SPONSORED: Salling Group: “A Digital Solution Has to Be a Business in Itself If We Want to Stay Relevant”

@sebastian

SPONSORED: Salling Group is determined to offer more than just a digital payment system in the food retail sector. It wants to become an integral part of supermarkets, an entity which creates experiences, builds loyalty and meets the customers’ exact needs. To put it simply: its long-term goal is to develop it into a business in itself.

SPONSORED: Salling Group is determined to offer more than just a digital payment system in the food retail sector. It wants to become an integral part of supermarkets, an entity which creates experiences, builds loyalty and meets the customers’ exact needs. To put it simply: its long-term goal is to develop it into a business in itself.

This article is also available in Danish. You can read it here.

Salling Group is seen by most people as an old-school grocery store which is run in a stringent and efficient manner and has pleasantly organised locations for people to pick up food and other household items. It hasn’t shown much interest in introducing cutting-edge, digital solutions; instead, it offers a traditional, and convenient, way of shopping.

But that general view may soon change. Two years ago, the grocery store group hired Kim Vindberg-Larsen, an experienced entrepreneur from the fintech scene, to help drive its digital development. Since then, the tech expert has built a mobile team, which has developed a series of new, digital products. He thinks that Salling Group has a special opportunity right now to cement their digital position in the life of the corporations’ many customers.

“Banks were in a similar situation 20 years ago when online banking was introduced. As Denmark’s largest retailer we serve around 1.4 million customers daily. Our task now is to keep staying relevant to them”, says Vindberg-Larsen.

With online banking and mobile payment services, banks have driven a great deal of the innovation ending up in consumers’ pockets for the past several years. The way Vindberg-Larsen sees it, innovation from banks has come to a halt, which leaves room for retail chains to take over and introduce novel solutions.

“Today, customers expect reasonable prices and great quality as bottomline, as something any respectable business should offer. For that reason, we are betting on combining these criteria with giving customers great, relevant experiences, which make their everyday life easier”, explains Vindberg-Larsen.

Attention to the big picture

Selling online, via mobile phones and through social media: omnichannel has been the one big buzzword for merchants in the past years. But Vindberg-Larsen and his mobile team focus on the bigger picture and do not get lost in the details of how to sell to customers through various, distinct channels.

“Instead of talking about e- and mCommerce as seperate communication channels for customers, I’d rather pay attention to ‘screen time’ in general, that is, the time users spend on their gadgets. If users don’t read our print magazines or newsletters anymore, we have to digitally attract them to something else – something they are genuinely interested in. Our task is to expose them to goods they didn’t know they wanted. And that challenge hasn’t been met properly by anyone yet”, he says.

Hologram chicken: The digital team in Salling Group is working under the radar with a series of high-tech solutions in collaboration with some of the biggest suppliers from all over Europe. Among other things, they’ve been looking at the possibilities of holograms and scent technology.

One of the responses to the decreasing number of magazines with special offers has been digital, personalised deals. Vindberg-Larsen believes that it is merely a symptomatic treatment of a fundamental change in customers’ behaviour.

“When digital services offer ‘personalized deals’, they want to avoid people opting out. There’s a very important difference between developing something to avoid an unpleasant occurrence and developing something cool that people want to opt for. The second approach demands innovation and courage. Our task is to build solutions, products and services that meet the customers’ need and drive sales at the same time”, he points out.

This philosophy has lead to the development of the ‘Mad ud af Huset’ app, an order-and-pickup competitor of Just Eat, which is connected to the group’s department stores. The solution was first launched in Bilka, where customers can order food from their browser or app and pick it up in one of the hypermarkets. The service solves customers’ food needs in a new way and generates revenue at the same time. Since its successful interception, it has been fully integrated with Føtex and Salling as well.

“The platform made a million revenue in the double digits in its first year, and a significant part of the population has chosen to use the solution. That’s a very good example of how physical stores and digital systems can create synergy. The app helps customers while it also makes it easier for our workers to serve them in the stores. I’m sure we will see many more solutions like this one – a hybrid between physical and digital sales that functions as a de facto service layer,” says Vindberg-Larsens and adds that the app will be implemented in the Carl’s Jr. fast-food chain during the summer.

