Nestle digital transformation bolsters e-commerce sales

Nestle in its annual report revealed that its digital transformation initiatives are reaping benefits as e-commerce sales grew 18 percent accounting for 7.4 percent of total sales in 2018.
Nestle digital transformationNestle sales increased 2.1 percent to CHF 91.4 billion in 2018 from CHF 89.6 billion 2017. The operating profit margin of Nestle reached 17 percent.

Nestle has a strong IT and digital transformation team to look after business efficiency and growth – driven by technology. Stefan Palzer is the chief technology officer (CTO) of Nestle. In addition, Filippo Catalano is the chief information officer (CIO) at Nestle.

Nestle admitted that the rise of digital and online shopping is changing the retail industry. It is using the opportunities offered by the digital transformation across marketing, social media and e-commerce. Nestle aims to deliver more personalized products, messages and services directly to consumers.

Nestle uses technology-driven by data. It is using investment in digital transformation tools for modernizing brands and business operations while developing new, digitally-centric business models.

Nestle said its 10 percent of all consumer contacts are personalized. In addition, in 2018, its e‑commerce sales grew five times faster than the Group average and reached 7.4 percent of total Nestle sales.

The company said digital transformation will play an important role in its target to increase trading operating profit margin from 16 percent in 2016 to between 17.5 percent and 18.5 percent by 2020.

Digital transformation will also be assisting in its cost-saving initiatives in order to reduce non-consumer facing structural costs by between CHF 2 and 2.5 billion.

Nestle in 2018 May said that it will re-organize parts of its IT activities to benefit from its existing technology hub in Spain and other Nestle locations.

Nestle, which aims to accelerate its digital transformation, will reduce up to 500 IT jobs in Switzerland over the next 18 months.

Nespresso is planning to establish operational centers in Spain and Portugal to benefit from existing Nestle hubs in the areas of e-commerce and supply chain, and also intends to create a center of excellence for boutique operations in Italy.

Nestle investment in production, distribution, real estate and IT infrastructure in Switzerland reached CHF 289 million in 2017 and will reach CHF 300 million in 2018.

Earlier, Facebook announced that Nestle, the world’s largest food and beverage company, is deploying Workplace as its internal communication tool to empower 210,000 employees worldwide in 2019.

The deployment of Workplace, which began nine months ago in Mexico, Brazil, the Middle East, and South Africa, has resulted into 25 times higher engagement per post and very high rates of mobile adoption.

Nestle managers are using Live video to connect with employees at different locations, while sales teams are using Workplace for daily check-ins and to share information and best practices.

Filippo Catalano, chief information officer at Nestle, said: “Using Workplace by Facebook we are able to give our employees across the globe a platform to build connections, enabling faster and more engaging sharing of information.”

Accenture said it is helping Nestle Oceania use social media monitoring to understand share of voice, run more effective campaigns, support the creation of a new social media centre of excellence and proactively resolve emerging issues.

Rajani Baburajan

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