During the pandemic, e-commerce quickly became the focus of large food chains. ICA, with about 1,300 stores and a 36% market share, was no exception, and in Q2 of 2020, while stay-at-home mandates were enacted, its e-commerce increased by 165%.
Now e-commerce has slowed down and in-person purchasing patterns are recovering. In addition, ICA has felt pressure from inflation in the last year and has lost market share to cheaper competitors. So in order to overcome these challenges, major work is underway to further sharpen digital capabilities.
“ICA has invested a lot in IT and digitization,” says CIO Benny Svensson. “We’ve been building new solutions for a few years and now it’s time to consolidate and become sharper with a new approach.”
Points of reference
Svensson, who was recruited from Ikea and became ICA CIO just over a year ago, points out four key areas of change within IT in order to hit targets of SEK 400 million ($36.5 million) in savings. The first is about prioritizing the project list: which projects to do when, and how to do them efficiently. But priorities look different in ICA’s various operations, says Svensson. For the stores, it’s about concrete IT solutions around how store owners manage their back office environment. But it also concerns IT outside the stores, looking at things like scanners, shelf labels, and, now more than ever, how AI can be used.
In this area, AI has already been in use to reduce waste in stores by keeping track of expiry dates and lowering prices to the right level to get items sold on time. “Last spring, we were in the pilot phase, but now we’re in a position to offer it to our ICA traders,” says Svensson. “There are examples of merchants who have reduced food waste by 45% by using AI.”
In the case of Apotek Hjärtat, Sweden’s most recognized pharmacy chain, it’s more about developing e-commerce and streamlining the cash registers. And for ICA-owned bank ICA Banken, it’s about creating an unmatched customer experience. In these main areas, Svensson says, ICA is constantly developing new things.
Looking at the consultant base
Another area being looked at is the balance between consultants and internal competence.
“We’re discussing the consultant base we have today and how to optimize our competence base,” he says. “It’s not either or, but I think we’ll have consultants in selected areas. Having said that, we want to let ICA staff participate in the exciting new technology and bring about an exchange of skills. For my part, it’s great fun to work with something that develops ICA going forward, and an exciting digital agenda can certainly be a way to attract talent, too.”
Ebb and flow of processes
The third area is about cleaning up systems where the landscape has expanded over the last couple of years, but without removing them at the same rate.
“This is proactive work that’s about simplifying the landscape, and you don’t do that overnight,” he says. “You have to build it step by step.”
There’s now a three-year plan where the IT department sits with users to produce a master list of where there’s overlapping infrastructure and functionality. The focus when the systems are removed are stability and standardization, so in order to get the intended efficiency and simplification, there has to be movement toward cloud solutions.
“In our priorities, we lean forward to get the digital perspective and ensure it becomes an integrated part of the business,” he says. “Then it’s important to speak the business language and suggest how to use the new generation of technology.”
Security is, of course, high on the agenda as well, and Svensson and his team proactively read patterns to see what needs to be worked on over time, and prioritize an agenda that’s part of every developer’s daily life. “I also summarize a report on safety for management once a month,” Svensson says. “Being nervous is part of the job.
The IT organization gathers
The fourth area of change is the reorganization of IT operations to get closer to the business and increase the pace of digitization. This means several IT organizations within the ICA group are merged into one. In total, it’s about 1,000 employees and up to 300 consultants who work with IT at ICA. The idea is to create fewer handovers, realize more benefit, and make the IT organization better defined.
“We’ve started with a very clear ‘why’ because we put our customers and stores in focus,” he says. “The digital transformation is vital and we need to have it as close to the business as possible.”
It’s also about breaking down barriers to be able to work together with next-gen technology in efficient teams.
“It must permeate the entire chain,” he adds. “And in this change, it’s important to weave in the purpose of it for how stores perform, and to create an easier everyday life for customers.”
Business IT Alignment, CIO, Cloud Management, Digital Transformation, IT Leadership, Retail Industry