Ned Hayes [00:00:09] Welcome to SparkPlug, where we talk to smart people working at the intersection of business and technology. Brought to you by SnowShoe making mobile location smarter. Today, Karen Jensen and I began a two-part interview with Joe Jensen, who heads up Intel’s retail division worldwide. The second half of our interview will be on air next week. Joe Jensen Welcome SparkPlug.

Joe Jensen [00:00:33] Thanks for inviting me. 

Ned Hayes [00:00:33] I’d love to hear a little bit more about your history at Intel. I know you’ve been at Intel for a while. Tell us about your history there. 

Joe Jensen [00:00:39] Oh gosh. I’m a long time or for sure, I’ve been at Intel 36 years and started as an engineer in product development and rotated through most of the enduring disciplines and then moved into business around 1990. And I’ve been that spent the entire career in the non PC side and in the embedded or now IoT space. 

Karen Jensen [00:01:01] Great. Well, I’m curious, could you tell us about the mission and goals of the retail business unit at Intel? 

Joe Jensen [00:01:08] Yeah, the team is really focused on how do we help businesses who are be the seed type companies, whether it’s in retail hospitality, the retail side of banking and even in education, how do we help those in companies better use technology to to improve the customer satisfaction and ultimately improve their business results? 

Karen Jensen [00:01:30] So how big is Intel Retail today? 

Joe Jensen [00:01:33] Well, I can’t say specific numbers. We do report to the street the size and variety business. This collection of B2C markets that my team looks after is the largest part of the IoT business. Well over three billion dollars a year for the overall IoT business. 

Karen Jensen [00:01:51] So you must have seen a lot of transformation during your time at Intel and especially in the retail space. So how has retail transformed? 

Joe Jensen [00:01:59] Well, I think retail has been under tremendous, transformative pressure, probably more than 10 years, but I think most retailers have been really feeling it for more than a little over five years. It’s interesting when we first started trying to to help retailers go beyond just point of sale as the technology footprint of the store. I remember going out and talking to them about this online retailer Amazon. Amazon’s growth was like thirty five percent a year in brick and mortar retail at the time was growing four or five percent a year and we’d bring that up in these meetings with executives in retail and without even batting an eye, they would say, Yeah, you know, that’s really not a meaningful part of our business. They’re not really very big. We’re not at all worried about it. And really, retail executives didn’t seem to start worrying about online competition until it became about 10 percent of the business. And you remember at the time you said, Hey, you know, maybe it’s because our former CEO, Andy Grove, wrote a book Only The Paranoid Survive. But you know, we’re really paranoid about things like this, and we think that this online thing might really be something. And I think what’s happened is the narrative in the media has really been how Amazon and online are killing brick and mortar, and we think that they really have it backward. We think that consumer expectations are rapidly evolving and consumers have very little tolerance now for what we call friction. Anything that makes their experience slower, less desirable, less satisfactory and online has just been way better at adapting and delivering to these new expectations than brick and mortar. 

Karen Jensen [00:03:34] Interesting. What are you most optimistic about in technology and retail? 

Joe Jensen [00:03:38] The thing I’m most optimistic about that how effective these new technologies are at delivering a better customer experience and at the same time, increasing business results, improving business results. We’ve done so many pilots and studies within retailers trialing these technologies, and the results are always really off the charts in terms of the kind of our why they deliver. The challenge is brick and mortar retailers today, I think, still feel trapped by the model penal that Wall Street has been holding them to. There’s a model of how much they should spend in every category, including tech. And for a long time, the I.T. side of retail has been on a path of how do we minimize our spend on it? I remember I was at a CEO conference 10 years ago and we were in a small breakout session with 20 CIOs, and they were talking about what’s the benchmark for best in class for its spending. And they concluded in this breakout session, one point sixty six percent of revenue was at what was the ideal. And towards the end, they asked me for what I thought. I remember standing up and saying, No, it strikes me that you guys are cutting yourselves into irrelevance. 