A meaningful membership

It has to be noted that the new digital solution of Salling Group is supposed to do much more than drive sales. The Netto stores have never had a dedicated loyalty programme, but they recently got one with the foodwaste fighter app “Mad Skal Spises”. It does not offer membership points or vouchers, but still makes customers feel good because they know they act for a noble cause.

“The easiest thing is to ‘buy’ customers: you get a 50-kroner voucher if you shop with us. But that isn’t profitable. I don’t understand why businesses call it ‘loyalty’ when they hand out a voucher for their customers, which makes the store lose money every time”, Vindberg-Larsen ponders.

SAP, one of the world largest tech and innovation companies, has awarded Netto and its partner Fødevarebanken the Nordic “SAP Innovation Award 2018” in the category of “Sustainability” for their Danish food waste app.

Instead of making customers collect points to be able to buy a toaster, the digital team wishes to develop products for smartphones which offer what they call “a meaningful membership”.

“People are tired of getting spam from their membership programmes. ‘Mad Skal Spises’ is a loyalty club which isn’t about cheap milk or discounted devices. People join in because they want to make a difference by reducing food waste and thus contributing to protecting the environment and helping Denmark reach the UN’s sustainability goals”, Vindberg-Larsen explains.

Digital as an independent business

Large corporations across all industries have long seen apps as marketing tools. They did not mind if the apps were unprofitable as long as they created goodwill and lured customers into “the real store”, where money could be made.

A Danish example for that is MobilePay, which has become immensely popular among millions of Danes and given Danske Bank a positive image as it struggled with bad press after its “New Norm” campaign. But, alas, it’s still not a profitable business.

Salling Group wants to change that approach. During the past two years, the mobile team has replaced the existing mobile platform with three new ones. The biggest strategical shift that the new platforms represent is that they were mainly developed to make profit, ultimately paving the way for other apps and digital solutions to become potential businesses in themselves.

“Even though we are a large corporation, it’s important to develop products with an entrepreneurial mindset. Everyone can make apps that become popular if they are backed by a large corporation willing to lose millions supporting them. The hard part is making apps that actually generate revenue”, Vindberg-Larsen says.

Kim Vindberg Larsen is a fintech expert who took his entrepreneurial mindset with him when he accepted his ambitious assignment at Salling Group With a highly specialised team and a clearly defined mission its relatively easy to put a man on the moon We did it with Mad Skal Spises inspired by Uber and Mad Ud Af Huset which became a strong competitor for Just Eat Theres great freedom but also a huge responsibility in being able to prioritise daily what needs to be done and in what order It demands a unique mindset but through a steep learning curve and with TrueAgile PureSprints and bootstrapping weve built trust in the business and the intersection where the solutions are being used

Salling Group took the first step with the “Mad ud af Huset” app, which is already lucrative, because business opportunities were built into the solution from the beginning.

“Salling Group is known for doing things profitably, and, for that reason, we can’t allow ourselves to squander our customers’ money: in the end, it is they who have to pay for the development. The frozen chicken shouldn’t become more expensive just because we want to make a good-looking app”, Vindberg-Larsen says.

At the same time, the “Mad ud af Huset” app has set such a good example that the corporation has been encouraged to come up with other potentially profitable, digital products. The self-service solution “Scan&Go” is currently being tested in five Netto stores in Aarhus and has promising results, while the customer club concept ‘ClubSalling’ and the deal site ‘BilkaLocalOutlet’ are exceeding all expectations.

“The development has to happen in small, incremental steps, while we constantly focus on what the customers need. I’m convinced, however, that every step we take is leading us into the shopping experience of the future. It’s all about staying relevant. We already have some very positive experience regarding ClubSalling, our benefit program, which basically uses the same backend as Scan&Go and has played an important role in bringing new users to the Salling universe”, Vindberg-Larsen concludes.

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