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Maria Lundberg took on a sizeable operation when she started as ICA Gruppen’s CIO in January 2018. In addition to its core business of about 1,577 grocery stores across Sweden and the Baltics, ICA runs banking, real estate and pharmacy companies.
It’s a complex operation Lundberg set out to digitise. Her goal is to tap into ICA’s 100 years of experience in building synergies. Historically, this meant common branding, loyalty programmes, the benefits of economies of scale and shared IT. Lundberg is now expanding the approach to digital services.
“When I joined I said we need to have a completely different direction for group-wide IT strategy because we have completely new synergies to explore here,” she says. “The digital journey at ICA is about launching an omni-channel experience, launching services in our ecosystem and creating new ecosystems with partners.”
One of these partners is British online supermarket pioneer Ocado. As part of a SEK600m (£53m) investment in e-commerce automation, ICA will roll out Ocado’s e-commerce platform in 2021. In addition, ICA’s grocery retail arm ICA Sweden will open a highly automated warehouse in Stockholm in 2022. It will use Ocado’s technology, where robots operate on a grid system to retrieve pallets and help fulfil online orders.
From arts to IT
IT wasn’t always on the cards for Lundberg. Initially, she considered studying the arts, but changed her focus to industrial engineering and management. After graduating, Lundberg started as a consultant at the Nordic IT software and service company Tieto (now TietoEvry). It gave her a good vantage point across the industry.
“[In] the consultancy business you get to know many different organisations,” she said. “I’ve worked with the service sector, private sector and public sector. It’s a perfect environment for a person who loves learning, problem-solving and driving transformation.”
After 12 years at Tieto, Lundberg wanted to focus on a single organisation. She started in the grocery retail industry’s second-largest company in Sweden, Axfood. Four years later she was asked to run IT for ICA’s grocery business, and in 2018 she took over as CIO of the whole retail group.
“When I saw [ICA’s] idea of the grocery business as the core and then building companies inside the group to provide higher value for the client, such as banking services, pharmacy services and insurance company, that really attracted me,” Lundberg recalls.
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But the multi-business structure comes with challenges. ICA Gruppen has 800 IT employees across its four operating companies (opcos). While the lion’s share of IT comes from the group’s centralised IT services, each company has its own IT team as well. For example, ICA Bank’s internal IT team develops the bank’s apps, but it also uses tools and infrastructure services from the group IT. A group-wide IT management team decides which capabilities are developed centrally and provided to the opcos.
“It’s not only about technology, but ways of working, common frameworks and a shared data catalogue,” says Lundberg. “Everything that can be done jointly [is done centrally], making it possible for us to re-use and share data, knowledge, learning and competences.”
Millions of data sources
ICA’s recent shared IT service success stems from advanced analytics. The group’s grocery business alone handles around 600 million customer receipts every year, providing valuable insight into customer behaviour. In 2016, ICA Sweden decided to create new capabilities for analysing this data.
The result was a recommendation engine that can personalise marketing campaigns for customers based on their previous purchasing behaviour. The engine has since been adopted across all of ICA’s retail businesses.
“Different stores have the opportunity to use the recommendation engine and algorithms to point out how they can put the right offering to the right customer,” Lundberg explains. “This is the most exciting and largest investment in digital step change we have done in the ICA group, new capabilities within campaign management using advanced analytics.”
“We have all been learning how to transform ICA into digital. It is one challenge for the IT department, but it is a completely different challenge for the ICA store owners to understand the nature of digital, and how to transform a physical store into a digital presence”
Maria Lundberg, ICA Gruppen
The project also highlights the added complexity in ICA’s IT environment. ICA Sweden runs an “ICA model” where all of its 1,300 grocery stores are independently owned and operated. They have access to the tools and services provided by the group IT, but store owners decide what they use. This means all of ICA’s shared IT solutions need to adapt to each store’s localised needs.
For example, in the case of the recommendation engine, the group IT provides each ICA store with access to the central e-commerce platform, but the stores create and run their campaigns independently. The platform is currently used by more than 350 ICA online stores.
“We have all been learning how to transform ICA into digital,” says Lundberg. “It is one challenge for the IT department, but it is a completely different challenge for the ICA store owners to understand the nature of digital, and how to transform a physical store into a digital presence.”
To tackle this, Lundberg has invited store owners to participate in management education. ICA also uses minimum viable products (MVPs) and piloting to engage store owners early in the IT development process.
“A sense of urgency has also helped,” says Lundberg. “In a 100-year-old company it is easy to say we have done this before, but everybody has a great understanding that if you want to stay ahead of the competition for the next 100 years, we can’t keep doing what we have always done.”
Lundberg believes the future of IT lies in strong partnerships and building ecosystems. Her strategy is to focus on ICA’s core expertise while working closely with select IT partners.
These plans were given an unexpected twist in early 2020 by the Covid-19 outbreak. For ICA’s grocery business, the pandemic introduced a considerable spike in demand both for physical and online stores. Partners played an important role in ensuring the company had the labour and IT capabilities in place to deal with the increased volumes and could adapt its IT systems for staff, such as call centre operators, suddenly working from home.
ICA also reacted by speeding up its development process. In late March, it published a home delivery mobile app, ICA Pronto. The app offers home deliveries of ready-made meals and a limited range of grocery goods, primarily for at-risk groups. For ICA grocery stores, it has provided a fast lane to e-commerce. The app has increased ICA Sweden’s online presence by 20%, jumping from 300 to 360 participating stores.
Despite its accelerated roll-out in response to coronavirus, the Pronto app is part of ICA’s broader efforts to use analytics and data management to improve customer experience and cut costs, by investing in automation and robotics. Lundberg is now more confident than ever that even a retail giant can move quickly.
“If anything good has come out of [this pandemic], it is that fast change is nothing to be afraid of,” she concludes.