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 feature the second half of our two part conversation with Joe Jensen, who heads up Intel’s retail division worldwide. The first half of our interview was on air last week. Today, we’ll talk about COVID, what’s next for retail revival, and Joe’s lifelong mission at Intel?

Ned Hayes [00:00:39] Welcome, Joe.

Joe Jensen [00:00:40] Thanks for inviting me. 

Ned Hayes [00:00:41] So, Joe, to start the conversation today in the second half of our interview, let’s talk about COVID. How have you seen retailers adapting to COVID? And then what do you think will happen in terms of digital transformation post-COVID? 

Joe Jensen [00:00:55] Well, I think there’s such a broad space. I think first principle we’d look at is there used to be a very traditional funnel for shoppers, and in discovery of items occurred primarily in the store. If you go back, you know, pre-social media days, you know, shoppers would find out what the fall fashions are by going to the retailer that curates for their demographic. So whether you’re you know, you’re shopping at Target or you’re shopping at Nordstrom or you’re shopping at Barneys, they’re going to have a curation of things that are in line with the fall fashions for your demographic. And you go to that store to discover what the fall fashions are. Well, that funnel is completely disrupted now shoppers discover what the fall bashing is by what their favorite Instagram celebrities are wearing. And so that, you know, one of the problems, I think, is a lot of retailers are still stuck in this notion that there’s a traditional funnel, and we think discovery is one of the key value props that stores deliver to shoppers. And in the key there is do you want to go to a store that all of the content and merchandising looks exactly like the competitors? So I go to, you know, in most malls, you can walk into two or three different department stores. And if you close your eyes on the way in, you wouldn’t really know the difference from one to the next because they all have the same micro mini stores within a store. They have the same merchandisng look and feel. And really, if you’re delivering a bland blah experience, what’s the discovery? What’s the joy? What’s the excitement in that for the shopper? And so where we see retail going, especially ya know, smaller retailers, curation is going to be really critical. And I think, you know, some bigger examples of that restoration hardware is an example of hyper curated content. West Elm. And there’s a number of these these stores now where they’re going out and finding a lot of stuff that fits a similar look and feel. And so if you’re that kind of shopper that likes that kind of look and feel you like to go to that store because they’ve done a bunch of the legwork for you? And so I think that, you know, first thing, there’s that element of discovery and, you know, could could restoration hardware deliver the same experience online? Well, they’ve got a great online capability as well. But it’s not the same as going to the store, and we know shoppers like to go to stores and shopping is a pastime and demand has created real time. So there’s this big opportunity. If you bring them to the store, you can actually help them experience products in a richer way and that will convert to sales better. So we did this hyper curation is really critical, the second kind of key premise we have is that retail is is splitting into two modalities. One is we’re calling hyper convenience. People want things to be as simple, easy, fast and seamless as possible. You know, I need a gallon of milk. I stop at the store. It’s really convenient. It’s really quick to checkout. It’s as easy as possible. And we think a lot of online shopping has taken share away from brick and mortar around this hyper convenience side. You know, take grocery, you go into grocery. They always have the staples in the back of the store on the nineteen hundreds era that the longer you keep somebody, the store, the more they’re going to buy. Right? Well, the reality is, you know, people they bought lots of stuff in the store might have had a long shopping list when they went in and they spent a long time because they already plan to buy a bunch of stuff. And we think in today’s world know instead of having, you know, four brands of milk in a cooler in the back, take your house brand and put it up front in a hyper humidity location and maybe instead of pricing at cheaper price, the same as the name brand. And there’s a huge opportunity now instead of making three points of milk to make 10. Right? And so, you know, this idea that, you know, how can you start to kind of ensure that your experience for shoppers is really convenient? The other side of the spectrum, we think, is is we call hyper experience. And that means that, you know, if somebody is going to go to the store, how do you make the experience amazing? And there’s many aspects of that. You know, really, if you’re creating demand while people are in the store, you should be creating demand for things you have to sell them right now because instant gratification is really important. And that’s an important part of experience, 

Karen Jensen [00:05:28] Joe to build on that point about hyper experience, from discovery to purchase. How can brick and mortar retailers accelerate that conversion funnel? 