Ned Hayes [00:04:44] Interesting. 

Joe Jensen [00:04:45] And they didn’t like that answer very much. But I think the reality, if you look at like a Walmart, Walmart is spending multiples of that per year. And if you read lately the news on where Walmart and how they’re positioned, they’re so well positioned from a technology perspective to deliver on these new consumer expectations. One of the biggest problems with customers satisfaction if the shopper is going to go to the store to get something, it’s probably because they wanted it right now. 

Karen Jensen [00:05:13] Right. 

Joe Jensen [00:05:13] If you’re out of stock, pretty hard to have that be a good experience for the customer, even down to the real basics of just making sure you have the right inventory. Players like Wal-Mart had the license, I think with Wall Street to spend it a much greater rate than Wal-Mart bought Jet, and that gave them kind of a reason to spend more on it. But, you know, Wal-Mart over the last five years is fundamentally retool their entire infrastructure, and they’re so well equipped now moving forward. And there are there are other players that have been doing what Wal-Mart has, and they’re incredibly well-positioned for the future. And then we see a lot of players who are still trapped in the cycle of I got to spend one and a half percent of my revenue on it, and I can’t possibly go compete with his online stuff. You know, how do I do it all? I have no money and I’m like, You know, you’re going to end up cutting yourself into irrelevance and your brand will be acquired by somebody else who will run it like an online retailer. 

Ned Hayes [00:06:02] Right? So if that spend about is wrong, what’s the right spend thing in the technology and new kinds of innovation? 

Joe Jensen [00:06:09] You know, the right number, I think is is tough. I think the better question is, when do you think you need to be in a position to be competitive with these new technologies? When will your set of competitors be delivering that kind of experience? And one things we know is that shoppers still like to shop in stores. Physical retail is not going to go away, and we don’t have any any notion that the physical retail goes away. We think it’s going to completely transform. And if we look at retail, it’s kind of broadly bifurcated into two camps. There’s the traditional brick and mortar camp where they’re very cost centered. How do I cut costs ya know, a dollar of cost savings is a dollar of profit. A dollar of revenue is only a bit more margin and the cost there, so they’re super focused on cost, cost, cost. And I think for a long time, brick and mortar really relied on this kind of easy button of sale. Everything’s on sale sale, sale, sale, promote discount and and that attracted a large audience who were very motivated by price. But not all consumers are motivated by price. So if you look at this online. My favorite, we were meeting with a consultant in one of my staff. She leaned over and said, Where did you get that dress shirt? And he kind of chuckled and they said, Well, you know, actually, I bought it at Costco. And she said, You know, our company makes those shirts and we make them for Costco. We make them for Sam’s Club and we make them for Amazon. They’re all private label. And the price at Costco and Sam’s Club was, you know, a few pennies difference. It was a little over eighteen dollars at Costco and just under under 18 with Sam’s Club. And she said Amazon sells more than Costco in price and Sam’s combined, and they sell for $39.99. 

Ned Hayes [00:07:59] Fascinating. 

Joe Jensen [00:08:00] And the reason that is is because the Amazon has the ability with their data and their analytics to find the customers who will pay $39 for that shirt. 

Ned Hayes [00:08:10] Right. 

Joe Jensen [00:08:11] And if you do know, of course, you know, the big box stores, you know, Costco and Sam’s there, they’re oriented towards, you know, selling, you know, a great value. But I think the point is really relevant. And when we work with the new generation, really the digital native retailers, they’ve typically started with an online only brand. You know, Chubbies is an example of one that they started online. They got to just under a billion dollars in revenue. And what we’re finding is retailers, these these online brands can’t expand beyond much beyond that level unless they start to get brick and mortar for broader exposure. Right. Talk to those companies, you know, they come to us and they have a long list of the kind of insights they want to get about the shopper’s real time in the store, and they already know what they want in terms of insights and data, and they ask us for help getting it. And the contrast that with the conversations we’ve been having for 10 years with the traditional retailers, we’re still in the phase of trying to explain to them why data would be important. 

