors. “It’s very expensive to do food shopping online. If something is very expensive, you won’t do it. It’s not so much that you must pay higher prices for the products, you had to pay for deliveries. At this point, you also have to pay for deliveries for returns. That was not the case for other replicas.” 

To combat these obstacles, Gebler highlights the importance of accurate delivery windows and the need for faster delivery to make online food shopping more appealing. “It’s not so much that you deliver faster. It doesn’t work because you will run out of money. It’s not so much the waiting time, but the accuracy of delivery. If you say you can deliver this in one hour, then you have a much different proposition. That broke up the entire market. This is something you see again and again where everybody tries to copy what has worked in one market to another market.” 

Food shopping requires a different experience, as customers will purchase food every week, as opposed to a digital device that they will buy once every few years. “You never buy the same device again. However, food is a different dynamic. So, the entire shopping experience needs to be different.” 

Gebler proposes a new approach to e-commerce by owning both the front and back office, allowing for greater control and success. “What everybody was doing in e-commerce is only from the front office and the app, but nobody owns the logistics. That is a big issue because then you simply can’t control it. If you want to be successful in e-commerce, you need to own both the front and back office.” 

He also suggests taking a service position that is more suited for less convenient situations, such as offering delivery windows based on customer demand. “What would happen if you offered only one delivery window a day instead of ten? This model has simple logistics. If it’s not convenient for customers during that window, they can order for the next day. It’s basically a bus distribution system to get from street to street and never visit the same street twice. This is a very efficient delivery system.” 

 

REVAMP SYSTEMS AND PROCESSES TO WITHSTAND BLACK SWAN EVENTS 

 

With competition from local supermarkets and Amazon, Gebler emphasizes the importance of understanding people’s behavior in the market. He also discusses the concept of anti-fragility in business, where resilience and adaptability are crucial in the face of uncertainty and negative events. 

“If you think about uncertainty, maybe you think about probability. But there are black swan events, and we have been going through one over the last few years. The first thing that happened for Picnic was that we had 10x demand. So, most people can’t properly deliver to you from the supplier side as demand was skyrocketing. And then the entire logistics completely changed. The point of anti-fragility is that you innovate your business to become anti-fragile.” 

He defines fragility in business as a software system or logistical process that no longer grows because of an unexpected event. There is a need to move beyond traditional robustness measures and instead focus on creating systems that can benefit from unexpected events, making the organization stronger in both good and bad times. 

“With anti-fragility, you have built many infrastructure systems and mitigation steps to make processes and systems in the organization more robust. The real power of anti-fragility is that you move to a state where an external factor, even if it has a short-term negative impact on you, makes your organization stronger. If you can achieve that, then you grow not only in good times but also in challenging times, because you are prepared for whatever may come in the future.” 

 

LEVERAGING CUSTOMER FEEDBACK TO BECOME ANTI-FRAGILE

 

Picnic has designed a system to be anti-fragile by starting small, gathering customer feedback, and optimizing packaging and delivery. “How do you design a system that is prepared for anti-fragility? Firstly, if you’re a retailer, ask yourself, what are you selling? Maybe you stock 4,000 items. And at some point, you simply say, ‘We will serve more if you tell us what to serve.’ Therefore, we started to ask all our customers what kind of products they would like to have at Picnic.” 

It’s also important to find out what customers want but can’t find at the store. “If you get hold of that information, you can launch the product. If there are no suppliers for that product, you need to go one step further. If nobody’s producing what consumers are looking for, you need to do it yourself.” 

In addition, Picnic leverages AI and machine learning to improve customer service communications by analyzing past responses to provide better responses in the future. “If you put this all together in a database, if you take all the responses that agents have spoken in the past, you have a good measuring system to see what a quick response should be in the future.” 

 

OPTIMIZE FOOD DELIVERY LOGISTICS WITH AI 

 

Gebler discusses the importance of last-mile delivery logistics, including predicting delivery times and addressing customer questions. “On the logistical side, the last mile is a very important aspect. It is essentially the only real touch point that we have with a customer at Picnic.”  

He highlights the challenges of delivering to customers, such as navigating complex addresses and addressing customer concerns. Gebler discusses the importance of sharing real-time data with customers and suppliers to improve efficiency and safety in the delivery process.  

“How do you work with machine learning to create a customer experience? There are two factors at play, you need to predict how long the delivery will take, and how to make that prediction a reality. When you’re talking about AI, machine learning, and forecasting, you need to have a better prediction system. You need to also have a better operational system that makes the prediction happen.” 

 

LISTENING TO CONSUMER DEMAND TO REDUCE FOOD WASTE 

 

The environmental impact of online food delivery services is negative overall, with only 50% of food produced being consumed. Gebler also notes the potential of autonomous driving in the food industry. Although it is not yet practical for public roads, it could have a positive environmental impact in the long run. Gebler highlights the importance of avoiding waste in the supply chain, particularly with self-adapting supply chains and early consumer demand knowledge. 

“If you look at the entire food system, only around 50% of what’s harvested gets consumed. So, this is an extremely wasteful industry. If you look at physical retail, usually most supermarkets have waste, somewhere between 10% and 20%. Picnic’s is below 1%. That is something we are very proud of and what we find very important because this kind of waste is avoidable. By having a supply chain that is self-adapting and knowing the consumer demand very early on, we can avoid waste.” 

 

DATA COLLECTION FOR SAFETY AND SUSTAINABILITY 

 

Picnic has implemented a safety data collection process for self-driving cars, using data from vehicle sensors to identify areas of improvement. One of the data collection methods is the driver coaching feature, providing riders with feedback scores and suggestions for improvement after each ride.  

“The first step was to understand where we stand with safety. Let’s collect data from the vehicles. Where are people driving safely and where are they not? We have identified dangerous places that have not been given enough attention to drive safely in. It’s again about sharing data. So, what we do is give all our drivers some feedback once they have completed the ride. After a ride, our drivers are given a feedback score between 0 and 100. If you’re 80 and above, then you have actually completed a fantastic ride.” 

When it comes to sustainability, Gebler mentions the biggest challenge lies in poor transparency with third-party suppliers. “There’s a big obligation for the entire ecosystem to have more accurate data available for partners and consumers to get the full end-to-end view on sustainability.” 

 

COMPLEMENT DATA WITH VISION AND AMBITION  

 

Combining data with vision and understanding is paramount to creating a successful business. He encourages entrepreneurs to share early versions of their products with customers to gather feedback and create something meaningful. 

“If you have a big plan and you need to do 10 things, what are the first two things that create significant value? It’s easy to say, but it’s probably the hardest thing in building a business and innovating. While we are all collecting a lot of data and talking about data innovation, the reality is that you will never have enough data. You need to complement data with vision and ambition.” 

“This is important for leaders across all industries. The main role is that you complement data with your vision and understanding of the industry. The same applies to machine learning and deep learning. While this is important to build, you need to think about how to go live with a prototype today with minimal effort.” 

“While we are all trying to think about what it would mean to launch a product and put it in the hands of millions of customers, we are usually launching too late. There’s a saying in the startup world that goes, ‘If you’re not embarrassed by the first version that you put out, you’ve launched too late.’ There’s a real power in sharing with customers that very early version to get feedback. You don’t need big teams to create something meaningful.” 

Gebler discusses the challenges of labor shortages in the industry and how Picnic addresses this issue through small project ownership and early responsibility for young employees. 

“It’s very interesting to see typically very young people have a lot of ownership. For example, we have supply chain leaders who run fulfillment centers and lead 400 people. In many cases, these leaders are around 27 and 28 years old. That’s impressive from an industry perspective. We also have a young engineer leading our entire safety operation. That is 300,000 vehicles for him to turn around.” 

 

*The insights have been edited for length and clarity. 

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Marko Sarstedt: Why is Sensory Marketing Important?

As the retail industry faces the challenges of a weakened economy and rising inflation, consumer confidence and spending power are decreasing. This shift in consumer behavior requires a strategic approach to product differentiation through effective marketing strategies. However, in a highly competitive and unpredictable market, maintaining a strong brand image is no easy feat. It is crucial for business leaders to stay ahead of the curve and develop innovative strategies to remain relevant and resilient.  

We spoke to marketing professor and consumer behavior researcher, Marko Sarstedt about sensory marketing, the impact it can have on customer experience, and the knock-on effect it has on customer loyalty.  

