CASE
AUG 2012
“…Why don't
you stay
HIRE
a FOR
little bit
PASSION.
longer?”
TRAIN
FOR
By Helle Katholm Knutsen
SKILLS.
In 1997 ailing discount chain Fakta, owned
by Danish retail giant Coop, had a fieryred bottom line. The customers stayed
away. The employees fled. The stores were
worn down. The chain’s overall reputation
was at rock bottom. When CEO Claus Jensen left the company 10 years later, he and
the dedicated people around him, including
management consultant Peter Horn, by using experience leadership as a critical tool,
had succeeded in one of the greatest turnarounds seen in the Danish retail sector.
Now Claus Jensen, today CEO of Claus
Jensen & Partners, and Peter Horn, holder of the Master in Experience Leadership
Award at Roskilde University, tell the story
behind.
By management consultant Peter Horn and CEO Claus Jensen
When Henrik Jorgensen started necessary expansion, increase and during the next few years his
as new CEO of Fakta A/S in 1997, turnover and not least create successor Claus Jensen comhe and his designed successor renewed excitement and commit- pleted what was started.
Claus Jensen – Fakta’s then ment for everyone involved.
The difference that had been
new sales director - did not have When Henrik Jorgensen left the made in a short span of time was
many available resources. The company three years later to to make more than 2,000 emchallenge was in brief to create become a member of the senior ployees feel they had real influadded value without making mas- management group of Coop Den- ence on their own job – and that
sive investments, to start a turn- mark, the owner of the chain, they made a difference to the
around, which could finance the they had turned the chain around customers.
CASE FAKTA 2
"We based the turnaround
of Fakta on experience
leadership for the
employees and customers,"
says Claus Jensen, former CEO of Fakta.
"We already knew that the customers mainly came to our stores
because they could save 10-15
per cent compared to shopping
in traditional supermarkets, but
they needed to get something in
addition to this. Have you ever
seen 2,000 people lift themselves by the hair to find out that
they were individuals and meant
a world of difference to the business? We did that by implementing experience leadership, arguing that Fakta not only meant
you should be satisfied with your
job - you should be proud of your
work" remembers Claus Jensen.
Before 2008 he had doubled the
number of employees, stores,
turn over - and profit went quite
berserk during those years.
Keep it nice, clean and fast
What happened then was actually quite closely connected with
the experience economy.
"We had to convince the employees to make a greater effort for
the same pay and we needed
customers to buy more without
the shop increasing the range of
goods – in fact almost the opposite. One of the tricks was to
persuade the employees to present clean stores and fresh goods.
And then we found an advertising agency, which offered us yet
another card: The entire market-
ing approach was to be based "We retained pretty much all of
on quick shopping and humor. the management and most of key
The slogan ‘Fakta – it only takes staff in the stores. On the other
five minutes. But why don't you hand, we needed to find a new vistay a little bit longer?" became sion, new values and a strategy
a figure of speech. Thereby the that made sense internally as well
experience that the slogan repre- as externally. Above all, we had
sents was a strong and at times to make sure that Fakta would
intangible incentive to shop – and become the preferred place to
work – in the Fakta stores.
shop for groceries. This meant
doing away with the rule-orientation that had hitherto dominated
Key values:
the discount industry. The soluTrust, humor and
tion was value-based leadership,"
pride
says Claus Jensen.
Along with their employees, the
The first Fakta stores were C-people developed a set of comopened in 1981 by a group of mon values that were easy to
merchants impressed by the ex- understand and apply in everyday
panding discount trend in Germa- life:
ny – and in response to the German chain Aldi, which had just - Responsibility
opened the first stores in Denmark. The chain grew through - Trust
mergers and acquisitions to 80
stores in 1986 and was the
following year bought by Coop
Denmark, the largest retailer in
Denmark, wanting a slice of the
discount market. The chain continued to grow by taking over 35
stores in the capital region from
the also Coop-owned Irma, but
the bottom line did not. In 1997
Fakta had 215 stores and 2,000
employees.
- Consequence
- Humor
- Pride
These values would prove to be
the precondition for winning more
customers. They had to feel that
it was nice and easy to shop in
our stores and that we had good
and fresh products and we had
made an effort to be clean and
presentable," comments Claus
Henrik Jorgensen and Claus Jen- Jensen.
sen started the turnaround without drama.
