When the Pundit was cutting his eye teeth in the produce business, one of his customers was ICA Gruppen in Sweden, so we have a special connection when we have Maria Wieloch of Ica participate in our events:
She has served on panels:
And she has even accepted important awards on behalf of ICA:
At the Global Trade Symposium, co-located with The New York Produce Show and Conference on December 11, Maria will be focusing on how special promotions can boost sales of produce and move the needle on consumption.
We asked Matthew Ogg, Contributing Editor at Pundit sister publication, PRODUCE BUSINESS, to find out more:
Senior Category Manager:
Fruit, Vegetables and Flowers
Q: Working with Sweden’s largest retail chain and within a business model where store owners can act independently, how would you say your role as category manager differs to your counterparts at other retailers?
A: It’s quite a big difference to be honest. The main difference is, of course, that the assortment we put forward to the stores is not automatically offered to the customers, so we need to be very good at internal marketing towards the stores. We have to very carefully listen to what they want and combine that with our expertise of fruit and veg to make sure we have the best offering for the stores as a wholesaler, but also be able to promote the reasons why they should have the assortment that we recommend.
If you’re an integrated chain, you basically decide what the stores are going to sell and you make the deliveries, but we offer an open assortment so the stores can pick and choose themselves. We really have to have a close communication with the department.
We have a Facebook group where most of the department managers are active and where we can communicate and share inspiration between them. When we have a new product, we always put it on the Facebook group and say why it’s good for them, what’s the unique selling point with the product and how it’s supposed to fit in the assortment. Then we get immediate reactions from the stores if they like it or not. We also have sales support with people who go out to the stores and help them to sell.
We have to think carefully about what we put in the assortment and we have to make analysis after we’ve taken the product in to really assess whether it was a good decision or a bad one.
Q: And because you’ve researched so thoroughly, would you say you get better results in the end?
A: I think we have a very good understanding of what Swedish consumers want. In an integrated chain, you put it out there and if it sells it sells, but we have more of an offering where the stores get to choose and we can see what the stores believe their customers will value. They meet their customers every day, and they have very different customers. Sweden is not a very big country, but it’s a very long country and is very different between the cities and the countryside.
Of course, the department manager is closest to his customer base, and hence if we have a broad assortment, he or she can choose what works on his or her customer base rather than us trying to be a central unit that says this is what you should have.
Q: So, it’s a mix of you studying the market and knowing the supply chain, putting the advice and options out there, but the store managers have the specialized knowledge of their areas and you can find a balance between the two.
A: Exactly, and maybe pinpoint the market in such a way that’s a bit more difficult if you are an integrated chain where you just work with volume and you’re portioning out the volumes. I haven’t worked in an integrated chain, so I can’t say for sure how it works, but that’s my simple idea of it.
We are the link between the suppliers as well. We have buyers — the buyers are the main connections to our suppliers, but they always feed us with new things — and we have stores with even closer contact, so we can have dialogue with both of them and ask if they think this is a good idea. Either one of these stakeholders might say ‘it’s a very good product, but because of our logistics system, it wouldn’t work because of this and that’.
Q: Does the fact you can’t centrally determine where the volume goes make it more challenging to negotiate deals with suppliers?
A: I’m not in charge of buying at all… I just have the category so we have a buying manager who is more into those things — we have very good historic knowledge as we are the market leader in Sweden, and we have a very experienced staff. I wouldn’t say that is in my view a problem to think about the volumes, because we have good historic data.
If you take a totally new product, it might be that that is the case, but you often have sister products to a new product where you can see historic volumes and you know what kind of campaign support it’s going to have. You have talked to people at the stores.
Q: That’s good to hear. And I see from the latest results that consolidated net sales were up 6.2% in the last quarter. That’s quite impressive in a competitive retail environment. There were several categories driving this, but the report mentioned fruit and vegetables were one of the strong performers. So, looking at that quarter and the trend over recent years, how has the produce department been tracking with its sales and what have been the key drivers in your view?
A: To be honest we have a situation where the Euro to the Swedish Crown is very strong, so it’s a lot of price I must say. Prices have been going up in Sweden due to this currency change, but we are seeing a very strong trend – well, it’s not a trend anymore; it’s a a shift towards eating more vegetables.
We have the ‘flexitarians,’ where people don’t go vegetarian or vegan, but they tend towards a more vegetarian way of eating. There is meat-free Monday that the press is using here in Sweden. There are more and more people adopting this, and for two reasons: first is good for your health, but it’s also good for the environment. Swedes generally are very environmentally conscious; for example, we are very good in recycling.
People eating more fruit and veg is driving sales strongly I think. I would say that’s the main driver. That’s the underlying driver, but people also understand that when you start eating more vegetables, you come to realize it is something different to what you were served in school, which was overcooked carrots and yucky broccoli. When you do it in other ways it actually tastes good, and taste is also something that we work very hard on at ICA.
We work very hard on choosing the tastiest varieties because I believe to get that permanent change, you need to have good taste.