 
Marko Sarstedt is a chaired professor of marketing at the Ludwig-Maximilians-University Munich and an adjunct research professor at Babeș-Bolyai-University Cluj-Napoca in Romania. Marko’s research on consumer behavior has been published in world-leading academic journals and ranks among the most frequently cited in the social sciences.

He has also made the Clarivate Analytics’ Highly Cited Researchers List several times including ranking as the “world’s most impactful scientific researchers.” In March 2022, he was awarded an honorary doctorate from Babeș-Bolyai-University Cluj-Napoca for his research achievements and contributions to international exchange.
 

Could you briefly explain what sensory marketing is and how it relates to customer loyalty? 

Sensory marketing involves all processing of sensory perception. It’s about how certain sensory stimuli – like light, temperature, sound, or haptic elements – impact our perception of products in retail environments. Sensory marketing as an academic field is involved in trying to understand how these different stimuli impact us, what are the mechanisms through which they impact us, and how retailers and other companies such as online shops can leverage these insights to improve customer experience. 

When consumers enter a retail space, there are lots of influences they have to cope with such as music, light, scents, and even other customers. Being exposed to many, sometimes divergent influences, creates dissonance and diminishes satisfaction. By harmonizing at least some of these influences, consumers can process the environment more easily.  

As consumers, we don’t want to go somewhere and invest lots of cognitive effort and capabilities to process all these different impacting factors. We want to have things easy. If this is achieved through sensory perceptions, customers will enjoy the experience enough to come back.  

Harmonizing sensory perceptions improves satisfaction, which then improves loyalty.  

There is a direct causal chain between these sensory perceptions and customer satisfaction, and it is well supported by research. 

 

How has the current economic climate impacted customer loyalty in the retail industry? 

We need to first consider the consequences of the pandemic which has shifted many businesses to the online environment. People who were not used to purchasing goods online were forced to give it a try and they learned that it’s favorable. The pandemic was an accelerator for online businesses because it massively shifted demand into the online world. Obviously, this is an issue for stationary retailers.  

At the same time, we’re seeing high inflation in Europe and other regions in the world because of the war in Ukraine. This means there is less spending power. People want to save, and they typically get better bargains online. So we see diminishing loyalty in stationary retail because people have just shifted to an online world for various reasons. 

Also, brand loyalty in general has been diluting for several years now. This is because there are more companies emerging that are targeting smaller niche segments to adequately address consumer needs and wants. In fact, today’s consumers, especially younger ones, expect this. 

Nevertheless, the fact remains that people still want to experience goods and services in an offline world. They like more tactile environments because humans are social beings. We like to communicate one-on-one and want to experience our surroundings. We don’t live in a social vacuum. Especially after the COVID lockdowns, we can see that people are longing for social interactions and exchanges. So, despite the shift online, there is a countermovement back to stationary retail.  

Sensory marketing has an unbeatable advantage over online settings because it caters to all our sensory perceptions which is more difficult to achieve online.  

That’s how sensory marketing can contribute to customer loyalty for stationary retailers. 

 

In today’s highly competitive retail landscape, how can businesses use sensory marketing to differentiate themselves from their competition? 

Brand managers put a substantial amount of effort into defining their brand image. They define what a brand should look like in the minds of consumers. They then run advertising campaigns on social media with influencers, targeting these brand image elements.  

What brand managers oftentimes forget is the actual experience of the brand at the point of sale. You can have the fanciest advertising campaign, but if the brand experience at the point of sale is opposing that image, then it’s wasted money in the first place. 

For example, if the masculine image of a brand that targets male consumers is not supported at the point of sale – either by the color schemes, lighting, music, or scent – all your brand positioning efforts are ruined.  

Brand managers need to view the experience of a brand holistically, not just through advertisement and communication, but also how consumers experience the product at the point of sale or the experience of the product itself.  

This is something that many brand managers put very scant attention on right now. They focus on how people perceive the brand. But when it comes to haptics, tactile, and what the products look like when a customer interacts with them, that’s regarded to be of minor relevance. 

 

How can business leaders justify investment in sensory marketing? What are the potential returns on that investment? 

There’s ample research showing the importance of sensory perceptions for consumer behavior. For example, we know that when companies implement a pleasant ambient scent into a retail environment, this generates an average uplift in sales of 20%.  

Similarly, we know that music impacts our behavior. If you play specific music in the background, it triggers specific country stereotypes and leads people into buying certain products. For example, researchers have played French music in a wine store, and suddenly, people bought French wine. Then they play German music and people have bought German wine.  

Scent, music, and haptics work together like an orchestra. Jointly, they impact our behavior and increase or decrease our propensity to purchase a product. They also affect our satisfaction with the servicescape and retail environment. 

What’s a good starting point for business leaders who want to start focusing more on sensory marketing in their branding strategies?  

The cheapest way of tackling this is certainly by music. You can play specific music in stores which can have a significant impact on consumer behavior. Of course, the best-case scenario is getting an agency to help you make these decisions. Things like time of day and volume play a role. For example, if the music is too fast, people will move through the stores too quickly. If the music is too slow, they move slower but there’s a risk they may get bored, which creates dissonance. While fine-tuning requires expert help, implementing music is low-hanging fruit and a good place to start. 

Many of these things can be done intuitively without causing harm to the business. Typically, investment in sensory marketing is low while the potential benefits are high.   

You have a book coming out about sensory marketing, Multisensory Design of Retail Environments: Vision, Sound, and Scent. Can you tell us more about it? 

As researchers, we know there’s a wide array of research in various fields – not only marketing but consumer behavior, environmental studies, and so on – that deal with sensory perceptions. However, these studies are oftentimes complicated and heavy with statistics, making it difficult to extract information that is relevant to practitioners who want to grasp the essence of the findings. 

With that in mind, my fellow co-authors and I set out to summarize the most recent research on sensory stimuli that retailers can readily implement themselves. We’ve looked at a huge amount of research from various fields, leaving aside statistical detail and theory, and focusing instead on how to improve the sensory perception of retail environments, as well as next steps for the future. 

What do you hope people will take away from your session next month? 

I hope that they take away how important it is to actively manage the sensory environment.  

We invest much time in the front end of brand marketing, from advertising to the image – but we frequently forget about how people actually experience the brand at the point of sale.  

*The interview has been edited for length and clarity. 

**The book: Multisensory Design of Retail Environments: Vision, Sound, and Scent.

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The Retail Landscape in 2022: What’s in Store?

Consumer shopping habits have changed drastically in the past two years. Retailers from all business environments transformed to accommodate fluctuating customer expectations. The adoption of retail tech has also increased among brands to not only survive but thrive during these uncertain times. As the year comes to a close, what key retail trends are expected in 2022?  

 

Shifting Consumer Priorities and Habits 

Customer personalization 

According to Gregory Ng, CEO of Brooks Bell, today’s customers want to connect with their favorite brands smoothly on their own time. As more retailers provide an omnichannel experience, customers expect to receive quick, responsive, and personalized engagements throughout their buying journey. Several initiatives brands have taken include offering personalized product recommendations based on previous purchases, designing quizzes to ensure the product is tailored to individual customer needs, and gifting customers coupons during their birthday month. Whether retailers have a presence online, in-store, or both, a personalized shopping experience yields positive results. A study by Boston Consulting Group found that customers who experienced high personalization were 110% more likely to add more items to their carts and gave higher net promoter scores.  

Sustainability

Results from PwC’s December 2021 Global Consumer Insights Pulse Survey shed light on the increasing influence of sustainability on purchasing decisions. Consumers have become more eco-friendly compared to six months ago, and 51% of respondents take sustainability into consideration when buying a product, alongside pricing and convenience. Retailers are responding accordingly, introducing greener products, processes, and services. At Systembolaget, more organic products in climate-smart packaging are on their shelves due to customer demand. “It is about designing your channel and products in the most sustainable way and thinking it through from start to finish,” says Systembolaget CEO, Magdalena Gerger. A growing number of companies, from fashion to furniture, are also embracing the circular economy to reduce waste and extend product lifecycles.  

Smartphone shopping

Smartphones have made the online shopping experience seamless, accessible, and convenient. In PwC’s December 2021 Global Consumer Insights Pulse Survey, 41% of respondents state that they shop daily or weekly on their smartphones. For e-commerce sites and retailers, websites and apps are their shopfronts and they need to be mobile-friendly to boost sales and engagement. As smartphone usage is high among consumers, retailers must rewire their marketing efforts for the highest visibility in a mobile environment.  

