Co-Interview: ‘Coronavirus has accelerated digitalisation’
The food industry has taken centre stage and become increasingly important as a result of the coronavirus crisis. We spoke with Marcel Härtlein, Global Head of Digital Transformation at the Emmi Group, and Nadine Stoyanov, Principal Business Consultant at Zühlke, about the trends, opportunities, and challenges presented by digital transformation in the food industry.
Insight in brief
- The coronavirus crisis has accelerated the digital transformation in the direct-to-consumer area
- A technology-driven approach allows for the agile implementation of the digital transformation
- A single, universal definition of digital transformation is key
How has the coronavirus crisis affected the food industry?
Marcel Härtlein: The coronavirus situation has accelerated the trend of digitalisation in the food industry. More people are working from home, which means they are no longer commuting to the office. This, in turn, has greatly reduced the number of customer touchpoints with brick-and-mortar retail outlets. The focus is shifting to online shops. This additional customer touchpoint is therefore becoming increasingly important and is generating a new sales market. Furthermore, it is opening up an additional channel that can be used to interact with the customer. For us at Emmi, it’s important that we recognise these opportunities early on so that we can address the issues accordingly.
Nadine Stoyanov: The coronavirus crisis has certainly demonstrated that companies which have already invested in digitalisation early on now enjoy a competitive advantage. During this period of rapid change, focussing on innovation and digitalisation can help make companies more competitive.
Start-ups with agile business models may find themselves at a competitive advantage when it comes to digitalisation. How is Emmi managing this change?
Marcel Härtlein: Emmi certainly benefits from the fact that we have a robust business model. This offers us opportunities but also poses certain challenges. Furthermore, Emmi has been classified as a company of ‘systemic importance’ for basic food supply. Based on our business model, the transformation is not necessarily as urgent as it is for other companies and industries. Our advantage is certainly that, thanks to our excellent starting position, we have a bit more leeway when it comes to implementing transformation processes in different areas. However, we are always focussed on maximising the benefit for the end consumer. Since this is our top priority, the question of digital transformation automatically takes centre stage. In the future, we want to offer our loyal customers a digital experience that goes above and beyond the actual product. We are currently creating the first direct-to-consumer experience in our domestic market here in Switzerland with the Kaltbach Boutique.
Nadine Stoyanov: Good positioning and a strong brand offer the ideal foundation. In recent years, direct-to-consumer marketing and sales has emerged as a major trend in the US in particular. Over time, however, it has become clear that this approach – whether highly strategic or tested in select markets – costs a great deal. Customer acquisition is complex; for this reason, digital transformation should be a top priority even for well-established companies so that they can react to the latest trends, such as subscription-based products, just as quickly and flexibly as start-ups. Established companies have a major advantage over start-ups: they already have a large customer base and sales channels that they can use to reach this customer base and expand it over time.
Has the coronavirus crisis pushed the topics of e-commerce or direct-to-consumer sales to the forefront for Emmi?
Marcel Härtlein: The urgency of these topics has certainly increased. All of our decisions about integrating new touchpoints are made on the basis of the customer journey, not just market trends. The Kaltbach Boutique is an excellent example: we saw a gap between the customer’s visit to the Kaltbach Cave and their experience reaching for a product in the refrigerated section of their local supermarket. Thanks to our existing distribution channels, we were able to quickly expand our vertical value chain to the end consumer.
Nadine Stoyanov: The shift from brick-and-mortar retail to direct marketing and e-commerce will be a key strategic pillar for companies in the consumer goods industry in the coming years. The longer the vertical and horizontal value chains are, the more of a key role their integration will play in guiding the end consumer along the customer journey in line with an effective omnichannel strategy. Certain retailers have already gained experience in this area and have seen that it is possible to design a customer experience with a cross-channel touchpoint strategy without any media discontinuity.
Marcel Härtlein has been Global Head of Digital Transformation at the Emmi Group since 2017. Before that, he spent seven years in various management roles at KPMG Switzerland. Among other tasks, Marcel is responsible for the Emmi Group's Global Digital Consumer Experience strategy, which is now one of the pioneers in this area.