Q: So that’s the demand side of the equation, but, of course, to succeed in such an environment and capitalize on it, you as a supermarket need to take certain steps as well. So, from your side what else have you been doing to get more volume moving?
A: We haven’t really changed that much in the number of spots we have in our leaflets. I’m going to talk about it at the New York Produce Show, but we do a lot of big campaigns where we connect social aspects. We have, for instance, a collaboration with the Red Cross where we donate money to the Red Cross from produce sales, and those kinds of activities tend to also get a bit more publicity, they get more spots in the store, and they also sell more.
We have, of course, the campaign with Halloween that I’m going to talk about as well, so we do some bigger campaigns. But we are a big supermarket, and there are many different categories that drive sales, so we haven’t really shifted the percentage of fruit and vegetables in our campaigns.
I think there has been an exponential shift in demand for eating more greens in Sweden, and that’s something we’ve been trying to drive for a long time through our different customers’ magazines, having more and more vegetarian recipes; it’s been a long journey.
We said at some point this shift had to come, and we really saw that after the summer period the sales started to increase. We also had a very hot summer in Sweden and because of the fire risk we were not allowed to barbecue, which for us is a catastrophe because in Sweden that’s what we do in summertime. But it means you had to find other ways of cooking instead of barbecuing a lot of meat, which is normal in summertime, so I think that also had a part in the shift to eating more vegetables.
There was a shift in the summer, and after summer that’s really made a big boost; now we want to keep the momentum and drive more sales of fruit and veg.
Q: So, you can adapt to issues as they arise, but also make the most of events like Halloween. Would you be able to give us a sneak preview of what you’ll be revealing about that in New York?
A: This is the second year we did Halloween, which is a phenomenon in Sweden. It has not been around for a very long time, and it’s always fun when you do something for the kids and it’s a lovely holiday. But what’s not so lovely in my sense is that it is candy-driven; our Swedish kids don’t need to eat more candy.
You shouldn’t exclude anything and they should be able to eat candy, but if you look at Swedish kids’ consumption of sweets and unhealthy things, we actually have some of the worst numbers in the world. That research was done by the Swedish National Food Administration saying that 17% of Swedish kids’ daily calorie intake comes from sweets, crisps, cakes, these power bars, power drinks, and other unhealthy foods. That’s really terrifying— we’re actually one of the worst in the world even though we are a country with good living standards.
With this in mind we said: ‘Okay, let’s put an alternative out there to see if we can make something of these new holidays for the kids not just having to do with candy’. So, we gave the mission to our design bureau and they had a blast of course. They said this was the most fun they’d ever had, and they came up with names and characters and so on.
We launched it last year and got incredible media from Sweden and of course around the world, because nobody has done this before. And the sales, of course, were good as well. Here you have the issue where you cannot press the stores and say ‘this is how you’re going to do it’; we are depending on the stores to pick it up themselves and really make a success out of it.
Q: We will look forward to hearing more about that at the New York Produce Show. I’m sorry to hear about those statistics though. I wasn’t aware that the situation was so bad with children’s diets in Sweden.
A: We weren’t either. It’s very bad. That’s why we try to find ways of getting kids to eat more fruit and veg, but you know kids are the most difficult customers because if they don’t like it, they just spit it out and you can’t do anything about it. They don’t understand the concept of health and you cannot force them — I have a 2.5-year-old and a five-year old. I’m painfully aware of this.
What we have to use is more this nudging technique that’s now arising from last year’s Nobel Prize winner, and really try to nudge them in the right direction. Halloween is a way of doing that — making it fun, making it playful, making them pick the products themselves, because if they pick it up and say ‘Mum, I want to try this’, it makes it easier at home
We want to do the same for Easter because Easter is also very connected to sugar in Sweden when it comes to kids. You have the Easter eggs filled with candy, but we want to try to go in a different direction or offer an alternative.
Q: And will you be doing something for Christmas as well?
A: In Christmas, we do a lot of other things at ICA centrally so it becomes quite difficult. We are thinking about doing it next Christmas, but we haven’t decided yet if we should be doing it or not. The thing is at Christmas, we brand a lot of our products with a Christmasy feel and that’s already being done in the store with other products and produce as well. We already have one rebrand in the department, so adding a kids’ line… we don’t know.
Q: And with the busy Christmas trading period underway, a lot of retailers generally are thinking how much is online going to steal from physical stores, and I suppose that’s a constant issue for a supermarket. What are your strategies in e-commerce to promote fruit and veg sales and position yourselves for that future?
A: Online is still quite small in Sweden to be honest, so we are actually right now working on our strategy. I’m not really able to talk too much about how we’re going to do this, but we are looking into these questions as we go along.
How do we increase the sale of fruit and veg online? Fruit and veg is a category where people like to feel it themselves and pick the produce themselves; it’s been shown in studies that Swedish consumers rely on their own judgment in terms of what is quality for fruit and veg. So, it is a difficult question — online is growing, but fruit and veg is still quite bound to the physical store.
Q: Do you have a delivery option for example?