 
Seize networking opportunities with Europe’s top retail leaders at IndustryForum Retail in the Netherlands.
 

Rethinking Retail Marketing Strategies 

An optichannel approach

Retailers who want to elevate customer experience levels should consider an optichannel strategy. By enhancing existing omnichannel marketing with statistics and user insights, retailers have a strong framework to improve automation, resource allocation, and communication with customers. The transformation from omnichannel to optichannel can be made possible with immediate steps such as mapping out customer journeys, quickening social media response time, and repurposing content.  

Customer data utilization

The more consumer data retailers collect, the better it is for business. But where should brands draw the line? Data privacy and protection must always be a priority for retailers and they need to strike a balance between collecting the data needed and making customers feel safe. However, finding this balance may be challenging with Google’s decision to end third-party cookies by 2023 and Apple’s new privacy policies. Retailers will now have to find creative ways to collect and leverage first-party data for marketing purposes.  

 
Join now: Learn about the newest tech in retail at our exclusive events, StrategyForum Retail and E-commerce in Denmark and European StrategyForum Retail in the Netherlands.
 

2022 Technology Trends in Retail 

AR and VR 

Augmented and virtual reality technologies provided solutions to create in-person shopping experiences during a time when customers preferred not to leave their homes. Fashion and beauty retailers were quick to adopt AR and VR, allowing customers to virtually try on their products before buying. Earlier this year, H&Mbeyond announced their collaboration with NeXR Technologies to develop a virtual fitting room. A personal avatar of a customer is created with the help of body scanning, giving them the freedom to adorn their avatars in different outfit combinations on an app before committing to a purchase. Virtual fitting rooms have the potential to increase online conversion rates and reduce returns. 

Sensor technology

The ubiquity of smartphones has paved the way for sensor technology in retail. This technology is a game changer for physical retailers where consumer data collection is slower than their e-commerce competitors. With sensor technology, physical retailers can gain valuable customer information to enhance experiences and improve marketing efforts. For instance, scan & go apps allow customers to purchase and pay for items on their mobile phones, making their shopping trips fast and secure. Retailers can also install sensor technology inside store floors to track customer paths and determine the most-visited aisles and shelves.  

Headless commerce  

This system gives brands the flexibility to build composable and customizable applications to fulfill their customers’ needs. Companies that embrace headless commerce can launch and optimize new updates quickly as the front-end and back-end of an application are separated. Furthermore, headless commerce ensures the compatibility of a brand’s website across all viewing formats and devices. Even without a huge budget and experienced development teams, companies can utilize these headless commerce solutions to modernize their shopping platforms.

 

As the retail and e-commerce space gets more crowded, brands have to consistently find innovative ways to stand out and remain profitable. Leveraging the right technology and strengthening customer relationships are the building blocks for a resilient and sustainable retail business.  

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Magdalena Gerger, CEO of Systembolaget: Why Brands Must Make Sustainability a Higher Purpose

Today’s consumers are experiencing an eco-awakening and are more conscious about the impacts of their purchases on the environment. Therefore, the demand for sustainable products is higher than ever before, resulting in growing market opportunities for retail organizations across the globe.  

Magdalena Gerger, CEO of Systembolaget, helps us understand how the focus on sustainability has affected the retail industry in terms of operations, leadership, customer experience, and more.  

 

Why is there a growing urgency for sustainability in the retail industry? And do you think there is a link between this urgency and COVID-19? 

The urgency comes across all parts of our societies and applies to all solutions. It is a question at the heart of everything we do these days. Retail is an industry at the forefront of it. Many retail organizations have expressed a higher purpose in sustainability as there is a constant flow of consumption.  

We at Systembolaget have also done the same — making sustainability a higher purpose where everyone can get involved. It has made sustainability initiatives aspirational and interesting for both our suppliers and consumers.  

It is the same for employees. These days, organizations that want to attract talent will start by explaining how they have a meaningful role in creating a better planet and better social conditions. This goes for owners and investors too. 

Is it linked to the pandemic? Yes. The pandemic has snowballed effects and increased the pace and clarity of society’s thinking. Fundamentally, sustainability was there before. It has not changed in actual content or desire to do better things for the planet. 

 

What are some immediate sustainable initiatives retailers can implement in their organizations? 

Everyone, retailer or otherwise, needs to start creating the right conditions and ask themselves, “What is it all aiming to do?” They need to express that clearly, set goals, and ensure the following structures point in a sustainable direction:  

  • Operations: Identify tasks in your organization that can be fixed and trigger your suppliers to do more. Once you start solving these issues, you will see a positive effect and it creates a hunger for more.  
  • Products: The opportunities are endless when it comes to what is on your shelves. It is about designing your channel and products in the most sustainable way and thinking it through from start to finish. At Systembolaget, we have achieved our goal of providing more organic choices. It is now an overwhelming part of our offering.  
  • Climate-smart packaging: This area requires a bit of education. Not everyone thinks about paper wrap packaging for a top-quality wine, but now it exists, and our consumers are choosing this product.  
  • Relationship with suppliers: Do not come with finished solutions, work together with your suppliers instead. For example, regarding our climate-smart packaging — it was a co-creation and not a direct order of “We want this.” 
  • Social aspects: It is vital to have human rights policies and the best working conditions throughout the supply chain.  

Additionally, transparency and communication are essential when it comes to showing consumers the results of a sustainable cause to make them realize that they are making a difference.

 

What are the biggest challenges when it comes to maintaining sustainability at all levels of the supply chain?

Breaking things down into manageable changes that have an effect is a challenge. At the heart of that is traceability — that goes for whatever product we are talking about. Take clothing for example: What were the raw materials for this product and how was it produced? How were the working conditions? What about water consumption?  

In our value chain, traceability is needed from the start. When we make a promise together to produce a sustainable product, we must try our best to guarantee it. Therefore, it is a challenge to have consistent traceability and transparency throughout the value chain. Without traceability, it is difficult to track any progress or improvements. 

Another obstacle is having a common and right approach to ensure carbon emissions decrease and working conditions improve. We encounter so many challenges in different viewpoints, cultures, languages, and definitions of sustainability. This is why good communication is key in turning ideas into action.

 

In your opinion, how has sustainability changed the role of the CEO?  

The sustainability movement and requirements have changed the role of the CEO and C-suites more than anything else in the last century. This is because it requires CEOs to take responsibility for the whole value chain, society, and the carbon footprint left over time. It requires leaders to think long-term and look at many more aspects.  

Nowadays, it is much more challenging to communicate and lead. A CEO is now an informal leader of a much bigger group of people than their own company. I find myself leading local and international politicians, supply chain and transport operators, and raw material producers. I also spend much more time with NGOs and academics. To be deep and broad at the same time is a challenge — to have the required knowledge and to apply that in your own context.  

There is one more huge movement, which is the technology shift that can be a tool for companies to improve their sustainability practices. We need to learn, grasp, and use new technology together in the best possible way to achieve sustainability goals. However, I think the greatest change of them all is for leaders to be more visionary, and inspirational and drive their organization to a higher purpose.

 

What are the most effective tech adoptions in retail to build business resilience and flexibility? 

Digitalization and new techniques are a whole new toolkit and have many advantages if utilized correctly. With e-commerce, it has become easier to connect both your products and green initiatives to your customers. Information handling is helpful here via digital techniques. Personalized services are now made possible with technology to enhance customer experience. 

In addition, automation in retail creates an efficiency that saves money and reduces carbon emissions. It also helps with traceability as I mentioned earlier. With automation, we were able to create a sustainability platform to collect important information from our suppliers. 

A big retail trend made possible by technology is having an omnichannel presence. At Systembolaget, it is common now for customers to get information online and purchase what they want at our stores. Better yet, some customers even bring their own containers! There is a keener interest in purchasing locally which plays a big part in sustainability.  

 

*The answers have been edited for length and clarity.  

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Framtidens etableringsstrategi och last mile som hot och möjlighet

För sisådär 15 år sedan var det inte ovanligt att man som retailer krävde 10års- kontrakt för att skriva på en etablering. Små lokaler i rätt lägen överläts för miljonbelopp och det var självklart att ett läge på Drottninggatan eller Gallerian hade miljonprislapp för den som ville köpa sig en placering. När fotokedjorna avvecklade sina butiker som en konsekvens av teknikutvecklingen var det en köpfest för de som ville ha tillgång till heta lägen och jag vet en liten butik i Göteborg där hyreskontraktet gick för sju miljoner. Those were the days.