Ned Hayes [00:09:11] Right. 

Joe Jensen [00:09:12] And so I think this mindset of online is is I think that what you’re going to see is the brands, the brick and mortar retailers who fail to embrace data and analytics will be the leadership will be replaced by these digital natives 

Ned Hayes [00:09:27] Even for small and medium retailers, do you think? 

Joe Jensen [00:09:30] Yeah, I think so. And you can. If you’re a little mom and pop sole proprietorship where you got six or eight stores, it’s an interesting data point. You have all these interesting historical data points. I had a friend who was running a supply chain business supplying mostly mom and pop health food stores, and they had, I don’t remember, a huge, huge number two thousand sole proprietorships and a number of small chains. And at the time, Sprouts was their biggest client, sprouted like 40 stores. So it’s a while ago they did it. They started really trying to use data analytics to help their small customers as the supply chain. And what they found is that the small, the stores that were the top performing where the owner had one store were doing 5x, the sales per square foot of the best chains and even small change, you know, so you figured out you’re killing it. As the owner of one store, you had three or four more stores and now your sales efficiency drops like a rock. And that’s because the owner of that store is in the store all day long. Every day they are the analytics engine for the store and the is this spread themselves thin? Now, now they don’t have that, that personal insight that they were getting in their store. 

Ned Hayes [00:10:40] Right. But it’s not only the personal insights and it’s the personal touch. I mean, Karen has led our team in a number of interviews with small retailers. We’ve seen a lot of success with the success of this kind of customized white glove experience. You come in the store, you know, the guy’s name. He’s already picked out a shirt that says, I know you like blue shirts Ned I found a new one for you. It’s really kind of a white glove experience for small retailers. So how important is it for those small retailers to have data and analytics if they’re able to provide that kind of customized experience? 

Joe Jensen [00:11:15] Well, I think if you’re trying to reach, you’re talking to a sole proprietorships or they’ve got a single store. I don’t think you’re going to have the scale and they probably don’t have the need. You know, the owner is probably the primary person in the store giving that kind of service a great example. In Phoenix, there’s a menswear shop that I went to the first time many years ago and bought a blazer, canali blazer, and I went back like three years later, and I’m Joe. By coincidence, the guy that served me then with his name was Joe. I walked into the store. Three years later, Joe looked up and said, Hey Joe, how are you doing the blazer? Work out for you? Oh, now that’s an off the charts example of service. You know, I know that Nordstrom, Barneys, you know, all of the premium larger chains aspire to that kind of service, and it’s unlikely that every staff member is going to be able to deliver that kind of service. So we think know technology to augment that service and to enable all the staff to to get delivers. An experience closer to that is where things are at a small certain store. You know, you saw somebody else, one store like this, it’s called the clothier in Phenix. They own that one store. They’ve got a set of staff members who are all like Joe, and they’ve been there forever. They know their clients really well. And the amazing thing is, Joe, even remember what size I bought and which jackets would fit me well. So when I went over to the rack and pointed a couple together, it will really fit right. Try this one 

Ned Hayes [00:12:51] Right. And I have a retailer here in the Northwest who has the same experience with me. He knows exactly how many shirts I’ve bought. One challenge that we’ve seen with small retailers, though, is that they are increasingly seeing the pressure of adopting technology, sometimes for technology’s sake. And of course, it needs to be appropriate for their business. But frankly, Intel is in the business of technology. What have you seen out there that’s been successful? 

