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Nestlé’s Neel Arora and Jordi Bosch Argilagós discuss the food giant’s digital transformation

Posted on by darion

When you’re the world’s largest food producer, change doesn’t happen overnight, and at Nestlé, the group’s journey to becoming a major e-commerce player has not been without its challenges.

Last year, Nestlé reported 13.4% organic growth in its e-commerce division, and the company is busy implementing a new digital-focused structure across all aspects of its business, including in markets where the internet is in its infancy.

At the recent Shoptalk Europe exhibition in Barcelona ESM Editor Stephen Wynne-Jones met with Neel Arora, global director of e-commerce, and Jordi Bosch Argilagós, global director of sales and customers for Nestlé.

ESM: Nestlé has previously outlined its ambition to achieve 25% of sales via e-commerce by 2025 – how is this process progressing? Is it still likely to be achieved?

Jordi: It’s been a while since we set these ambitions – I think it was before the pandemic. At that time, the share of our sales online was about 8%, so the most important thing was to call our teams to action.

Since 2018, we have almost doubled our online sales – from approximately €8 billion to €16 billion – and since the last quarter, the share of online sales has exceeded 17%. We will reach 25% and we still intend to achieve this by 2025.

The bottom line is that online sales are growing, and the ultimate goal is to be present wherever consumers choose to spend.

There was a natural normalization and slowdown in the years immediately following Covid-19, but we are now seeing an acceleration. This applies to many e-commerce, social commerce and fast commerce models. We grow everywhere.

ESM: Where were the biggest wins in this? You said you doubled your online sales – what was the real factor accelerating this growth?

Jordi: COVID was definitely a clear accelerator, but beyond that, the decision to move e-commerce from being something “on the side” of the organization to being at the center and therefore building additional capabilities.

Here in Barcelona, ​​we have created a new e-commerce team, led by Neel, who has spent the last three years working to support local teams, develop playbooks and build an e-commerce academy that has trained over 10,000 associates around the world. Ultimately, this is what caused this growth.

Neel: One of the first things we did was build transparency. The key thing that changed as a result of the pandemic was that more purchasing missions that were not previously digitized were digitized.

Generally speaking, before the pandemic, you went online to buy things you knew you no longer needed. But if you think about last mile delivery, it’s the digitization of impulse shopping. If you think about social commerce, it is the digitalization of product discovery.

Additionally, during the pandemic, generations of consumers emerged, like my parents, who had never shopped online before but were suddenly forced to do so. Now you have all these different missions and different consumers that are part of the broader digital ecosystem.

ESM: As a global company, Nestlé is of course present in many countries where e-commerce is in its infancy, as well as others where it is highly developed. How do you deal with this from an organizational perspective and grow each market individually while maintaining a company-wide approach?

Neela: This is something that comes from our definition of the channel – the need to take a global view, understand local realities and see where countries are now and where they need to go.

If you are in a market like Pakistan where e-commerce accounts for less than 5%, you need to implement the basics. We create a baseline and support them with individual workshops to help them build a plan.

For markets that are a little more advanced, it’s about, “OK, what’s next, how do we get to the next level of maturity?” In the most advanced markets, it’s about getting out of their way, providing resources where possible to help them accelerate, but also taking their best practices and adapting them to the needs of emerging and accelerating markets.

ESM: Ok, so you use the best practices of the most developed countries as a springboard for other countries. But coming back to the goal of 25% e-commerce sales, do you think that will realistically happen in a market like Pakistan that you mentioned? Or does policy focus on different goals for different markets?

Neel: Actually, what’s brilliant about markets like Pakistan is that they can teach a very advanced market like the US about last mile delivery and markets. The missions are different, as is the trading infrastructure. With this amazing retail landscape that we have, each market can learn from the other and also teach the other market about its strengths and weaknesses.

Jordi: This 25% number is the North Star. Some markets have already reached this level and others are well below it. But the important thing we want to signal is that e-commerce is growing and will continue to grow as adoption continues to grow.

Indeed, markets where penetration is lower than average are growing faster than markets where it is higher, so the impact of digital technologies is very important in all markets.

ESM: Leadership starts at the top, but when it comes to things like e-commerce, you need to make sure your teams are on top of things. How are you trying to engage and empower your employees in the “digitalization journey” that Nestlé is on?

Jordi: This is a fundamental change. The name of the game is integration. We have centralized teams and a center of expertise because we need to constantly develop new capabilities – for example in retail media or analytics.

But at the same time, our large clients, such as Tesco, do not have a specific “online” and “offline” key account manager. Everything is integrated.

ESM: You mentioned retail media there. Of course, retail media opens up huge opportunities for collaboration between retailers and manufacturers – how do you see the potential of retail media from a consumer goods perspective?

Jordi: This is a very strong trend that we see everywhere. In the United States, for example, this has been a reality for some time not only with Amazon, but also with Walmart, Target, Kroger and other retailers. Now you can see that it is gaining importance in Latama, in Europe and also in Asia.

Overall, I’m quite positive about retail media – the potential for sharing and leveraging data insights can be a win-win for both parties. This can be a win for retailers because it provides an additional source of revenue, but it’s also a win for consumers because, when used correctly, it can enable message personalization, improving the shopper experience.

This can also be a win for brands as they can benefit from more targeted campaigns and more personalized messaging, which in turn can drive growth.

Neel: I think that’s a really cool way to put it. It’s definitely a win-win situation and we see it growing very quickly.

For me, working as a member of the sales team, any opportunity to invest more in our customers is truly exciting. The opportunity – and challenge – is that this creates a different relationship between brands and retailers. There is a duality to it that requires you to treat it carefully as well.

ESM: There has been a lot of talk over the years about closer collaboration between retailers and suppliers on issues like logistics and sustainability, and retail media has proven to be the key to opening those doors. The datasets are being shared for the first time, bringing mutual benefits to both retailers and suppliers.

Jordi: As you said, this only opens doors, because with the kinds of challenges we face as an industry – and as a society – increasingly, the only way is to collaborate.

Consumers are more demanding. They expect a certain level of service. They expect fast delivery. They expect us to be more sustainable. The only way to meet all of these expectations simultaneously is through collaboration.

That doesn’t mean it’s easy – but it’s our job to try to overcome these barriers.

ESM: As companies like Nestlé evolve, it will require a different way of thinking. Nestlé has remained relatively unchanged over the years, but now there is a completely new way of thinking that requires a completely new set of skills. Recruitment in the consumer goods sector is currently a major challenge. How to deal with this and how to attract people who think about “constant change”?

Jordi: That’s a very good question. That’s why we’ve launched what we call the Next Generation Sales Module internally, because we recognize that the retailers of the future will be very different from the retailers of the past, becoming ecosystems that will become much more digital and so on.

This requires new ways of working, new opportunities and new skills. We don’t have all the answers. We definitely need to be more digitally literate, more agile and more analytical. So we are doing two things at the same time – one, we are working to attract all talents, but also to attract specialists.

We need e-commerce specialists, we need retail media specialists, but at the same time we need to improve the competences and develop the capabilities of our current teams.

ESM: So flexibility is a prerequisite for anyone wanting to join Nestlé?

Neel: We certainly need agility to adapt to the scope of change. I think the only thing that can be added to what Jordi said is that it’s about culture. We see this being driven by our senior leadership – positive change, bold digital ambition and showing real intent. It filters. I think that’s really important.

ESM: So you need to be able to think like a startup – even if you are an organization that has been around for over 150 years?

Jordi: The only thing we know for sure is that the pace of change will accelerate.