 

Millenniets första årtionde var en etableringsfest inom detaljhandeln. Egentligen började den redan i samband med Sveriges EU-inträde några år tidigare, då integrationen med Europa möjliggjorde att varor kunde flöda över gränserna utan handelshinder, så som tullar. På några år kom mer än hundra nya aktörer att etablera i Sverige och skapade på så sätt ett helt nytt detaljhandelslandskap. Berlinmurens fall hade fördröjt utvecklingen med några år, eftersom detta öppnade upp en marknad i Östeuropa som i princip inte hade någon modern detaljhandel alls. Men till slut hade även den marknaden mättats och det var dags att rikta logistikflödena norrut, via Danmark och sedan över sundet till Sverige.

 

I etableringsfestens spår exploderade köpcentrumbyggandet i landet och mellan 2001 -2014 ökade andelen uthyrningsbar yta med 100%, samtidigt som populationen ökade med 10%. Med samtidigt utbyggnad av externa handelsplatser och en explosiv e-handelstillväxt nådde vi peak butik någon gång runt 2017 och därefter har marginalerna fortsatt varit utmanande för många av de traditionella kedjorna.

 

Jag tror självklart på den fysiska butiken och har skrivit flera artiklar om hur lågpris, ehandelsaktörer, varumärken som går D2C och även nya kedjor med stor sannolikhet kommer etablera i både köpcentrum och på volymhandelsområden – med det är ändå oundvikligt att konstatera att det finns för mycket butiksyta – både i Sverige och internationellt. Pandemin har varit en katalysator i utvecklingen och har också förändrat förutsättningarna på arbetsmarknaden, med en större acceptans för hemarbete som kommer göra ytor för kontor, mindre attraktiva för de fastighetsägare som sett möjligheten att justera sin exponering mot retail, genom att konvertera till kontor. Det kommer bli en stor utmaning för handelsplatser och stadskärnor att ställa om mot en långsiktigt hållbar disposition av ytor – hyresdiskussionen kommer bli en het potatis i samband med förnyelse av kontrakt och det är idag få handelsplatser som inte är utbytbara. På Manhattan i New York är vakansgraden över 20% och i vissa lägen har hyrorna sänkts med en fjärdedel…jämfört med tiden som jag beskrev i ingressen har situationen förändrats drastiskt på 20 år.

 
 

Med en situation där det krävs färre men bättre butiker, i kombination med nätet för att få både, marknadstäckning och ett starkt varumärke är det troligt att logiken förändras de kommande åren och en mix av traditionella butiker på fortsatt attraktiva handelsplatser, tillsammans med mindre butiker som ligger mer bostadsnära och kanske även ett par nya butikstyper. Utvecklingen inom last mile förändrar logiken även inom närliggande branscher som restaurang. Här skissar jag en utveckling av en av flera möjliga framtider, där kedjor, ehandlare, dagligvaruaktörer och restauranger påbörjar en ny nivå av konkurrens med också en optimering av affären med alla till buds stående medel.

 

Jag har tidigare skrivit en hel del om den fysiska butikens företräden, med varumärkesbygge, distribution och relationsskapande så jag utelämnar det här. Jag tror däremot att man kommer kunna använda fler koncepttyper för att kunna optimera butikstäckningen:

  • Ankarbutiker – är egentligen klassiska butiker som fortsatt etableras på väl valda lägen för att skapa rikstäckning. Vad ett väl valt läge är varierar från kedja till kedja men klart är att man behöver färre butiker för att uppnå vad man kan definiera som rikstäckning idag än för 20 år sedan. Färre butiker innebär också med stor sannolikhet bättre butiker eftersom det kommer innebära att färre butiker behöver underhållas och uppgraderas.
  • Feeder stores – ett begrepp jag fångade upp när Detaljhandelspodden hade besök av Clas Ohlson och där vi fick reda på att ett antal lite större butiker fungerade som framskjutna logistikpunkter för ehandeln och där man använde last mile-aktörer för att distribuera e-handelsorder i en radie runt dessa butiker.
  • Compact stores – pandemin har inte bara accelererat e-handelns tillväxt utan också förändrat kundströmmarna. Även om många längtar tillbaka till kontoret så finns det också de som ser en framtid där vi har en hybrid mellan kontoret och hemmet. McKinsey förutspår i en rapport att 20% av den globala arbetskraften kommer att tillämpa ett hybridbeteende även efter pandemin. Eftersom handeln finns där konsumenterna finns innebär det en marknad för mer bostadsnära lägen för såväl handel som restaurang. Detta innebär att destinationshandeln kommer minska till förmån för en mer lokal handel. I Paris gick borgmästaren till val på att skapa 15-minutersstaden, där all service finns inom 15 minuter från där man bor och lever – både för att skapa en levande stad, men också för att minska onödiga transporter. Mindre butiker innebär också större riskspridning och ökad varumärkeskännedom, något jag avhandlat i en tidigare artikel. En strategi med feeder stores och mindre, bostadsnära butiker skulle kunna illustreras såhär, i jämförelse med den traditionella etableringsprinciperna i förra bilden:
 
 
  • Obemannade butiker är också en reell möjlighet för att både utnyttja delar av befintliga butikslokaler utanför ordinarie öppettider, men också för etableringar på lägen eller i koncept där personal antingen blir för dyrt, eller där man helt enkelt stryker personlig service ur erbjudandeekvationen. Amazon Go och sedermera Amazon Fresh är ju de vanliga exemplen på detta fenomen, men i Sverige har såväl Coop, Pressbyrån och inte minst uppstickaren Lifvs etablerat obemannade butiker. Detaljhandelspodden fick ett samtal med Daniel Lundh, som är en av grundarna av Livfs (Avsnittet släpps vilken dag som helst) där han avslöjade att den teknologi man utvecklat för sina egna enheter, också kommer användas av en aktör inom sällanköpshandeln med start strax efter sommaren. Därmed kan gränserna för vad som är möjligt att erbjuda i termer av tillgänglighet också börja suddas ut inom flera branscher. I Asien finns obemannade butiker inom såväl mode som hemelektronik. Det gör det möjligt att etablera i helt andra lägen än tidigare.
  • Robotiserade lagerlösningar. Dagligvaruhandelns e-handelstillväxt har varit makalös det senaste året men är också utmanande för ekonomin i affären, givet de små marginalerna och de höga kostnaderna att leverera varorna hem har inneburit ett negativt resultat på ehandelsaffären, samtidigt som utvecklingen pekar på att det är häråt utvecklingen går. För det är en sak att lägga ordern online och en helt annan sak att sitta i bilkö till dagligvarubutiken för att hämta upp sin order vid uthämtningsstället. Walmart har under pandemin riktat intresset emot flera lösningar som skapar flexibilitet i ehandelsaffären och både investerat i kyllösningar som möjliggör leverans av kylvaror till villaområden där boxar som håller kylan utanför dörren möjliggör leveranser även när mottagaren inte är hemma, självkörande fordon men också en investering i ett Israeliskt företag som utvecklar robotlager i miniformat. Lösningen möjliggör att man stoppar in ett e-handelslager, till exempel i en del av ett parkeringshus, så att man kan hämta sin order på väg mot bilen när man uträttat sina ärenden.
  • Vad gäller showrooms och pop-up-butiker så ser jag inte dessa som särskilt intressanta lösningar på lång sikt av det enkla skälet att det inte tillför något till ekvationen. Den fysiska butikens främsta företräde är att man får produkten här och nu, vilket är ett argument emot showroomtanken och vad gäller pop-ups så menar jag att styrkan i en fysisk butik bygger på att ha ett inarbetat läge. Det tar ett år eller mer att attrahera en tillräckligt stor publik för att skapa en hållbar affär och att montera upp och ned en butikslösning, för att flytta till nästa läge innebär inte bara icke-effektiv lönekostnad, utan också att hela idén med att bygga en basförsäljning försvinner.
  • Egna utlämningsställen, eller snarare att äga last mile är också en intressant utveckling givet vad som nu sker.  I USA har Amazon och Target etablerat egna utlämningsställen, det vill säga fysiska gränssnitt där man både kan ha en skylt uppe och hantera både utleveranser och returer på ett “varumärkeslöftessäkrat” sätt. Det innebär såklart en kostnad men också en möjlighet i starkare relationer – här ser jag en absolut möjlighet i att ICA och Coop etablerar egna logistikhubbar i bostadsnära områden för att undvika att tvinga kunden till långa resvägar. Nordstroms Local är ett exempel på hur en traditionell aktör försöker utveckla sig för både vara e-handelsrelevant, men också skapa ett koncept för att säkerställa en relevans i den lokala affären som jag skrivit om tidigare.
 

