Retail consumers have been conditioned to expect fast, convenient, and effortless consumption. Speed, price, location, and quality are key. Global brands, such as Amazon, keep on raising the bar on service levels forcing everyone else to keep up. But what will your response be to these changing customer expectations and increased competition?
New technology, new consumption patterns, rapid corporate digitalisation, and demographic changes are all affecting modern retailers. There is no single issue that can be focused on to achieve lasting change. Your competition is changing fast, the technologies used within retail are changing fast, and your customer expectations are changing fast. Retail has never seen such a rapid wave of change from all directions.
Some retailers are fighting back. ICA Group from Sweden has an innovative programme called ICAx that aims to explore all these areas of change. ICAx was created in 2017 as an internal innovation hub to explore how ICA can and should react to these changing market conditions, in particular—exploring tools and technologies the group can use to improve the customer experience.
ICAx is clearly having an effect on the business. Online grocery sales at ICA Group grew by 50% in the past year. The online sales market is growing anyway, but this is still over twice the growth in the market more generally, demonstrating that ICA is capable of delivering to customers today as they spend time focusing on what will happen tomorrow.
But ICAx isn’t just a team that thinks about the future of retail, the ICAx team has a real input into the way the business is managed today. They are exploring digital development projects, how to improve strategic cooperation inside the business, and potential acquisitions that could create a competitive advantage for the group.
This innovation hub allows a major retail company to combine the stability, resources, and large customer base of a big organisation with agility of a start-up. What ICA Group has done is to create an accelerator programme inside a large organisation. The ICAx team can identify tools or ideas that will be useful to the wider business and can accelerate development of these solutions far more quickly than a normal department inside a large company could ever manage to achieve.
The digital offer of the ICA Group is strengthened by this approach. It’s demonstrating that Amazon is not the only retailer capable of exploring innovation and how the customer experience is evolving. In this case, ICAx is allowing a major Swedish brand to evolve at the pace of a start-up and to find and acquire actual start-ups that have the potential to change how the retailer designs their customer environment. That’s exciting, not just for ICA Group, but for all retailers struggling to keep up with the relentless pace of change.