Stora Coop Varbergs journey to efficient grocery E-commerce
May 15, 2020
In 2018, Stora Coop in Varberg, Sweden won “Digitized Store of the Year” at Dagligvarugalan – the most important awards event for the grocery retail industry in Sweden. Stora Coop Varberg won the award for their efficient, digitized management of online groceries. In this case study, Stora Coop Varberg shares their journey from e-commerce rookie to the digital retail leader they are today.
Stora Coop Varberg, previously named Coop Forum, opened its doors in 2010. From the start, the store took pride in offering great customer service – always on hand for questions, and responsive and available to support all 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 characterizes the store and its management most is a high level of curiosity in innovative technical solutions – always striving to be at the forefront of new technology and offering their services to test it early on.
In 2015, Stora Coop Varberg realized that their customers were ready for online shopping. The store was quick to see the trend and had their e-commerce solution set up by December the same year.
The complexity of online grocery retail
Every industry has its challenges when it comes to e-commerce. For grocery, these challenges are related to, among other things, the handling of articles that require temperature-controlled storage – particularly frozen goods which require an unbroken cold chain. In addition, each order often contains a large number of articles, which increases the risk of selection errors, and heavy and fragile items make the packaging process more complex. Further, some articles come with expiration dates, and fresh products need to be carefully checked for quality, weight, and count. All of this, combined with high-volume pickup orders, makes online grocery retail highly complex.
Coop’s journey towards more efficient online grocery shopping
Stora Coop Varberg launched its e-commerce offering in December 2015. Central Coop was involved in the startup phase to a certain extent, but beyond 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 items and in what order,” says Göran Borg, CEO at Stora Coop 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 was extremely time-consuming and the risk of making mistakes was 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 have 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 Borg.
Early on, Stora Coop Varberg chose to invest in Pricer’s digital shelf labels and have since added StrongPoint’s Pick & Collect solution, developed especially for picking groceries. With Pick & Collect custom-made for the individual store, a route is set up to assist the pickers and show them in which order to pick the items. On their handheld computers, they can see what to pick, in which order, and a description of the item. 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 task. A green light flashes on the shelf label of the article to be picked next, and as soon as it is picked, the light turns off and the next item’s light turns on.
The flashing light is also visible at a distance, which makes it easier to find the article faster. With the mobile handheld device placed on the arm and the ring scanner on the finger, pickers can use both hands to pick articles fast. The software also integrates with produce scales to report back the accurate weight of fruit and vegetables and offers secure procedures for managing age-restricted alcohol and tobacco items.
“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 limited 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 Varberg.
The latest addition to Stora Coop Varberg’s e-commerce offering is StrongPoint’s Click & Collect lockers, now an integral part of Coop’s in-store pickup concept.
“We have noticed that about 25-30% of customers have switched to picking up their orders in the lockers. The lockers have been received extremely well by the customers who see 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. And we have also noticed that we are reaching an entirely new customer group through the lockers, which of course is very satisfying,” says 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 Borg.
Increased pressure on online sales due to the pandemic
Like most online grocery retailers, Stora Coop Varberg has noticed major changes in consumer behavior in the wake of the coronavirus pandemic, 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 Varberg has been running at full capacity every day. Each pickup time slot, from early morning to late evening, is fully booked. From initially being able to offer customers swift order and pickup, the pressure on the e-commerce services is now so high that there is always several days lead time on any order.
“We’re exceeding our targets every day with our online orders. We are seeing new customer groups trying out our online sales and they are generally very satisfied with the service. Our Click & Collect lockers are especially 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 pandemic, we saw a lot of people stockpiling goods, 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 pickup lockers,” says Borg.
A dark store as the next step
The next step toward 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 continue 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 Kallies.
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