Utvecklingen inom last mile som skett under pandemin är kanske en av de mest spännande aspekterna av transformationen – där det tidigare var självklart att behöva åka till en obskyr tobaksbutik i en förort för att hämta ut sin order, som nu kommer till Instabox, eller hem så snabbt som en halvtimme efter order. Och här finns det en hel del att resonera om. Amazon och övriga market places har byggt sitt värde genom all data man har tillgång till. Genom AI vet Amazon vad du egentligen vill köpa och alla har vi väl varit med om att råka få en annons riktad till oss på Fejjan, när vi just diskuterat ämnet med en vän – något som skapat en känsla av att vi är  avlyssnade av våra mobiler. Sanningen är att logaritmerna har blivit extremt duktiga i att förutsäga vårt nästa steg. Vid sidan av market places så delar ehandlarna data med logistikoperatörerna som vet vilka volymer som går till vilket område. Snabbfotade uppstickare som Foodora har totalkoll på hur ordervolymerna ser ut över dygnet, veckan och året, helt enkelt eftersom det är en förutsättning både för att skapa en bra bemanningsplanering och ett högt kundvärde. Men på samma sätt som att Amazon använder den data som genereras från market place-delen till att både köpa in och sälja produkter själva och även utveckla EMV inom de kategorier som verkar rätt i marknaden, får ju också last mile- aktörerna underlag för att göra detsamma.

 

I Kina har Meituan, tidigare en ren budtjänst, börjat köpa in egna produkter och sälja till konsumenterna via både ehandel och robotlager, som jag nämnde ovan, där tiotusentals produkter står redo att packas på några minuter och hämtas ut som ur en jättelik varuautomat.

I Sverige och Norge har Foodora etablerat dark stores inom dagligvarusektorn där man kan förse närområdet med livsmedel och dagligvaruartiklar som man själv köpt in. Genom att fler kedjor kopplar sig till lösningen för hemleverans får man samtidigt en större förståelse för efterfrågan. Det finns ett skäl till att aktörer som Target och även andra större kedjor valt att hantera last mile, med egna resurser eller genom förvärv. Den som är närmast kunden vinner alltid. Foodora har även etablerat restauranglösningar tillsammans med leverantörer till dagligvaruhandeln som till exempel Fontana, vilka därmed också, på samma sätt som Nike och Adidas inom sportsegmentet, går D2C.

 

Pandemins forcerade utveckling av last mile öppnar därmed upp en ny marknad, både för dark kitchens eller ghost kitchens , som det också kallas – kök utan serveringslokaler, där allt sker på beställning och med kundens hem som restaurang och där last mile är länken mellan de båda. Det innebär att framtidens restauranglösningar kan bedrivas från källarlokaler på bakgator med väsentligt lägre kapitalbehov än tidigare. I USA har det under året redan hunnit konceptualiserats nätverk av ghost kitchens som erbjuder ett brett urval av maträtter från världens alla hörn.

 

Hade jag varit någon av de stora dagligvaruaktörerna så hade jag investerat i egen logistik, både för att säkerställa alla touchpoints, men också för att inte skapa framtida konkurrenter. Jag hade också noga följt hur leverantörerna väljer att agera för att gå D2C själva.

 

Det finns många möjligheter i det som nu händer och sker och det är spännande att följa positioneringen och allas krig mot alla, i det nuvarande läget. Säkert är att det kommer ta några år innan läget stabiliseras och de stora flodfårorna skapar tydlighet i vad som de facto blir framgångsfaktorer som håller över tid.

 
Magnus Ohlsson

Skriven av Skriven av Magnus Ohlsson, grundare av Retailomania.

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Understanding The Tech Challenges of Retail Giants

With more and more people embracing digital and smart shopping experiences, the retail market is scrambling to adopt new retail technology to remain viable and sustain growth in a rapidly changing landscape.

In this article, we’ll highlight some of the major challenges businesses are facing and the solutions they are looking for. For a more in-depth look at the trends of the retail industry, head over to our Retail Investment 2021 report.

 

Challenge 1: Evolving and Enhancing CX

 

Customer experience is expected to shift even more in 2021 and as consumers become more conscious of their spending, retailers will need to optimize every step of the customer journey to maintain loyalty, and spark growth.

Improving customer journey optimization will involve significant investments in retail technology trends, a key touchpoint of which will be the tech that improves process efficiency such as AI, automation, and customer touchpoints (as well as mapping them out).

A quick view at the core focuses among retail leaders shows that many organizations are prioritizing smart solutions and digital competency to handle customer needs and ensure quality CX.

 
 

What Are They Looking For

 

Improving the experience for customers by delivering fast and accurate responses through CX software which integrates marketing automation, customer service, CRM, CPQ, sales force automation (SFA) solutions, and customer data platform (CDP)

 

Challenge 2: Deciphering The Data

 

Achieving effective customer journey optimization will require targeted investments in retail technology and a high priority tech among retail leaders is data and analytics.

With the influx of data available due to rapid digital transformation, organizations are scrambling to adopt big data and real-time data analytics to better refine their business actions according to customers’ needs and profiles.

As the global big data market is forecasted to be worth $103 billion by 2027, data analytics is no longer just a buzzword, but an important retail technology investment needed for day-to-day efficiency in organizations and individuals.

Given the current talent gap, however, businesses will still look to third-party solutions in terms of building an infrastructure that allows them to utilize data analytics effectively.

 

What Are They Looking For

 

Platforms that implement easy-to-use analytics, data mining, and automated forecasting. Department-specific data such as marketing, sales, and customer analytics will also be a key factor for many businesses.

 

Challenge 3: Digitalizing Stores and Scaling e-Commerce

 

A shift towards improved digital storefront experiences is in line with customer market behavior as globally, 49% of the population is shopping online more now compared to pre-COVID times.

Nevertheless, customers still prefer shopping on-location, with a recent survey done by Shekel showing that 87% of customers prefer to shop in stores, but with touchless or seamless self-checkouts.

As such, improving the infrastructure for businesses’ e-commerce platforms and brick-and-mortar stores has become a race. Those who are able to achieve seamless online shopping experiences and frictionless smart payments will get the lion’s share of the market.

 

What Are They Looking For

 

The ability to transition from an analog business model to a digital, omnichannel model through cloud solutions or optimizing current digital channels such as mobile apps, IoT, and smart shopping.

 

Challenge 4: Improving Digital Security

 

Machine learning and cloud computing continue to be high priorities in tech adoption for retail leaders. Cybersecurity, however, has seen a significant rise due to demands for safer and more secure digital/smart shopping.

The confusion caused by the coronavirus and the massive shift towards digital/remote working has led to cyberattacks becoming frequent with large data breaches increased by 273% in the first quarter of 2020.

 
 

Retailers will face an uphill battle in the “new normal” of post-COVID to assimilate all the necessary digital security strategies, be it upgrading vulnerable software and hardware components or strengthening customer data protection, to ensure customer confidence and loyalty.

However, with the global market for cyber security software expected to grow to $230 billion in 2021, they can expect exponential growth in the practices and solutions for digital security.

 

What Are They Looking For

 

A simplified platform that allows them to reduce security risk through robust privileged access management (PAM) and optimal solutions for customer data storage and protection that comply with GDPR.

 

Overcoming The Challenges

 

At the start of 2021, it’s clear that retail giants are making big investments when it comes to innovative retail technologies. Certain technologies, such as digital transformations, continue to be a major priority for retailers.

The big changes, however, come from renewed interest in improving customer journeys through data analytics and scaling up digital channels via e-commerce or smart shopping experiences.

For any organization, it’s essential to identify which areas of retail technology they are trailing behind, then network with the right solution provider, invest in skilled talents and have the necessary tools to maintain growth in a soon-to-be revitalized industry.

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Pandora’s CIO Peter Cabello Holmberg: Building A Hub Of Agility And Digitalization

Pandora took the business world by storm this year as the renowned international jewelry retailer successfully drove digital transformation and innovation in the midst of COVID-19 and launched the much-talked-about Digital Hub.