How does the creation of your own online shop affect your relationship with retailers?
Marcel Härtlein: Naturally, our relationships with our retailers are very important to us. Nevertheless, we are trying to generate added value for the consumer by investing in new areas. Direct access to customers and data helps us to obtain valuable knowledge about our customers’ behavioural patterns and interests. Having our own online shop provides us with high-quality data. Hopefully, we can use this data even more effectively in the future in collaboration with retailers, and approach it from the point of view of a refinement strategy.
I also think it’s important that we learn new skills in this area so that we can maintain a high level of competitiveness. But it is important for everyone to have the same definition of ‘e-commerce’. E-commerce refers not just to online shops, but also to working together with retailers, online third-party suppliers and platforms with new business models, all the way to new product categories that have been developed for digital sales channels. E-commerce has a great deal of potential.
Nadine Stoyanov: We frequently see companies looking for ways to use customer data to accelerate the learning curve in their first step in the direction of ‘direct-to-consumer’ marketing together with their sales partners. Our ability to establish a single, shared definition of ‘e-commerce’ and generate interest in new services or even products that address certain customer needs is key in this phase. Retailers can also profit from these services when it comes to increasing footfall in stores – such as through a unique combination of services or by fundamentally improving in-store service quality. New markets and/or potential customers could be acquired either in parallel or downstream; this is also an excellent opportunity for trying out new sales channels.
What does Emmi’s implementation strategy look like in terms of digital transformation?
Marcel Härtlein: Emmi is pursuing a transformation that is primarily technology-driven. This means that we first evaluate the technical possibilities, then we build upon a cloud-based approach and then we train our employees. At the heart of this transformation is a single, central platform that serves as the basis for all tool expansions and harmonisations. We will use in-house training courses and webinars to educate our employees in order to match ability with ambition. In my area of responsibility, we have been a virtual team since day one, which has put us at an advantage during the coronavirus crisis.
Nadine Stoyanov: Once again here, digital transformation is characterised by a comprehensive approach and, in the best-case scenario, becomes a decisive competitive advantage. The selection of ‘best-in-class’ tools and the optimal integration of these tools across all process levels are key for a successful transformation. But Marcel Härtlein is absolutely right: even the best tools are worthless if our employees are left behind.
What role do external partners play in terms of the digital transformation at Emmi?
Marcel Härtlein: In the first stage, external partners can play an important role primarily as a neutral observer and a source of inspiration. They are in a better position for this than someone inside the company. External partners can shine a spotlight on certain potential issues and help to initiate processes. They offer an external market perspective, experience and, of course, expert knowledge on the various topics. Within the company, we are often lacking sufficient time and resources for the necessary market and competitor analyses.
Where does Switzerland stand in terms of digital transformation?
Marcel Härtlein: As a rule, Switzerland is a pioneer when it comes to innovation. This is also proven by the fact that Switzerland has been named one of the world’s most innovative countries. However, when it comes to the term ‘digital transformation’, we don’t have a single, agreed-upon definition. It’s not just about digitalising analogue processes. Digital transformation is a mindset; it encompasses everything from new skills all the way to an expanded understanding of speed and management. Digital transformation should be an investment in the future. I see digitalisation as an optimistic approach that shouldn’t instil fear in people but, rather, should be regarded as something that opens up a wealth of new opportunities.
Nadine Stoyanov: ‘Transformation’ is a big word that is understood in different ways by different people. At times, it almost seems slightly mystical. I like Marcel Härtlein’s approach because transformation is made up of lots of moving parts that all need to be reconciled with one another: strategy, management systems, collaboration, ways of working, mindset, and culture. This requires a lot of energy and a strategic bent. Digitalisation shouldn’t be seen as a religion; it is a matter of operative adaptation and strategic and analytical decision-making.
Nadine Stoyanov is Principal Business Consultant at Zühlke since April 2018. She gained both strategical and operational experience in corporations and technology start-ups. Nadine believes that by the means of digital innovation coupled with a strong customer focus and data analytics, companies can create a unique and consistent customer experience that sets them apart from competition. Furthermore, Nadine has a proven record in the commerce sector.