A: It depends on the store. The store owners decide themselves if they want to have online and if it’s a pick-up at the store or they offer delivery, so it’s not centrally managed in that way. It’s not a central ICA system — we supply the system to the stores but I still have to choose a physical store where I want to do my shopping, whether it’s my local store or an ICA Maxi store, which is a hypermarket.
It’s actually picked in the store, and it’s either picked up by the customer in the store or delivered to the customer. In the Stockholm area, we have a central picking area, but elsewhere in Sweden it’s managed by the stores.
Q: There’s also the rise of subscription models elsewhere. Is that taking off as well in Sweden?
A: Not in supermarkets as I know. There is more of a subscription market where you get a delivery with weekly menus, so you get a delivery on the Monday with ingredients for four people; that’s quite big in Sweden, but not subscription on your everyday groceries in that sense. Of course, that’s going to come but it’s not something I’m involved in.
As we see online is growing, the physical experience in the store becomes more and more important. That’s what we’re also trying to do with Halloween and those kinds of things. It becomes an attraction area — a reason for the consumers to go to the store. It’s hard to get the Halloween feel online, but if you have a whole expo to make it a destination, you can do something good in the store to make it an experience for the shopper.
Q: At last year’s Amsterdam Produce Show, you discussed how organics had grown within the fruit and vegetable category, reaching around 15%. Has the percentage increased and what have we seen in organics?
A: We were quite early in organic in Sweden, and we have now reached a percentage where it has actually been for more or less the last two years. Sometimes it goes up and sometimes it goes down. It’s really driven by the media — if they say organic bananas are better than conventional bananas for your health, then we can see a small increase for a period but then it quite often goes down and stabilizes at 15%.
But as I was saying, over the summer period it was quite hot, and it’s put a big strain on our Swedish farmers — both the meat farmers but also the fruit and veg farmers. We’ve become a bit more patriotic I would say. There’s an increased demand for Swedish produce, and we see also that a lot of customers put an equal mark between sustainability and Swedish produce.
My interpretation of this is that sustainability before was more or less with organic as the only option, but now sustainability has a much broader perspective. What’s sustainable for one person might be organic, but for their neighbor, sustainability might be to buy Swedish produce. Sustainability as a subject has really arisen on the agenda of consumers, but we have more options now — locally-grown, nationally grown and then organic, and also people who say ‘I buy everything without plastic, that’s my way of being sustainable’.
So, the demand for Swedish produce has really increased more than the demand for organic.
Q: But there’s still very much a place for the imported fruit and veg?
A: Of course, and there are things that we cannot grow in Sweden. They co-exist. There is an increased demand for locally produced, but we cannot grow oranges here. In Sweden there are many things that we cannot do here, and the supply is what it is, so when the supply is done we have to import.
Q: So, for example, Swedish apples or pears would be preferred over the same fruit from other parts of Europe?
A: There are some people who care and some people who don’t care. It’s very important for us to give the consumer what the consumer wants. And that’s why we often have the option in our stores to buy both imported and Swedish — also transportation and diesel prices are increasing, because of transportation costs, it’s cheaper to not import. But it’s a big equation.
It’s demand-driven, so if we put out an option to our stores to buy imported and Swedish, we see where the demand is from that store and we go for that option.
Q: You spoke about plastics as well earlier with some people trying to remove that from their shopping. Are you experimenting with sustainable or recyclable packaging initiatives?
A: Regarding packaging, we are looking into more environmentally friendly options. There is a lot of packaging in fruit and veg, but it is often there for a reason, to protect the produce and prolong the shelf life. Without packaging, sometimes waste would go up, which is also not sustainable. But with that said, we need more environmentally friendly materials.
In the meantime, we are exploring were we can change plastic to either paper or green plastic without affecting the shelf life or the experience for the consumer. Paper is not see-through and hence covers more of the product, which sometimes is not appreciated by consumers.
One example that we have done is to exchange plastic crates for paper crates in most of our packed private label tomatoes. That’s a great saving in plastics. We are also to some extent using natural branding on our organic plastics — for example, laser marking. This is an innovative technique that is not very widespread, and it has its limitations for example in what produce it works on and the speed of the machine.
We see that the industry as a whole in Europe is working on plastics, which is good. There needs to be big steps taken by the packaging companies going forward in order to solve the equation of protection of produce versus environmental impact.
Across the globe, operators that cannot control their affiliated independents have challenges.
In the US, the problem is often that individual stores can buy outside the system and buy less expensively from producers or wholesalers that don’t have the same food safety, traceability and sustainability standards.
If the independents are strong, properly capitalized, etc., when they combine with a strong wholesaler/distributor, they are often unbeatable with local market knowledge that no chain can match.
But, it is also true that many weak independents have simply disappeared as Walmart has rolled out across America.
ICA seems very string, though, with an incredible distribution infrastructure across that very long country.
Ica is innovative as well. Come to New York and see some real-world examples of how to boost sales and help increase consumption, with ideas coming direct from Sweden!
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