Responsibility
Trust
Consequence
Humor
Pride
CASE FAKTA 4
Reduced staff turnover
and fast promotion
Change and turn
around through communication and comOne of the premises for imple- mitment
menting experience leadership
was to introduce value-based When beginning the great turnleadership. This happened by es- around it was important that
tablishing a brand new human re- the management could identify
sources department and a sales with the discount concept and
department so that the manage- show us how to improve through
ment could attain a real focus on personal thrift. One of the first
employees, stores and sales.
strategy meetings for the leader
group was hence held in a scouts’
"The human resources depart- cabin.
ment should, from a management The meetings in the leader group
point of view, ensure that the served to integrate people and
employees could develop greater gave creativity a free reign:
benefit through better education "This meant that we would soon
and become more competent. come on top of a starting point
Thereby we had the opportunity for a vision, that is, that we were
to reduce the staff turnover, to be the preferred place to shop
which was incredibly high, on for groceries; that we wanted to
an annual basis. Another carrot delegate as much responsibility
for the employees was that they as possible to the stores and emcould be recruited and retained ployees, and that we should be a
through better career options. stronger and more visible actor
It should be possible for the low- in the retail market," says Claus
est-level assistant to advance Jensen.
to a position as deputy manager
or store manager within a few "Our competitor, Netto, whose
years. By engaging our employ- black Scottish terrier logo is well
ees we aimed to make, at best, known from the chains in the UK,
a mediocre business excellent," Germany, Poland and Sweden,
says Claus Jensen.
had, through intensive marketing
and tough management, attained
"The sales department were a significant head-start in the distasked with attracting custom- count market. We were confident
ers with fresh and exciting prod- that by being a more aggressive
ucts in nice and clean stores. number two we could emulate
The customers were so used to the car rental agency – which
discount that low prices were no has the slogan ‘We try harder’ –
longer adequate to attract most and gain a larger market share."
people. It certainly took something more, and this was why we An agency competition led the
had to gamble on non-traditional management to choose one of
non-food products as well."
the most innovative advertising
agencies in Denmark at that time,
UNCLE Grey. After a few studies of Fakta's customers, the
agency suggested the slogan, ‘It
only takes five minutes. But why
don't you stay a little bit longer’.
CASE FAKTA 5
Besides the price, the agency
also found that the speed of
shopping was one the main shopping parameters.
But we also went for other
things than merely a slogan and
a creative solution. We wanted
an overall marketing strategy
that could change the perception
of us having a ‘somewhat shady
reputation and a boring image’ –
as the agency put it.
The task that we set the agency
was simple and clearly defined:
‘Fakta wants to profile itself markedly in relation to its competition
in the retail market, particularly
the largest competitor. The latter
has attained a strong position in
the market and made it acceptable and modern to shop for groceries in discount stores. Fakta
sets the following overall goals
for its communications:
1.Fakta must be made a brand
through consistent and sympathetic communications.
2.Here-and-now strong price offers for the customers shall still
be used to generate traffic in the
stores.
3.The employees should be involved so that the campaign also
has an internal impact. Fakta has
for some time had a considerable turnover amongst staff and
wants them to stay longer.
Costumers and employees
did a fine job regarding
Public relation activities
- also in the press. That
was part of the success.
The annual Faktament
gathered 4,000 enthusiastic employees from all
over Denmark. The idea
was to establish a common commitment and to
show "you're not alone".
The bicycle team, Team Fakta,
was meant to be an internal
activity. Suddenly the team
started to win and got ambitions.
Fakta wants to aim high and the without angles and shop-in-shop camera. Customer at the cash
aim is something new and dif- corners. There is a fixed ‘main register: "You have been speedferent, but only with respect to street’ built up around 2-3 aisles ing with the trolley. On top a fine
communications. The product,
of 50 DKK from our speed conthe range, stores and their deco- .
trol, thank you."
ration will be enhanced over time, Shopping for 8-10 different grobut not changed noticeably. Fak- ceries in different product types Our stars:
ta’s status as a discount chain can be done in five minutes.
Fakta’s employees
should be maintained.
The store is in a central location – Until then, employees in discount
The agency proposed to gather within walking distance for many chains had been regarded as a
all of Fakta’s external communica- people – almost with a status of necessary evil. Nor was it partions in a long-term total concept. convenience store.
ticularly challenging or satisfying
The chain’s communications must
to be an employee at Fakta.
be uniform and consistent, no The agency recommended that
matter if they were in the form Fakta’s future would be based on "We had to change that and since
of television commercials, cata- doing something for the custom- we also wanted the employees
logues, employee magazines or ers who thought that there were to become more engaged in the
store signs. An important ele- other and more important things chain, and in addition to delegatment in the development of the in life than grocery-shopping.