Joe Jensen [00:13:17] Well, I think that, you know, the best success really comes when when people try to you, you again focusing on smaller enterprises, it’s unlikely that the owner of the clothing is a technology person. Right. So, you know, their swim lane is is men’s wear retail and the best way that they can be served by technology is to step back and say, What aspects of my business do I want to improve? What aspects of customer service do I want to improve? And then and then approach technology partners with the business problem that they understand that they’ve defined and look for technology providers who can help you solve that specific business problem. And ideally, you know, our focus is we pioneer those solutions with our partners. And then we really try to steer customers to proven solutions so that, you know, the owner of that store isn’t. Helping that partner build it the first time, but rather, you know, we’re steering people to solutions who’ve already scaled elsewhere, so you don’t have that. I’m the first one to try it risk. 

Ned Hayes [00:14:21] Yeah. So I’m curious, what is the coolest new piece of technology that you’ve seen in the pandemic so far? What’s the most impactful in the future, in your opinion? 

Joe Jensen [00:14:32] I think that it’s maybe two separate questions there, but one. We have a lot of our partners and retailers in hospitality businesses using kiosks, and pretty much all the kiosks are built with a camera in the vessel. And what we saw really quickly as the pandemic hit is a number of our our our our direct customers who are building these solutions were able to reprogram the analytics for that camera and to deploy kiosks that would check for mask wearing and also to count the number of customers in a store and in the customers and the staff in the store to ensure safety. And we’re talking about, you know, in a matter of weeks, they were able to go repurpose a kiosk that was really oriented towards customer service and turn that into a tool that could be at the front of the store to help customers be more safe to give customers more comfort of their safety. And also, of course, to ensure the staff is safer. 

Ned Hayes [00:15:35] I’m definitely seeing those pop up and more so big box stores, a lot of places, you know, I will get pet food and I walk in and there’s a sanitizer, a kiosk with sanitizer. There’s a button for me to press to get my pickup order. Or, you know, there’s there’s a whole it’s almost like everything you need for asking a customer service question is right there. 

Joe Jensen [00:15:56] With our customer service analogy? If you if you think about that menswear analogy and say and you look at the north in the northwest, if that associate that you worked with, had they had a dry winter and gets all the raincoats. He’s going to try to pitch you a raincoat subtly. But but if he knows he’s out of stock in the size you wear, he’s not going to mention the raincoat. 

Karen Jensen [00:16:22] Right.

Joe Jensen [00:16:22] And if you contrast that with how promotion is typically done today in retail, it’s the brand paying for a position. You know, they’re paying for the mannequin mannequins, they’re paying for an anchor and the item is on that for a contractual amount of time. And if you talk to staff in a department store, they’ll tell you that whatever was on the mannequin sells out within a couple of days. And I was actually meeting with the founder and CEO of a huge men’s clothing brand and in his kind of key team key staff. And I was talking about this and saying, you know, the problem is, you know, companies like yours will will pay for something. They be promoted for a week and it goes out of stock within a couple days. And then somebody comes in like, Hey, I’d like to buy that like, Oh, I’m sorry, that’s the last one, huh? And they’re creating demand, and there’s a tremendous amount of real time demand created in the store. Sixty percent of of the purchases by shoppers in the U.S. and the West, I mean, in Western Europe are for things people didn’t know they were going to buy when they went to the store, with demand created and the experience created real time. You know, you go shopping as an activity, you see something that you like and then you want to buy it, and instant gratification is a big part of that. And I think that retail is going to be headed. Your inventory in the store will be linked in to your promotion digital promotion system along with some anonymous analytics. And you’re going to dynamically promote to shoppers what is likely to be interesting to them and that you have in stock right now. 

Ned Hayes [00:17:53] Got it. That concludes the first part of our conversation with Joe Jensen of Intel Retail. Next time we talk will be delving into the impact of COVID on retail and what comes next. Thank you, Karen. Have a good one. 

Karen Jensen [00:18:06] Thank you. 

Ned Hayes [00:18:07] Thanks for listening today to the SparkPlug podcast hosted by me, Ned Hayes and brought to you by SnowShoe Snow.sh for smarter mobile locations. Spark Plug is a wholly owned property of SnowShoe all content and copyright 2021 Spark Plug Media.