To find out more about the Digital Hub and Pandora’s agile aspirations, Management Events interviewed Pandora’s CIO, Peter Cabello Holmberg, winner of CIO of the Year 2020, who shared the objectives of the ‘Hub’ and its importance in Pandora’s continued digital strategy.

 
(Photo: Mikael Rieck, from Computerworld)
 

THE DIGITAL HUB

 

The Digital Hub, also known as the Hub, opened its doors in Copenhagen in July 2020. But what exactly is the Digital Hub?

 

The Digital Hub is actually a place. It’s a physical location; a full floor in a building next to our global office, where we have room for some 200 headcounts. We initially called it ‘Global Office 2’, but as we wanted to create some hype around digital and our digital strategies, we decided on ‘Digital Hub’.

Also, we were running out of space in our global office, and we had pockets of digital talents – the IT, marketing, and e-commerce teams – sitting in different places globally. That wasn’t optimal so we wanted to consolidate our digital talents in Copenhagen.

We believe that having our digital talents in the same location would help our delivery speed, and our intention was to have a new layout of office space that could facilitate agile ways of working, where people can move around and sit in teams to exchange knowledge on a daily basis.

In the early phases, we discussed building it in New York or Amsterdam, but we decided to build it next to our global office in Copenhagen because there was a need for proximity with the rest of the senior executives there. We were super lucky that we could get the office space next to our global office.

 

How did the idea of the Hub come about?

 

We’ve been working with our thoughts and aspirations on digitizing across our value teams for a couple of years. And what we realized was that we had to orchestrate ourselves differently to deliver faster on our digital aspirations.

We’ve been relying on waterfall approaches, business cases, and other methods that were very slow for us to get things started and signed off, so we needed a different operating model and a different engine room.

It was that realization – for us to deliver on our digital aspirations, have more transactions on our online channels, and improve digital marketing, omnichannel, and in-store technology – that we felt the need to bring the technology, e-commerce, and marketing teams together and implement new, agile ways of working.

 

Projects like the Digital Hub are huge investments, and getting the stakeholders’ buy-in is always a challenge. How was the project presented for the executive buy-in?

 

I went to the CEO and the executive leadership teams a year and a half or 2 years ago and said that we needed to do an IT transformation. I said that I would save money for the company, build new career duties, and introduce agile working. And I got a sign-off on that.

The CEO bought into it because we – on top of the savings – also presented strong business cases for digitalization and data-driven consumer growth that were very attractive with significant incremental revenue.

 

AGILE WORKING AND CHANGE MANAGEMENT

 

After getting the sign off on introducing agile ways of working, how did you start its implementation?

 

We did a number of introduction sessions before we did anything else. We talked about what agile is, its meaning and principles, and the choice of methodology, and introduced the terminology. We also did a few proofs of concepts, small projects that we would normally put into an agile release train (ART), and applied agile ways of working, like scrum meetings.

Other than that, we had meticulous discussions about Spotify and SAFe, and supporting tools for agile ways of working. We initially made a decision to go with both models, which was a mess for us. Now we’re back to the principle of one model.

We made some decisions along the way that were just wrong. So when we went live, we went in knowing that we had to learn if the decisions and changes worked and asked everyone to give feedback so that we could adjust on areas that didn’t work.

 

Major organizational transformations can be difficult to execute smoothly. How did Pandora handle the change management?

 

This was a massive change management exercise, but we knew we had to shift our ways of working completely.

So we gave people a flavor of how this change would look. We started to talk about what an ART should be like and introduced new and different roles to both the business and organizations. We pieced it step by step, presenting increasingly more elements of agile working.

There was change management happening both bottom-up and top-down, but at some point, we came together and communicated to everyone involved that ‘This is how it’s going to look, and here are the members of the Arts’.

We communicated the incoming change to all parts of the organization with 50 to 70 lightning talks about agile working held for all the employees to participate. More than 1,200 people from the entire business signed up to learn about it.

Even when we went live with our first ART, we continued having lightning talks because more and more people wanted to know about it.”

We try to stay as open and transparent along the way so that everybody knows what was happening. It was a lot of communication on where we were, what was happening next, and what to expect.

 

HIRING AND TALENT MANAGEMENT

 

With all the transformation initiatives, what were the responses from the teams and employees?

 

The interesting thing is, as we implemented the agile ways of working, our churn rate of people in IT, marketing, and e-commerce leaving Pandora has gone down. Even though we did this massive transformation, the turnover rate has decreased.

From what I’ve seen and heard, people are actually quite excited to try agile working. They want to see how it works. Some have already tried it and are super happy with it. And those who have always worked in traditional waterfall approaches are keen to learn about agile ways of working because everyone’s talking about it.

 

With about 200 employees working on a collective digital strategy, how does the Hub ensure that decisions and responsibilities are delegated to the right people and teams?

 

We have a number of ARTs now, and the biggest and most mature one is our consumer ART.

Whatever the team does in this agile release train is tied to our business strategy, so there’s a link from the strategy to how we work with agile portfolio, lead portfolio management, and so on. So we can track from strategy to ARTs to APEX to features to use cases.

Since we have defined the ART with all the members and different roles, there’s full transparency on who’s responsible for what. Everyone knows what their role is in the whole process.

Furthermore, the tool that we use holds the overall description of the business strategy, and breaks down into the related ARTs and components, so that we’re constantly updated on the business timeline and deliveries. Hence, I would know exactly what’s going to be delivered and when. It’s pretty amazing.

 

It’s not news that Pandora has been actively hiring digital talents for the Hub. What talents are being seeked, and what hiring strategies are being used?

 

We’re hiring very different types of profiles into the Digital Hub from all over the world – Columbia, Argentina, the US, and Singapore. We want people who are creative, who have an opinion, who want to push things forward and make a difference. And because we also want to set them free with the business, we want them to be self-operating.

What we did with hiring was create hype around the Digital Hub. We had the CEO talk about the Hub when he was interviewed, and we sent out press releases and reached out to different media. We also talked to universities about what we were doing and trying to achieve and spread the word that we wanted to build a digital powerhouse in Pandora and be number 1 in our industry.

So we set the ambition level quite high, which is part of attracting talents while doing features and events and mobilizing all types of channels to spread the word.

 

What challenges did the Digital Hub encounter in terms of recruiting talents and managing the current workforce?

 

One of our bigger problems was that, when we got a ‘go’ for the Hub, it was the time when COVID-19 hit. So we had to hire these positions using Teams and Zoom since we couldn’t meet the candidates face-to-face.

We also had to go about the hiring processes in a different way because everybody was on lockdown globally, and we couldn’t fly them in and bring them to the Digital Hub. From Day One, they had to start from their home office. We sent PCs and laptops to them, and onboard them from their home and whichever country they were in.

 

Now that the Hub is completed, what initiatives is Pandora taking to ensure a functional communicative and collaborative culture?

 

The Hub initially was driven by the CDO, CIO, and our SVP for data analytics. Now that we have consolidated these functions under a CDTO then the Hub is anchored with the CDTO. We’re trying to create a community so that the Hub is seen as one team with one common purpose.

Now, the Digital Hub has its own dynamics, and there are social events, fireside chats, and town halls where people across different organizations can participate. We put these people together in one location, and what this has actually done is broken down the silos that we were experiencing previously.

We’ve been sitting on different floors, in different buildings, in different countries. Now that we have brought the teams together, they talk to each other every day – they literally sit next to each other – so it has broken down the silos between different functions. We’re much more aligned compared to before, and that is a huge improvement for us.

 

DATA AND DIGITALIZATION

 

In terms of technology and innovation, what challenges did you face with the Hub?

 

We didn’t have many challenges with our technologies and choice of technologies when we started the transformation.

We already had a roadmap on what to do with data. We had our online platform, our salesforce, e-commerce, and cloud. Our biggest challenges are with integrations, master data, and a scattered point of sales landscape. But overall, we are in fairly good shape.

 

What stage is the digital transformation of Pandora at the current moment? What other processes are underway to boost the brand’s digital experience?

 

What we have now is a pretty solid digital strategy that has been shaping up over the last 8 months or so.

We’re going all in on our user data for tips on marketing and personalization. We’re also considering communities for people who are interested in our type of jewelry, and planning to introduce a global loyalty program that will hopefully further drive brand loyalty.

The consumer ART is working with data, and working with the marketing team on digital marketing and personalization. In regards to data-driven consumer growth, we also set the teams free to use data to drive sales. By combining the different data sources that we have, such as our transactions and customer browsing data, the ART teams are free to make decisions on their own to allow faster decision-making.