ing more responsibilities we deconcept was to prioritise imagecided that they should be seen as
generating television commer- The management also wanted the senders of all our messages,"
cials instead of advertisements to hear the customers’ opinions says Claus Jensen.
that communicate discount of- and therefore carried out focus
fers such as the catalogues. The group interviews amongst differimage value created through tele- ent customer profiles. The pervision was exploited and incorpo- sons in the focus groups generrated in the overall communica- ally appreciated that you could
tions concept.
buy your groceries quickly and at
reasonable prices. Most bought
Look out for the speed groceries on a daily basis and
control
were not particularly loyal to any
specific retailer. The distance to
Some of the agency’s employ- the store was more important
ees went on different types of than the logo above the store.
shopping expeditions in different
Fakta stores in different parts of It was confirmed that when shopthe country – ranging from the ping in Fakta you complete your
large, weekly expedition to quick shopping rapidly. Fakta should
‘convenience’ approaches. It un- hence be made the epitome of
derlined the significance of exam- ‘convenience’. The offer for cusining things for yourself that they tomers could therefore be recame back with some very good duced to: ‘Fakta is the fastest
observations:
place to shop for groceries’.
The stores are organized in a
practical and functional manner,
CASE FAKTA 7
Later that was a theme for one
of the commercials with a hidden
This ended up looking as follows
in the creative concept of the
agency:
‘It only takes five minutes. But
why don't you stay a little bit longer’. Regards, Peter. Fakta employee.
The vision was that the employees should be made synonymous
with Fakta. The concept contained many opportunities for
creativity and flexibility in communications; we could let different types of employees appear in
different situations with different
products, offers and messages.
"What we mainly liked about the
campaign was that it engaged
the employees; a lot of them
were casted for our catalogues
and our television commercials.
For many, it has been fun and exciting to be in a catalogue printed
in several million copies. Or to
be in a television spot shown on
most television sets," says Claus
Jensen.
At this time, Fakta's management
got involved with Peter Horn &
Co., a management and communication consultancy, whose
CEO, Peter Horn, formerly had
been working with large shopping
malls and retail chain Irma.
the consumers to know that the
employees at Fakta had the most
extraordinary personal qualities
plus a burning engagement in
whatever they were doing. The Cpeople took care of the business
press. The purchasing managers
could tell the omnibus media about
trends regarding beverages, food
and non-food, and the employees
at the local Fakta stores gave
interviews about new Fakta community initiatives, general news
about the shop and also some
very interesting stories of what
some of the employees did when
not at work. It could be sports,
mountain climbing, stock car racing or a singing career."
This was another way to make
Fakta visible - at an annual value
of a large double digit million DKK.
It only takes five minutes to get married
"The best initiative was yet to
come: The customers themselves, who also contributed with
stories. Some made the news on
television - and in all the other
media: The greatest hit was the
couple in Jutland who wanted
to get married in a Fakta store.
As the groom explained: "It only
takes five minutes. And I'm extremely busy." We ensured that
all these stories were authentic."
"The timing for Fakta to take ownership of the discount market in The Public relations concept was
the Danish media was perfect. to tell the truth and nothing but
The competitors, among them the truth.
Netto and Aldi more or less hated the press, and that left a lot "If a mistake was make, the reof space for Fakta," Peter Horn sponsible admitted it. If a product
says.
had not lived up to the customer's satisfaction it was compen"The strategy has to let all em- sated or the money was returned.
ployees at Fakta use and com- This was done on the spot. All the
bine their personal brand with employees could decide what to
the brand of Fakta. We wanted do. Almost no one complained to
CASE FAKTA 8
the media."
On top Fakta at a time sponsored a bicycle team, Team Fakta,
and the television series ’Taxa’ ,
which was broadcast by the Danish Broadcasting Corporation for
‘almost next to nothing’.
"No one understood the link, but
when this excellent series drew
millions of viewers we managed
to make most Danes aware of
the Fakta brand – and the investment came back tenfold, remembers Claus Jensen.
The greatest hit was the
couple, that wanted to get
married in a Fakta store. As
the groom explained: "It only
takes five minutes. And I'm
extremely busy." We saw to
that all these stories were
authentic,"
says adviser Peter Horn, Peter Horn & Co.
Together we can
make it
The increased external visibility for the employees was to be
emulated spectacularly internally.
We agreed in the management
that Fakta had great potential in
its employees.
"We therefore established the
annual institution ‘Faktament’ (a
combination of Fakta with the
word ‘treat’ in Danish), where we
invited all of our employees to a
mega event with entertainment
and a briefing on what we had
achieved and what we wanted to
achieve. In the first year – to
show that we could do more than
everyday work in the top management – we performed as ‘Fakta
All Stars’ and gave a hell of a rock
concert. We also awarded the
titles of store of the year, store
manager of the year, deputy manager of the year and employee of
the year to show that we appreciated the efforts made by individual employees – and also followed it closely," Claus Jensen
says.