Joe Jensen [00:05:37] You know, to me, I guess it’s the basics of retail. I mean, this is why you have associates. The best associates are going to observe the shopper. They’re going to notice the kind of things that  they’re looking at. They’re going to go over at the right time and offer some help. They’re going to show them some things that that others who like the things they were looking at other people, but like those like others, you know, kind of that associative aspect and all of those things you’re grateful for. My wife was at one of the premium department stores a few years ago, and she went in intending to buy two or three shirts first, and we had the most amazing sales associate. It was off the charts good, and this lady was so good, my wife ended up buying 11 tops and she felt great about it, and it wasn’t like she got pressured into buying stuff. This lady was so good at realizing what my wife liked and what would look good on her that she kept bringing more and more things that my wife loved and she would have never, my wife’s not a spender, she would have never done that. But the experience was amazing, and we’ve shopped at Chain, which prides itself on an amazing experience hundreds of times and never had an experience like that. How can, in my view, is, you know, technology can help that chain enable all their associates to deliver experience like that. And so, you know, the key here is, you know, how do you use anonymous analytics to understand the behavior patterns of shoppers and shoppers that had this pattern bought that thing? So when I see somebody having this pattern, let me suggest that thing. 

Karen Jensen [00:07:22] Right. 

Joe Jensen [00:07:23] In some similarly simplistic things, if you go into, you know, sticking with a department store side for a minute, you’re walking in a department store today and there’s posters at the front of the store. It’s really prime advertising promotional location. And you know, we have used this analogy before, you know, maybe it’s prom dress season, so they’ve got prom dresses advertised at the front of the store? Well, what percent of shoppers are really a target for a prom dress? You know, pretty narrow window of teen, and it’s a pretty narrow window of parent of teen. 

Ned Hayes [00:07:56] Right? 

Joe Jensen [00:07:57] And for everybody else walking by, that’s just a wasted space. It’s noise. And in the technology’s very mature today in terms of estimating age and gender. And if somebody is in the, you know, likely in the right range, put the prom dress out on the screen. But, you know, if it’s a male walking up. Not very many dads are buying prom dresses for daughter. Some, but not all. And you didn’t sell all the raincoats because it was a dry winter and the guy’s walking up. Throw a raincoat on the screen because you got a whole bunch of it right? 

Ned Hayes [00:08:30] It goes back to that that classic story that we’ve all heard about Target knowing that somebody was pregnant before they did because of the kinds of searches that they’ve done. So being able to micro-target or being being able to really accommodate exactly where the person is at in their life and being able to offer goods that are appropriate to that moment in their life. 

Joe Jensen [00:08:54] And I think the key there is doing this in a way that it did its behaviors and patterns based and not individualized. And I think too much of this, this type of marketing, and this is where the online marketers have done a terrible job, too much of it is trying to figure out exactly who the shopper is as an individual and a target to that individual. And I think 1), you know, people find it creepy and 2) it’s not been very effective. And my favorite example is years ago we were shopping for a Tiffany, a pair of Tiffany lamps for our bedroom. And on a Friday night I sat there watching TV, did a bunch of web searching, found a few options at the Lamps Plus store. There happens to be one a few miles from our house. Saturday morning we drove to Lamps Plus and we picked up a pair of lamps, and bought them and drove home and put them in the bedroom. But the next two or three months, every banner that I saw on my on my internet were Tiffany Lamps. 

Ned Hayes [00:09:54] Yes, even though you already had them, right? 

Joe Jensen [00:09:56] Already bought, so you know you could think that’s okay. Wait a minute, this guy’s search for Tiffany lamps one evening and has never searched again, maybe we should stop showing him Tiffany lamps. 

Karen Jensen [00:10:06] Well, also, you know, building off of that right there, what if someone gets an ad for the same thing and it’s a different price? You know, a better deal or you know you, you ordered it and it’s not yet here. And then you can, you know, you have an ad for a curbside pickup at a local store. I get ads, just like you’re saying for Tiffany’s all the time, and I’m like, Wait, this is a different company. This is the same company that I just bought from, what are they offering? 

Joe Jensen [00:10:32] Now that I think gets into, again, that really simplistic level of price? And I guess for me, I think price has been overused in retail and discounting, and I think there’s a whole segment of the population being first is more important than price. 

Karen Jensen [00:10:46] Right. 

Joe Jensen [00:10:48] Me being curation and better curated content is more important than price. And so I think that you what we’re going to see is, again, if price is your primary lever in your market, years ago, we met with leadership senior leadership of J.C. Penney. This is, you know, many, many leadership teams ago,. 

Ned Hayes [00:11:08] Right. 

Joe Jensen [00:11:08] And they told us that the problem they had is that they had used price as the driver for their business for so long that they only sold things below cost. 

Ned Hayes [00:11:20] Which is not a scalable business. 

Joe Jensen [00:11:22] Well, turns out that’s a way to go out of business, right? And in that leadership team ended up disappearing and being replaced a few times. But you know, the challenge is, you know, that’s a viable strategy if you’re the lowest cost producer. And it’s hard to compete as the lowest cost producer with being brick and mortar. 