 

What are the biggest differences between the company’s past and present data utilization?

 

It’s two different worlds before the Hub and after the Hub is live. The incremental revenue that is delivered from our data-driven consumer efforts is just outstanding.

We’ve built the integration between different sources in our stack, applied new technologies, and hired Ph.D.-titled profiles to work with data so that we can learn more about our consumers.

We didn’t have that data focus a year and a half ago. I think we had one person in Pandora working with data, but now we have 60+ people working only on advanced data analytics and the use of data.

 

SUCCESS AND THE FUTURE

 

What do you consider to be the key achievements of the Hub?

 
(Image: Peter Elmholt, from ZDNet)

What’s interesting is that the agile way of working that we implemented has really proven its value when the pandemic hit.

Our stock prices have gone up some 100% during 2020 when COVID-19 hit, and that’s quite amazing. It’s actually all down to our technology readiness and the shifts from physical stores to taking advantage of our online channels and digital initiatives.

We were able to step back and look at our priorities and completely change our focus, and now the rest of the business – HR, finance, and other parts of our commercial organization – want to embrace agile working because they see its value. This is just the start and we want to do even more.

Additionally, we see that we can move much faster now. Because the teams are dedicated to the agile release trains (ARTs), they’ve become very efficient and knowledgeable about their role, purpose, and responsibilities. So we’re able to come up with solutions to business strategies at a faster rate.

 

There are always expected ROIs for major projects. What is the anticipated ROI in 2021 due to the Hub?

 

When we first started, my focus, and marketing’s focus, was on revenue-generating and return on investment. It was clear when we went to our CEO that what we proposed was very attractive and that data-driven consumer growth, meaning advanced data analytics alone, would pay for our Digital Hub. And we still have many other initiatives that we’re driving.

In some cases, in terms of ROI, we’re talking about a factor of 10 of the investment. Also, our stock prices have gone up significantly because we took advantage of our online channels and digital initiatives. I think that alone shows the impact of getting digital right.

 

What are the upcoming plans and strategies for the Digital Hub and Pandora?

 

We are in the middle of finalizing our digital strategy for the next 3 to 5 years. We never had a digital strategy before, but now we have it, and it sets the direction for our technology investments across our value chain – where we want to invest our bodies and resources.

Also, we’re focusing on how we can take agile working and our technology operating model to the next level. Yes, we started out with Agile but we’ve only been live for a year or so. Now, how do we bring this further? What do we need to invest in? What kind of profiles, like what agile coaches or release train engineers, do we need to bring on board to further mature our agile ways of working?

 

What commercial goals does Pandora seek to achieve in 2021? What role does the Hub play in achieving these goals?

 

Our key focus right now, and into the next 3 to 5 years, will be on revenue-generating initiatives. We want to drive even more revenue through our online channels.

Aside from that, we’re also focusing on creating an even more seamless customer journey across our different channels. We want to engage with our consumers in a more meaningful way – be more precise in what and when we communicate so that we become more relevant.

Of course, we do all of these to drive revenue, and the Digital Hub is instrumental for us to proceed with the plans.

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Magical Journeys Towards Digital Retail

Over the past decade, the retail landscape has experienced eroding margins, the growth of e-commerce, declining visits to malls, the success of low-cost retailers, and changing consumer behavior/needs. As if that was not enough, the COVID-19 pandemic is still in full development. While many once-leading retailers have disappeared and more brands are in peril, often already since before the pandemic, others have managed to survive, and some even continued to thrive.

 

What drives innovation in retail today

Retailers need to understand that what drove the retail sector in the past differs from what drives it today. For John Brahim (CEO & AI Business Architect at Maistering BV), innovation in the global retail sector is partially AI-driven, highly virtual, and experiential. The pandemic fuels the fire, and strategic choices are imposing themselves much faster than expected. The real challenge to digital retail innovation is making good choices that are executable at the right speed.

 

Tips for managing innovation and resulting change

Change begets innovation and vice versa. Consumers now shop more mindfully and cost-consciously for local, sustainable, and high-value brands. They also consider their health, safety, and financial status often before making purchases. It is vital to take note of these trend changes to innovate effectively. Subsequently, Brahim understands that leaders can better manage growth and innovation through the following methods:

  1. Adopt and prioritize a “digital-first” approach to retail.
  2. Identify a portfolio of digital journeys from a mid-term perspective.
  3. Embrace new principles to orchestrate those journeys.
 

Fostering innovation through leadership

Innovation comes from everywhere. Leaders must possess the ability to tap into current digital trends and understand how the COVID-19 pandemic influences them.

They must also understand the changing consumer behavior in a digital world, having strong convictions on purpose, authenticity, value proposition, and business models.

A handful of global platforms dominate the world; thus, a retail leader must feel the digital consumers’ pulse to lead the race in digital innovation.

 

New digital technological roles in leadership innovation

To innovate in the digital world, one must practice a digital way of working. Get handsy with mobile technologies, conversational AI, and next-gen collaboration. Brahim states that leaders need to embrace digital technologies themselves and re-think management as they formerly knew it. Partly because it is hard to modernize businesses if one is old-fashioned and because the speed of digital innovation is murderous, requiring an acceleration in decision-making & execution.

Innovative leaders have many parallel-running business journeys. Each journey with a different impact and objective. Such leaders have to keep in mind local sensitivities and maintain constant contact with their teams. The game aims to gather insights and materialize propositions that lead to higher customer delight and profitability.

Maistering BV understood this and created the unique platform Master Collections. It addresses this topic by providing leaders the ability to run magical business journeys with essence, beauty, and impact in a way that classical retail systems simply cannot.

 

Customers, partners, and other stakeholders roles in innovation

Innovation today has become a collaborative, instantaneous, and solution-driven process. It is about undertaking experimental journeys with customers and partners in joyful, swift, rich, and impactful ways.

“Business leaders must be on their toes – listen to customers across all channels, understand their local and global buying choices, respect safety concerns in stores, and provides a seamless omnichannel digital experience.”
– John Brahim

Retailers and suppliers must engage in multiple collaborative journeys to reduce costs and enhance the experience. Both stakeholders must also learn how to speed up collaborative innovation.

 

What established leaders can learn from new innovative leadership

The retail sector in the post-COVID-19 world will undoubtedly find itself with an accelerated shift from bricks to clicks. There will be surges in AI implementation from demand forecast to supply optimization and cognitive digital consumer experiences.

Established retail leaders must adopt two things from digital leaders. The acceptance that software eats the world and the unconditional willingness to speed things up. The Holy Grail for established retail leaders is to undertake collaborative business journeys that combine speed, sophistication, and common sense feasibility. Established retail leaders still have unparalleled strengths in the latter.

 

Future trends in innovation

Although we continue to witness unprecedented change and innovation today, the real revolution is still to come. Brahim postulates that artificial intelligence (AI) will completely change the connection between consumers, retailers, producers, and the product portfolio itself. Soon we will see a whole new world of contactless collaboration, conversational interfaces, cognitive abilities, machine learning, and adapting algorithms, predictive software, applied robotics, and next-best suggestions reaching the consumer in a myriad of ways.

Business leaders will learn how to adopt AI technologies to solve new problems, create new ways of working, orchestrate magical journeys, and master their retail leadership art. As digital retail transformation accelerates worldwide, consumers’ expectations at each stage of the customer journey – be it prepurchase research or browsing, the shopping experience itself, or post-purchase experience sharing – are changing.

The adoption of breakthrough technologies such as artificial intelligence (AI), the Internet of Things (IoT), and blockchain will help brands and retailers address these changing consumer expectations in a timely and effective manner, thereby deepening customer engagement.

Master Collections, as a new category platform, offers leaders the perfect toolset to engage in digital journeys and naturally fosters the synergies with C-Suite peers and others who require guidance and empowerment as we master digital retail.

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Skincity: Med hjälp av Bitlog har vi blivit mer än 70% mer effektiva

bitlog_skincity

En av de stora utmaningarna för e-handlare idag är att skapa en effektiv och lönsam lagerhantering som är anpassad efter företagets storlek. Bitlog har sedan 2006 levererat innovativa mjukvaror för lager och distribution där målet är att skapa system som gör att de tidskrävande rutinerna i lagerhanteringen försvinner. Med gedigen erfarenhet och kunskap tar de sig an några av Sverige snabbast växande e-handlare och hjälper de att bli mer effektiva och lönsamma i sitt arbete. Ylva Pagmén, Chief Operating Officer på Skincity berättar:

– Vi hade behov av att hitta en leverantör med ett genuint intresse av att hitta lösningar och arbetssätt som passade vår verksamhet och som vi kunde arbeta med under vår tillväxtresta.

