Per Strömberg CEO Anders Bärlund
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Managing “The New Normal” ICA Gruppen Capital Markets Day, December 9, 2020 Per Strömberg CEO ICA Gruppen Anders Bärlund CSO ICA Gruppen A very different year.. Rapidly changing customer behaviour and preferences Extreme online growth Periodic strain on supply chain Managing new ways of working Supporting society… The “S” in ESG has been much in focus in 2020 – and we have been supporting society in many different ways Supporting risk groups… … smaller businesses … and the society • Cooperation with the Red Cross • Supporting local suppliers in • Many local initiatives by ICA to facilitate deliveries different ways to make it easier Retailers across Sweden for them to sell through our • Free pharmacy deliveries for 65+ stores in Sweden and the Baltics • “Energy” packs for health care staff (Rimi) • Rapid scale-up of last mile • Settling payables faster to delivery service ICA Pronto support smaller businesses • Food bank for people who lost prioritizing risk groups their jobs (Rimi) Our strategy remains on track – but some areas will need even more focus post COVID-19 In particular: • Online • Price value • Sustainability and Health … have become even more important Shifts in ”the new normal” Price value Online Sustainability/Health Supply chain Ways of working Ambition 2025 ICA is for everyone. We serve all customer segments with relevant price-value and locally adapted offerings We have the leading everyday food ecosystem built around inspiring local marketplaces with supporting products, services and infrastructure We are recognized as one of the corporations doing the most to improve public health We are known as a trusted source of guidance to make relevant, healthy and sustainable choices WeWe are are industry industry leader leader inin progressing progressing towards towards a a climate climate netnet-zero-zero business business We are the most attractive and appreciated employer with the proudest employees We are known for entrepreneurship, modern ways of working, continuous learning and that together we make a difference We are a trusted data-driven company, with relevant and personal products and services, based on data that we use across the ICA-system, to the benefit of all stakeholders We are deeply data-driven in our daily work and we leverage data to develop our business Our updated step-change areas for the next 1-3 years E-commerce and digital Strengthened food ecosystem transformation Best in class grocery Mortgage growth Price, promotion & Urban strategy 2.0 e-commerce offer Online profitable growth assortment Strengthen customer loyalty ICA Insurance profitable Expand convenience and Strategic and active and price value proposition growth Min Doktor success meal solutions portfolio management Data driven transformation supported by AI/AA Transformation to reduce cost and build new capabilities Climate beyond neutrality Make healthy choices easy ICA continues to be the #1 grocery retail brand in Europe Top 10 strongest Supermarket/Hypermarket store brands (SEI) in Europe 2020 (vs. previous year) Data updated 1 Sweden 4.7 (4.7) – 2 Switzerland 4.0 (4.3) ▼ 3 Slovakia 3.9 (3.6) ▲ 4 Portugal 3.9 (3.7) ▲ 5 Spain 3.8 (3.3) ▲ 6 Netherlands 3.8 (3.6) ▲ 7 Portugal 3.7 (3.3) ▲ #1 Nice to shop at (>2x #2) 69% 8 Finland 3.4 (3.4) – #1 Makes it easy to shop when 64% 9 Slovakia 3.4 (3.3) ▲ and where I will (>2x #2) 10 Bulgaria 3.4 (3.3) ▲ #1 Has private label I like to buy (~2x #2) 63% Source: Nielsen SEI 2020 Source: ICA Brand Tracking Q3 2020 To summarize… Strategy remains on track and brand position is strong Enhanced focus on online, price-value, sustainability and health We are aligned to continue delivering on our targets Strong performance and well positioned for “The New Normal” ICA Gruppen Capital Markets Day, December 9, 2020 Anders E Svensson Deputy CEO ICA Gruppen & CEO ICA Sweden ICA stores are gaining market shares in recent months.. ..and we continue to outperform Total sales.. market growth online 14% 250% 12% 200% 10% 150% 8% 6% 100% 4% 50% 2% 0% 0% DVI Index ICA Total ICA LFL DVI online ICA Online Source: DVI (Dagligvaruindex) by HUI, on behalf of The Swedish Food Retailers Federation …with significant volume growth driving earnings in 2020 Q3 EBIT growth ..and YTD +8.7% +12.2% 3 237 1 208 1 111 2 885 2019 2020 2019 2020 Our main focus areas remain relevant, but COVID-19 has led to higher priority in certain areas Sustainability E-commerce and health Price value Personalization Meal solutions Market leader online since 2017 – online demand surged in 2020… +96% ICA online sales (MSEK) Online, share of total store sales 4,499 Year 2019 R12 Nov 2020 Regular online Meal kits 1.6% 3.4% +33% 2,294 +42% 4 219 1,729 +50% • Reaches >85% of Swedish population +43% 1,221 2 026 • Share of sales through 813 1 465 Stockholm dark store ~10% 568 975 614 415 • Home delivery share ~35% 153 199 246 264 268 280 R12 Nov 2015 2016 2017 2018 2019 2020 …with more and more ICA retailers offering online 66 new stores have gone online in 2020 – 360 in total Online sales share for participating stores were 6.3% YTD Q3 >70 stores using the dark store in Stockholm Our partnership with Ocado is a key driver for long-term online profitability World leading ONLINE platform Automation in central fullfillment (CFC) • AI-supported shopping journey to drive basket • Automation in CFC leads to an increased size and margin improvement efficiency • Platform realizes a wider assortment in CFC • Targeting at least a doubling of picking • Better and more reliable manual pick productivity compared to the dark store • Partnership with world leading retailers • Ocado is investing heavily in further automation and AI-supported process execution in the CFC Important online milestones up to 2022… June December Spring November Spring Limited B2C MVP B2B Dark store Tests start in Volume ramp-up Gothenburg starts Stockholm CFC in CFC begins on OSP as an MVP 2020 2021 2022 September November February Summer December Public MVP Ocado starts First store has Conversion of All stores B2C the installation converted to OSP Dark store in converted to in the CFC Roll-out starts Stockholm to OSP OSP MVP=Minimum Viable Product. OSP=Ocado Smart Platform ..with some temporary and limited financial effects Operations Rapid corona-driven volume increase in 2020 ICA online 2.0 first store pilot in September 2020 Financials Volume driven higher cost level in dark store Project driven higher costs when moving into implementation phase Operations Migration of stores to MVP OSP starts Dark store in Gothenburg opens and dark store Stockholm converted to OSP 2021 End of year all stores are converted, and CFC testing starts Financials Project implementation and OSP conversion costs Estimated margin effect vs 2020 (all things equal), approx. -0.1pp Operations Adding functionality to OSP Commissioning of Ocado CFC in Stockholm 2022 Financials Warehouse commissioning costs Estimated margin effect vs 2021 (all things equal), <-0.1pp MVP=Minimum Viable Product. OSP=Ocado Smart Platform Price value will become even more important We will use a variety of tools do drive price value… 1 Investments in key 2 Campaigns and 3 Strategic work products with high communication with assortment price sensitivity 4 Sales support to 5 Strong private 6 Loyalty program the ICA stores label offer key to personalize price value 28 ICA’s private label: five growth platforms to build customer loyalty LONG-TERM FOCUS Increased price value Ambition Customer’s preferred choice Strengthened private label brand Increased sales, differentiation and Objective Assortment development strengthened loyalty at the forefront Proud and engaged store employees Growth For A Good For A Good For inspiring For a For Tomorrow – Tomorrow – dining simpler affordable platforms Sustainability Health experience life choices Secure a good private label margin Accelerated private label growth 2020 pp 1,4 1,2 1,0 0,8 27,0% 0,6 26,5% 25,8% 25,3% 25,2% 0,4 24,6% 24,6% 23,9% 23,8% 23,1% 0,2 0,0 2016 2017 2018 2019 2020 Food Food & Non-food Growth food Growth F&NF Well positioned for “The New Normal” Strong performance in a turbulent market with big and escalating shifts in customer behavior Investing in online and transitioning to the new Ocado platform Ensuring customer loyalty and price value in uncertain times Increasing benefits from digital acceleration ICA Gruppen Capital Markets Day, December 9, 2020 Jan Prokopec CDO ICA Gruppen Strong contribution from our four prioritised digital focus areas Food Personalized Advanced Process Ecosystem & Digital Analytics & AI Automation (Digital/e-commerce Marketing FOCUS AREAS FOCUS and omnichannel) Innovation and new technology New capabilities and ways of working ENABLERS Data accessibility and quality Reaching Process Automation targets for 2020 – 100 MSEK New target for 2023: 200 MSEK yearly run-rate in EBIT contribution Moving into industrial scale within Advanced Analytics & AI Number of use cases during 2020 25 20 In 2020 we have gone 15 from single pilots per 10 business area to industrial scale 5 roll-outs 0 Q1 Q2 Q3 Q4 ICA Sweden Rimi Baltic Apotek Hjärtat ICA Bank Innovation hub ICAx continues to strengthen our ecosystem and operations across the Group Express food deliveries Unmanned store makes Analytics powered tools to customers 24/7 opening hours possible do reduce shrink in store Increasing our sustainability ambitions ICA Gruppen Capital Markets Day, December 9, 2020 Kerstin Lindvall Chief Corporate Responsibility Officer ICA Gruppen Sustainability part of ambition