"This required action rather than
words: we also introduced new
values internally. The most significant was undoubtedly ‘the
open door policy’. The then 2,000
staff - later 4,000 – could get
in touch freely with the management and get a reply within 24
hours. In contrast to earlier, we
also opted to consistently inform
store managers of the results
of their store so that they were
able to follow whether the store
was performing well or badly," In the years to come, the number
says Claus Jensen.
of spontaneous job applications
for Fakta rose exponentially.
"We emphasized that Fakta still
meant discount and should keep Massively improved
cost low. But that should not service through
equal messy or dirty. This meant involvement
that the management had to
frequently be on the road. Even In the beginning some of the custhough we had good regional man- tomers were skeptical of the ‘new
agers, the impact was greater Fakta’. The stores had at once
when the top management itself become tidier and more appealcame to visit and displayed an in- ing. We merchandised our prodterest. This also entailed that we ucts neatly – instead of presentwould sometimes have to roll up ing the usual cardboard inferno
our sleeves and lend a hand when – fruit and greens were more apa store was close to being over- petizingly presented, and above
whelmed by busy customers."
all, the service at the checkout
tills was massively improved.
But perhaps the most important The till workers smiled and wore
element was that we needed to name badges, and sometimes
give employees the impression they could also tell jokes learned
that they were not only 10-15 from a small Fakta booklet. It
employees in one store, but that was almost as exciting to be a
they actually formed part of the worker at the till in Fakta as besecond largest discount retailer ing a guide for a travel agency.
with more than 2,000 colleagues
in more than 215 stores - later "To get on top of stores we remore than 4,000 in 350 stores. duced the number of different
CASE FAKTA 10
products to 1,350 – the equivalent of about 85 per cent of all
a family’s needs for groceries.
In this way we could ensure a
greater turnover of products and
hence a reduced wastage," says
Claus Jensen.
"At the same time, we set ourselves new targets. We needed
more stores so that we could
buy in bulk and get better prices meaning that we could also
compete in terms of having the
lowest prices in the industry in
comparison to quality. As to that
I think we succeeded - we were
able to double the turnover from
DKK 5 billion to DKK 10 billion.
The consumers certainly knew
where to find us."
Conclusion:
An experience a day
makes the customers
stay
"In retrospect, it has not been
about money as much as about
experiences that were the basis
of Fakta’s success. The employees felt they really were the lead
singers – and the customers had
the experience of being treated
like human beings - simple as
that. We had the qualities that
they were looking for – stores
just around the corner, quick
shopping at consistently low
prices - and sometimes a bit of
adventure," states Claus Jensen.
After he left Fakta, the company's head office was moved
from a separate location in Vejle, Jutland, to Coop Denmark's
headquarters at Albertslund and
many functions have been integrated in a common strategy for
all Coop's chains, including Irma,
Superbrugsen, Dagli' Brugsen
and Kvickly. Coop Denmark has
an annual turnover of app. DKK
50 billion and 35,000 employees
Today, Claus Jensen is CEO of
Claus Jensen & Partners.
--Read more:
www.cjpartners.dk
www.peterhorn.dk
Retail employees on service training
courses: Is the discount wave over?
The Fakta case was perhaps an early
indication of what is currently happening internationally: Retail chains
start to train their employees in
service behavior and experience creation, states Professor Jon Sundbo,
Ph.D., Roskilde University – one of
the founders of the Master Education in Experience Leadership at the
university in 2005.
The Danish discount retail chain Fakta started
in 1997 a turnaround that moved it from the
edge of bankruptcy and obliteration to one that
manifested itself in the upper end of the competition. The means of the turnaround was a new
view on customers, stores and employees. The
chain decided to give customers an extra experience besides the rational and cheap shopping
that was – and still is – most important to the
customers. The shops were cleared, the employees trained in being interested in the customers
and having a real interaction with them.
This was perhaps an early indication of what
is currently happening internationally: Retail
chains start to train their employees in service
behavior and experience creation. The aim is to
give the customers a better service, more information and an extraordinary experience (such as
discussing culinary issues with them as a basis
for selling high-quality and high-priced food products). Is this a sign that the discount concept
can not be developed further and retail chains
swing
round
towards
customer-experience
based concepts? It might be.
Read more: www.ruc.dk/mol
CASE FAKTA 11
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