Ned Hayes [00:11:41] Absolutely. So, Joe, as we come to the end of our time and discussion, I wanted to turn the conversation briefly into the wisdom that you can share with our audience around your learnings, both in retail and in your career. Briefly, where do you think that retail will be in 20 years? What made it look like? Hey, paint us a little scenario. 

Joe Jensen [00:12:02]  I think that retail in 20 years, the hyper experienced side will be incredibly mature, and the staples that you need in your life will arrive and be there when you need them, and you won’t end up with a huge pile. So here’s a simple example, I buy mouthwash two bottles at a time. Typically, I’m running low on mouthwash. I need to get mouthwash in the next few days or automatic order and replenishment. I apparently don’t consume mouthwash at the same rate all the time. When I tried that, I ended up with six bottles of the month wash, right? I don’t want six bottles of wash. I think the analytics will get better and better, and that will become more and more predictable. And I think these staples this this hyper community path will be so convenient that things are just automatic. 

Karen Jensen [00:12:43] Interesting. 

Joe Jensen [00:12:44] And I think that retail, as people think of it and shopping and for a large portion of the population, a pastime is shopping. Going to the mall, going to a store is something you do because you enjoy it. I think shopping is going to become more like the this is what I do for enjoyment, and that’s where I think the hyper experience side is going to come in. I think retailers will become more highly curated, so the experiences will be specific store by store. You’ll go to the store because of how they’ve curated their content. You know, take Pottery Barn, you know, Pottery Barn has a look and feel and people that, like things from Pottery Barn, tend to like most of the things, the Pottery Barn. And I think you’re going to see more and more of that kind of approach to retail. And I think you’re going to see a lot, a lot more seamless approach by the brands of becoming that source of the shopper funnel for the store. 

Ned Hayes [00:13:32] Right. That’s going to take some trial and error, right? 

Joe Jensen [00:13:35] I think the technology is there. I think the problem right now is that that in large part, the leadership of these entities is not mentally there yet. And I think that there is an affordability problem in not in terms of the technology is super expensive. It’s just the historical panels have not comprehended that kind of tech overlay. 

Karen Jensen [00:13:53] Interesting. So as you just pointed out, not all technology will succeed. So from your experience, I want to know why are mistakes okay to make? And if you could talk about the importance of that trial and error? 

Joe Jensen [00:14:07] Yeah, I think, you know, obviously piloting is really critical. I think that the first stage we see mistakes made is the customer isn’t really clear on what business problems they’re trying to solve. I think if you go back 10 years ago, there was a ton of the key people coming in my store. I need to be more, more tech and they were throwing tech in the store just to kind of look like they were more tech. You know, I think, you know, the endless aisle is something that is going to go away. It turns out I can’t. I wish I would find the source. But there was a study we read that said they track shoppers from looking for an item in the store. They couldn’t find it on the rack. You’ll find an associate. The associate would look through the same rack and not find it. So she would then go in the back and look through back stock. Can’t find it come out going to look for, you know, stores in the area that might have stock can’t do that. OK, customer, let’s do an online order. Shop at your house. One percent of shoppers would go through that whole journey experience in and out of stock. So the endless aisle was a way to capture some sales. But it was the sales for people that really, really, really wanted that thing, and they’re willing to spend 20 minutes going through an emotional experience. We’re terribly clunky and you turned off the internet experience and the store was worse than it would be if you were at home. And so I think that, you know, the tech for tech’s sake, you know, throw it, throw iPads in the store. So our associates looked like they’re really tech savvy. Those kind of things didn’t really work. And that’s because they didn’t have a clear business problem identified. 

Ned Hayes [00:15:47] Right, right. It goes back to business basics. Understand your customer, understand what they need to serve that need and your customers will love you, right? 

Joe Jensen [00:15:57] And you know, the crazy thing is, is being an engineer, I’m all about root cause, you know, what’s the root cause of a problem? And and I keep coming back to as we do our work. One of the biggest root cause problem areas is inventory. Inaccuracy of inventory at the store. We were pushing and working on RFID quite a bit for a few years and RFID is a really elegant solution to solve this, the but, is it touches all aspects of the people systems in the in the business in terms of inventory returns, warehouse distribution, there was so many parts of that that have to change when you declare if I need it. That was difficult. But the point I’m trying to get to in in working with about 40 different large chains, the best store we encountered when we did a deep physical inventory, 65% of the products were correctly counted. Huh? 65 percent, and now you look and say hey consumers expect hyper convenience if they go to the store to buy, if they want it there. I got the car, drove to the store and they don’t have it. What the heck? 65% inventory accuracy is not acceptable, and most of the executives in these chains believe their inventory accuracy is in the 90s. 

