CV-19 Insights

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RSi COVID-19 Insights From Around the Globe – Sweden

Sweden’s approach to managing the COVID-19 pandemic sets it apart from the majority opinion. Are they crazy? How are businesses impacted?

Olivier Siard, Director Retail Business Development, Sweden Retail Update – April 21

As a Frenchman exiled in Sweden for the last 8 years, these questions have been turning in my head due to the country’s response to COVID-19: have the inventors of Volvo gone wild? Have the founders of IKEA totally lost it? Or is the birth home of H&M initiating a new trend? Are we indulging in the singularities that embody the “Swedish way?” (you’ll notice I say “we” already). Is there business insight to be uncovered here?

The plan is actually simple and standard: Slow the spread of infection to avoid reaching beyond the healthcare system’s capacity. Do this via a range of gradual rules, postponing the potential of a lockdown only when (and if) necessary. In charge is the Public Health Agency, led by Anders Tegnell. On TV every day, his department maintains a list of bans including: no groups over 50 allowed to congregate, no visits to elderly homes and all high schools and universities are now closed. The rest are just strong recommendations. The Swedish government is asking that citizens over 70 to stay home at all times, companies have their employees work from home, and of course, that all citizens abide by the classic global guidelines around hygiene and social distancing.

Anders Tegnell, the Swedish Fauci, he had key roles in the Swedish response to the 2009 Swine flu pandemic and now the 2020 coronavirus pandemic.

Looking at today’s curve…It seems like Sweden is passing the peak, although it is too early to confirm anything.

Is this a model for other countries? Why is Sweden handling this differently? This is where you must include a minimum of local perspective. First and foremost is discipline. Throughout history, Swedes have shown a strong commitment to rules. While it could be seen as being inflexible on a daily basis, it pays off in times of crisis. As of the middle of April, 50% of the population is working from home, public transportation has seen a 50% drop in usage, and the shopping streets of Stockholm, even though they’re are wide and airy, have seen traffic reduced by 70%. Sweden remains open for business, but we all agreed to slow down drastically. All without imposing a formal lockdown.

Second comes obvious local demographics. Population density is 25 per square kilometre, which is only one-tenth of the density in the UK or Italy, and half of the households are single person households. I would also add that a measure of social distancing is already part of the culture. For example, while French people kiss their colleagues or shake hands every morning, the Swedes instead tend to throw a respectful wave to greet one another, which naturally decreases potential exposure risks in day-to-day interactions.

Finally, Swedes are healthy, active individuals typically. Just look at them queuing for herrings or watch them ski the 90km Vasaloppet race by the tens of thousands. As a community, they’re the picture of health.

While Sweden doesn’t have to ask itself when or how to roll back a lockdown, the magic stops there. Although most stores remain open, Sweden is planning for a 10% decrease in GDP this year and unemployment has risen to 13.5%. The government has launched multiple measures to support the unemployed and fund worker salaries for businesses that have been put on hold. In a global market like ours, most companies are closely tied to the outside supply, so securing local sourcing is a hot topic.

Focusing on the retail industry, and a little background for those who may not know, Sweden is very dynamic and the largest market in the Nordic region. Beyond size, the country’s economy is driven by new technology, sustainability, and green science, so it’s no surprise that the corporate percentage spending on R&D is the highest in Europe. Sweden also ranks second in the world on the logistics infrastructure index after Germany. Behind the global giants that are IKEA and H&M, a wide variety of Nordic retailers are driven from Sweden. How did they cope with COVID-19, and what trends have they been noticing?

Starting with the pure players, CDON is the national leading online marketplace. For Henrik Jarl, their CMO, “The [COVID-19 pandemic] has seen our sales booming. Swedish families have been busy online, ordering all the leisure goods they need to stay home and motivated (garden furniture, home fitness, toys for kids).” In a few weeks, CDON also doubled its number of home deliveries, despite the fee (which was reduced by 50% given the situation). You can easily say the virus has further established the foothold of this local marketplace business. Alternatively, brick and mortar stores have seen far less traffic, with bankruptcy already looming for some.

Comparing clicks LY vs. TY. Although the total trade has decreased, the share of e-commerce has increased, which is reflected in the increase in clicks from Prisjakt (price comparison site) to stores. Compared to the previous year, the increase is as much as 22.6% between March 15 and April 5. Right now, the trend is that the increase will continue upwards.

On the grocery front, Sweden remains a competitive market in all formats. Like other countries, store owners rushed to setup Plexiglass shields for the cashier and implement distancing measures for customers.

Serving at risk clients has been a priority. While many stores open earlier only for at risk groups, that has become the busiest time to shop and many stores implementing online delivery have been overwhelmed. Although some dedicate delivery times for at risk category clients. Klas Balkow, CEO of Axfood, is promoting GodHjälp – a newly released P2P app connecting volunteers for free deliveries. While clients willingly pay extra for CDON deliveries, I’m not sure they’re ready to pay much for weekly groceries.

A very wide variety of formats in Sweden, regrouped into 5 groups: ICA, Axfood, Coop, Lidl and Citygross (Coop took on the Netto stores and transformed them almost overnight into slick convenience stores).

Another business focus here has been securing a sustainable local supply. LIDL Sweden have actually launched partnership programs aimed at new local suppliers. Malin Lauren, purchasing director, describes clearly her priority: “The situation is extreme, we must think out of the box and act quick. We want to protect the Swedish food producers. Keep in touch!”. Local sourcing is key to supporting an economy that did not lockdown, and will hopefully be booming again soon.

Finally, as we’re seeing throughout the world, prompt access to demand data is the foundation for a more stable supply chain. Suppliers of all sizes are avidly keeping an eye on sales data, store and warehouse inventory, and anything else they can get. While automatic replenishment systems may be temporarily unreliable, true and current demand data is the key to success.  Jessica Wolf, a leader of innovation at Coop Sweden, is aiming to share their 800 stores’ data, including online, to improve collaboration. The challenge will be to turn that data into action; but, as we all know, good data is the essential first step.

So, no, Swedes have not gone crazy. They leveraged some of their singularities, hoping it will help them get through this crisis without too much damage. These circumstances have generated new ideas and associations, moving us all further into the digital world but also closer to our local supply – data will do the rest. I hope Sweden has inspired you, come visit!

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