Stora Coop Varbergs journey to efficient grocery E-commerce
May 15, 2020
In 2018 Stora Coop in Varberg, Sweden, won the award “the Digitized store of the year ”. The award was presented at the Dagligvarugalan (The Grocery Retail Gala) – the most important event for the grocery retail industry in Sweden. Stora Coop Varberg won the award for the efficient, digitized management of online groceries that the store had developed. In this cases study Stora Coop Varberg share their journey from E-Commerce “rookies” to the digital for runners they are today.
Stora Coop in Varberg opened its doors in 2010 (then going by the name Coop Forum). Already from the start the store took pride in offering great customer service – always at hand for question, being very responsive and available to support with any upcoming customer requests – and the customers really liked it! The store has received the highest customer satisfaction index out of all the Coop stores every year since 2014.
What really characterizes the store and its management is the high level of curiosity in innovative technical solutions – striving to be at the forefront of new technology and gladly offering their services when new technology is to be tested. So really, it was not that unexpected that 2018 was the year the store, in fierce competition, won the “Digitized store of the year” award at the grocery gala.
The story really starts in 2015 when Stora Coop in Varberg realized that the customers were ready for online shopping. The store was quick to see the trend and had their E-Commerce solution set up already in December the same year.
The complexity of online grocery retail
Every industry has its challenges when it comes to E-commerce. For groceries, these challenges are related to, among other thing, handling of articles with requires temperature controlled storage (chilled, frozen as well as ambient) – particularly frozen goods which requires an unbroken cold chain. In addition, each order often contains a large number of articles, which increases the risk of picking errors , as well as heavy and fragile articles which makes the packaging process more complex. Furthermore, add the fact that some of the articles comes with an expiration date which needs to be within the correct range, fresh products that needs to be carefully visually checked and that come articles comes with an age restriction. All of this, combined with the fact that there is often a very large amount of orders to be picked at the same time, really makes you realize the complexity in online grocery retail.
The journey towards more efficient online grocery shopping
Stora Coop in Varberg initiated their E-Commerce offering in December of 2015. Central Coop was involved in the startup phase to a certain extent, but other than that it was really all about testing out the concept and finding the best and most efficient setup.
“In the beginning, there was a lot of ‘trial and error’. We did get some assistance from the head office, but other than that, a lot of time was spent figuring out what worked. We used printed paper lists and tried various ways of picking and in what order, says Göran Borg, CEO Stora Coop in Varberg. I can now conclude that we clearly put in way too many man hours in the beginning, but then we didn’t really have any tools to support us and creating all the new routines and finding the correct structures took some time.”
Using only pen and paper, the work of picking and delivering groceries became extremely time-consuming and the risk of making mistakes significant. As the number of E-commerce customers increased, processing the orders in a quick and efficient way became more and more difficult.
Our online sales has grown continuously and if there is one thing we have learned along the way it’s that the only thing that really matters to achieve efficiency in the order picking. It can be difficult to achieve profitability in online sales, but today we are more or less break even. We have found ways to streamline the costs. It is really all about keeping track of the time it takes to pick the order and at what time of the day to pick to be as efficient as possible. The really big change came when StrongPoint contacted us and introduced their solutions. It is obvious that they know our industry and are quick and willing to solve our challenges. We have a very good partnership with them today,” says Göran Borg.
Stora Coop in Varberg chose already early on to invest in Pricer’s digital shelf labels and have since then added StrongPoints Pick & Collect solution, a picking solution especially developed for picking groceries. With Pick & Collect a route, custom-made for the individual store, is set up to assist the pickers and showing them in which order to pick the items. On their handheld computers, they can see what to pick and to which order (they usually pick for multiple orders at the same time) and get a description of the items. The store also uses the Pick-by-light function in the system which is connected to the Pricer’s digital labels to further facilitate the picking. The picker sees a green light flashing on the shelf label of the article to be picked next. As soon as the article is picked, the flashing light turns off and the flashing is turned on at the next article to be picked.
The flashing picking light is also visible at a distance which makes it easier to find the article faster. With the mobile handheld computers placed on the arm and the ring scanner on the finger, the pickers are free to pick articles fast, using both hands. The software also integrates with scales for reporting back the correct weight of fruit and vegetables and offers secure procedures for managing alcohol and tobacco.
“Pick-by-light, with the digital shelf labels is extremely efficient. The pickers don’t have to search for the next articles. It is especially good for picking items like baby food or hair dying products, where the products look very similar to each other. We save a substantial amount of time and the picking becomes so much easier. Also, the risk of picking the wrong goods becomes much lower,” says Christer Kallies, Head of Event and Marketing at Stora Coop in Varberg.
The latest addition to Stora Coop in Varberg E-Commerce offering is the StrongPoints Click & Collect Lockers, now an integrated part of Coop’s Pick-up in store concept.
“We have noticed that about 25-30% of customers have switched to pick up their orders in the lockers. The lockers have been received extremely well by the customers, that sees them as a really efficient way of picking up groceries on their way home from work. They like being able to choose their own pickup time. But we have also noticed that we are reaching an entirely new customer group through the lockers, which of course is very satisfying”, says Christer Kallies.
“If there is anything I possibly regret, it is the fact that we didn’t push for the Click & Collect lockers at an earlier stage. They have been extremely good for the whole concept. There is of course an initial investment connected with the Click & Collect Lockers, but compare that to buying another truck and the maintenance that would bring, and the choice is easy. And not to forget, the customers really appreciate the lockers”, says Göran Borg.
Increased pressure on online sales under the current situation
Like most online grocery retailer, Stora Coop Varberg have been noticing major changes in the consumer behavior in the wake of the corona virus, causing online sales to significantly increase. Many customers have been quarantined and neither can nor want to visit a physical store. For some time now, Stora Coop has been running on full capacity every day. Each time slot, from early morning to late evening is fully booked. From being able to offer customers to place an order and receive the order or pick it up the next day, the pressure on the E-Commerce services is now so high that there is always several days lead time on any orders.
“We’re exceeding our targets every day with our online orders. We are seeing new customers groups trying out our online sales and they are generally very satisfied with the service. Especially our Click & Collect locker are appreciated for the flexibility they offer, letting the customer choose their preferred pickup time instead of having to stay at home and wait for delivery. At the start of the corona we saw a lot of people stockpiling, but now we are back to a more “normal” shopping pattern. This is possibly a sign of a behavior that is settling in. If that is the case, we will definitely require more pick-up lockers”, says Göran Borg.
A dark store as the next step
The next step in improved efficiency for Stora Coop Varberg will be adding a 300 square meter dark store where pickers will be able to pick the most frequent items.
“It’s about preparing for the future. After all, we’re seeing E-commerce continues to grow and we are following the trend closely. It is both inspiring and scary with everything going on, from robotization to driverless cars etc. But above all, it’s exciting and the future is looking bright”, says Christer Kallies as his finishing words.