Ned Hayes [00:17:10] And it’s not. 

Joe Jensen [00:17:13] I think you’re also going to see something in Japan, the government there. They have a problem where there’s a shortage of labor. And so the government decided a few years ago that they were going to try to take as much labor out of convenience stores as possible. In all, consumer goods have to be packaged with an RFID label by twenty twenty five, I think twenty three, twenty twenty five for Japan, and they’ve been throwing a bunch of money every year, getting RFID costs down, and they claim that by 2023 it’ll be sub one penny and by twenty twenty five it’ll be sub one yen. And that’s going to make RFID tags so cost effective and efficient that when you go to a convenience store, you will pick all the items you want, put them in a basket, set the basket on the checkout lane, it’ll give you a total, you’ll pay and you’ll walk out. And I think that the hyper convenience is going to go that way. Will it be done with cameras or RFID tags a combination? Not totally sure. But that’s the direction that Staples will go, I believe. 

Ned Hayes [00:18:14] Right? So that’s the future of retail that you say that increasingly things are going to be automated, things are going to be customized, and I’m going to be able to know that when I go to the store that the item I saw online is actually there on the shelf that I saw. 

Joe Jensen [00:18:30] Yeah, and an example from the big home improvement stores. I was in line in return recently when the store manager took a phone call from the shopper, who put in place a large online order for a large number of things, like, 50 items. And he was calling to say, Hey, could you please call me when you have all these things ready to go? I’m kind of in a hurry. And she was very courteous on rhw phone and said absolutely took his phone number down, she said I’ll personally look after it. She hung up and she leaned over the assisstant manager said, I don’t know how we’re going to have time to pick 50 items off the floor. And she said this guy is a genius. Instead of him coming in and spending an hour picking all the items off the floor, he’s going to have us spend the hour to pick all the items off the floor. 

Ned Hayes [00:19:13] Right, right, so shift the burden onto the retailer. 

Joe Jensen [00:19:17] But, you know, maybe this guy shops all the time at that, that home improvement center, but you’re finding stuff takes forever. And even the staff can’t necessarily find stuff. I shop in those stores a lot and you ask for help. Well, I think it’s an aisle six and let me let me go help you look and they want it around for a few minutes, too. I think that that inconvenience of searching and hunting is going to have to be solved as well. 

Ned Hayes [00:19:40] Absolutely. In terms of physical presence and actual location, do you think physical presence has a role to play here? 

Joe Jensen [00:19:48] I do, for sure. I think it gets down to, you know, people like instant gratification. And, you know, we talked to I guess it won’t name names, but major electronics retailer and they believe that when the sales tax parity happened, which is now happened where it online, it has to pay sales tax as well, that they would be able to greatly increase their sales of flat panel TVs. Right. And they said it turns out their research showed that people are paying $50 more for a flat panel TV if they can pick it up right now. 

Ned Hayes [00:20:22] Fascinating. 

Joe Jensen [00:20:23] And so, you know, this this idea of instant gratification, we think even on a big ticket item, you know, people you know, you decide, you know, you spend a weeks deciding which big TV to buy. You measure your living room. You will look at him in the store. And if the online price is close or the store prices close to online that I want it right now, people will pay more for that. 

Ned Hayes [00:20:44] Right? Really, really. Appreciate your insight here, Joe. Karen, any last questions? 

Karen Jensen [00:20:50] You know, maybe, maybe just one, actually. What is your signature achievement? What do you what would you like to be known for? 

Joe Jensen [00:20:57] You know, my whole career, I’ve had a deep belief that the more technology makes everything better. And I really I think I’m on a mission to help brick and mortar retail maintain the relevance they have today with consumers. Great. 

Ned Hayes [00:21:13] Thanks for leaving us with that, Joe. It’s been such a pleasure to learn more about Intel Retail and your mission. We look forward to talking again soon. 

Karen Jensen [00:21:21] Thank you so much. 

Joe Jensen [00:21:22] Thank you very much. Very enjoyable chat. 

Ned Hayes [00:21:24] Thank you, Karen. Have a good one! 

Karen Jensen [00:21:26] Thank you. 

Ned Hayes [00:21:27] Thanks for listening today to the SparkPlug podcast hosted by me, Ned Hayes and brought to you by SnowShoe. Snow.sh for smarter mobile location. SparkPlug is a wholly owned property of SnowShoe all content copyright 2021 SparkPlug Media.