Skincity, Sveriges största hudvårdsklinik online, hade utmaningar med effektiviteten vid bland annat orderplock. Logistikavdelningen bestod av hudterapeuter som tack vare stor produktkunskap lyckades plocka rätt produkter men i takt med att de växte uppstod nya behov i orderplocksprocessen. Bitlog hjälpte Skincity att automatisera logistikflödet genom sina lösningar.

– Tidigare plockade vi en produkt åt gången, men efter att ha fått hjälp att automatisera processen kan vi nu plocka tolv ordrar på samma gång, något som ökat vår effektivitet kraftigt, säger Ylva Pagmén.

Enligt Bitlogs grundare Fred Boström handlar det om att ha väl integrerade system mellan e-handel, affärssystem och lagersystem för att skapa ett effektivt arbetsflöde. Att automatisera delar av lagret innebär ofta stora effektivitetsvinster när den mänskliga faktorn stängs ute från flödet. Dels genom att ordern direkt når lagret på ett automatiserat sätt och dels genom att hantera eventuella avvikelser som kan uppstå, så som förseningar eller saldobrist som i sin tur kommuniceras till kunden.

– Vårt samarbete med Bitlog har förändrat vårt arbetssätt mycket. Framförallt i plock- och packprocessen där vi blivit mer än 70% mer effektiva, förklarar Ylva Pagmén. Redan efter en månads samarbete märkte vi av resultaten och blev snabbt 50% mer effektiva. Även kvaliteten i form av kontroll på lagersaldo och lägre felplocksfrekvens har blivit bättre. Vi har tillsammans tagit fram en fantastiskt bra plattform för oss att stå på, en plattform som gör det möjligt för oss att fortsätta växa, sammanfattar Ylva.

Bitlog faktaruta

Bitlog har sedan 2006 levererat moderna lösningar för smart lagerhantering. Företaget grundades av Fred Boström som tidigare arbetet på andra företag med stora utmaningar inom lager- och distributionsområdet.

Besök www.bitlog.se för att läsa mer

 
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Master your true leadership in retail

The retail industry is currently evolving to keep up with Industry 4.0 and John Brahim, CEO & AI Business Architect at Maistering BV believes that digital innovation will be even more at the heart of the fast-changing sector. Brahim shares his knowledge and insights in this article on the path to master leadership in retail. While talking about Master Collections, a brand-new orchestration platform, he shares five practical guidelines on incorporating digital innovation and applied AI. Good reading for those who aim to co-shape the future of retail.

Innovation Transforms Consumers, Enterprises, and Leadership Alike

As the retail industry undergoes a massive transformation with the Fourth Industrial Revolution, a new type of leadership will play a crucial role in leading the charge towards digital transformation of the retail sector. Brahim outlines the steps that retail leaders might take to reinvent themselves and shape Retail 4.0, a lesser-known twin of Industry 4.0.

“Retail is shaking on its foundations as applied AI will infuse the current digital innovation wave. Like now, the sector will be driven by consumers that demand digital era shopping and delivery experience allowing them to combine ease, ratio, and emotion fitting to their style and choices. However, the way these preferences will be expressed, perceived and translated across the channels, will become much, much more sophisticated.”

Brahim continues, “This forces retail leaders into numerous, never-ending transformation journeys. Maistering’s sole mission is to augment retail leaders and their teams. Master Collections, our platform is an unparalleled set of AI-based collaborative services to orchestrate magical business journeys. Master Collections require limited set-up effort and allow retail leaders to reinvent their play in a natural way, both the big picture and the day-to-day work one step at a time. But I don’t want to emphasize the platform, as innovation is always about leadership: it takes a visionary leader to adopt a visionary approach.”

As it is with all emerging technologies and innovation, organizations and businesses must be prepared for change. Legacy thinking often slows down or even impede change, however, Brahim points out there are established ways to facilitate innovation in mature organizations.

“Innovation is always a mix of technology, new paradigms, new instruments with behavioral change – mental and emotional. First tip: acknowledge that innovative change is now at the core of your job and lead by example by embracing AI in how you orchestrate and collaborate.”

Any new method, process, product or service introduction that comes out from innovation typically results in change – change in people, ways of working and unlearning and learning. Brahim believes that it is essential for leaders to build the right team, inspire them with the right focus on impact and empower them with the ability to intelligently move ahead.

Of course, to ensure a successful innovation process, the onus will be on leaders to be effective in their role to lead both employees and partners towards sustainable business growth.

“Since innovation comes from everywhere, leaders should have the ability to tap into the employee base, get ideas, and suggestions, nurture them and develop solutions to implement them – thus ensuring a successful innovation process. As this is a collaborative world, this is equally true for partners. Since most change is people-related, it is imperative to keep a good eye on the emotions, motivate people and ensure that the team is on board and along with you on the journey. Second tip: assure that you use the new generation collaborative tools to help your team and your partners undertake these crucial journeys.”

Integrating Digitalization and Partnership To Push Innovation

“It is an illusion to think that one can lead to an era of digital innovation without embracing digital behavior and AI augmentation. Leaders need not be technologists themselves but indeed must become hands-on in using AI in everything they do. Key is to act holistic, really focus on transformation journeys from early intention to final touch down and impact. Third tip: leverage AI in all facets of your job: exploring, aspiring, plotting, inspiring, disrupting, mobilizing, executing.”

Brahim understands that a leader has many business journeys running in parallel and has to bring insights at their fingertips, frame them from multiple lenses to translate them into actions that will lead towards profitability and customer delight. All of these can be aided by AI-technologies that exist today.

And Maistering understood this as their platform, Master Collections, addresses this topic by providing leaders the ability to run magical business journeys with essence, beauty, and impact.

“Innovation today is now more than ever a collaborative process. It is about undertaking experimental journeys with customers and partners in ways that are joyful, fast, rich, and impactful,” notes Brahim.

“Master Collections has an entire atelier of management techniques to shape transformational journeys. Some leaders are biased towards purpose, most are centered on action, some are too content-based, many have difficulty with the emotional side of change. No wonder so many digital initiatives fail. Fourth tip: teach yourself how to look at magical journeys from different angles, also the ones that do not come to you naturally.”

But how to drive AI-based innovation with a legacy systems landscape? 

Brahim acknowledges that legacy systems often do not really help business leaders “to be on their toes – listen to customers, their buying choices, their experience of the service they get; and to partners and stakeholders to leverage this information in real-time and respond quickly to the changing dynamics of their business.”

Still, he doesn’t plead for wall-to-wall implementation of new systems. “Too often, enterprises lose themselves in costly re-engineering of their systems landscape, only to discover that they end up with a new generation of legacy. IT efforts should definitively focus much more on collaborative data harmonization in the sector. Fifth tip: pay more attention to emerging external content services and leverage legacy systems better by combining them with new generation orchestration services.”

Dealing With Your Strong and Weak Points When It Comes To The A.I. Revolution

Understanding both their AI and behavioral change is a necessity for businesses to lead in retail 4.0. True, new players often have an advantage in the first part of the equation. So, Brahim believes that established leaders should learn from new leaders to leverage AI-based innovation. He recommends established leaders to:

“Relentless drive towards digital experiences and willingness to bet on AI as it will change everything. Then again: established leaders know how to mobilize people. The combination will fuel journeys that combine speed, sophistication, and common-sense feasibility.”

Of course, in the retail industry, innovation can come from different areas of technology. The reason Brahim has strong convictions that Artificial Intelligence will take center stage is based on how it will impact the shopping experience.

“The real revolution is still to come.AI will completely change the connection between consumers, retailers, producers, and the products & services: with conversational interfaces, cognitive abilities, virtual experiences, and proactive personal suggestions and conditions.”

In addition, AI will also lead to new levels of digitalization and automation of production and distribution. For businesses to lead in Retail 4.0, they need to start implementing AI as a core part of their strategy.

Ultimately, Brahim is confident that the retail sector will not suffer, but benefit from AI-driven innovation and that “business leaders adopting AI technologies; new ways of working, will orchestrate magical journeys that allow them to master their true of retail leadership.”