Ned Hayes [00:00:01] Welcome to Spark Plug, where we talk to smart people working at the intersection of business and technology brought to you by Snowshoe, your smarter loyalty leader Spark Plug is happy to welcome Steve Dresser to the podcast. Steve is the CEO at Grocery Insight in Bradford, England. He spent the majority of his career in the grocery and supermarket industry working first as a shop for team leader at Sainsbury’s and now with Grocery Insight since 2007, quite a tenure there. So he really helps clients solve retail problems through insights gained from store visits, thought leadership and analyzing more than 250,000 grocery retail images. So Steve is a rethink, retail top 100 retail influencer, and we can’t wait to hear more from him. So welcome, Steve.

Steve Dresser [00:00:53] Pleasure to be here. Thank you very much for having me. 

Ashley Coates [00:00:55] I’m so happy to be talking with you today, Steve. Well, let’s start off with we’d love to hear more about your path leading up to becoming the CEO at Grocery Insight. 

Steve Dresser [00:01:05] Yeah, of course. So yeah, I started out in retail, so I did my official employment. I used to deliver on a paper route and I always really enjoyed the retail side of it. And in the shop I was only Pelsall 1314, but it always really interested me, you know, they were selling like candy and things like that. It wasn’t a huge store by any means, but it was always interested in the whole customer aspect and who came in for what. And you go to discover your regulars and how the shop presented itself. It’s quite an old shop and there’s all manuals, no electronic checkouts. Remember thinking that people really benefit of electronic check ups and what you could do with that and I guess as well, when I used to travel, you know, not extensively by any stretch as a as a kid on vacation, but I was very interested in different supermarkets wherever we went. And it was really interesting that, you know, different stores existed seven slightly different things for the local area. So yeah, so when I was working at center, it was so by accident. When I was young I needed a job as I was finishing standard school in the UK and going on to study for A-levels before university. Although at university I got part time job at Central and it was just literally around the corner from my house, so it was easy to access, but I really enjoyed it. I just didn’t always get stuck in start with actually I worked on the checkout so it wasn’t my ideal job. I quite like being around people and what to read about being fixed to account book. Yeah, so it was my open and I really did enjoy that. Just the whole unpredictability of day to day things and actually, you know, making sure things were right for the customers and pressure from visits and numbers and things like that. And obviously, you know, when I got promoted, it was like a real sort of moment to celebrate, but I worked really hard to getting to that level. That wasn’t an existing in UK stores. Any model of strawberries has been stripped away, which is I think is a real shame for the industry. But I learned a lot. It’s not as dangerous as being in the army. But I say if you worked in retail generally it gives you a great number of skills. I think you can equate to something like the I mean, just the general organization, you know, there is training, but it’s obviously difficult to replicate being on the frontline almost in a in a store. And I think you learn so much by doing which was perfect for me really when I left center is I think that just about reached the end of the line of being promoted quite young. And I think the management position as it was, there was a lot more paperwork and things didn’t really suit me. There were a lot of legal elements, things that weren’t really my bag. I preferred the trading element of an above preferred really, you know, getting interviews with customers and things like that. So then our journey ended and I started working for myself, just doing price checks initially and then on, on, on a mystery visit basis, audited, you know, for various suppliers through a, through a third party agency. And I think his camera phones really took hold. I was blessed in a way that I was at the time where technology. So I did a lot of the legwork because obviously camera phones became really, really strong. My first real phone was like a BlackBerry, which the camera phone quality was horrific. I think before that, some of the Nokias were it was really grainy. Obviously, iPhone had taken hold in. The qualities improved, improved on on the cameras go on camera phones. It’s made my job so much easier. And obviously social media as well. I’m big on Twitter and that’s my like primary medium really. So I was lucky, I think joined in 2009. I was lucky that that really took hold and gave me a platform that ten years before that I just wouldn’t have had that way into the industry. As unconventional as it is, it’s a bit of a new way to work. I think it just brings many benefits and it brings a number of drawbacks as well. I think it’s a balance. It’s what I make the best of what you’ve got. 

Ned Hayes [00:04:25] Well, I know that you just mentioned visiting stores, and I know you place a strong emphasis on visiting stores on a regular basis. So can you tell us why on site visits are so important? 

Steve Dresser [00:04:35] Yes. So from our perspective, we’ve got a team of four in the company and we all visit stalls regularly weekly. I trust my people well, weekly, because I think it’s just so important to get right to the shelves of what’s going on in stock. And we don’t just do new store visits, you know, where we go to a new site where, you know, maybe retails something that’s a trial or a concept. We do visit often. We’ll wait for things to die down, maybe, you know, a month. Just so we can see a true picture for the customer. And I think it’s so important just to go just on that every day there’s nothing that’s sort of got bells and whistles on it just to experience how that retailer presented itself. And we know that some examples that we may find it’s sort of poor standards. Practice could be dismissed as well. That’s just one star. No one’s to really know. That could be a hundred from 500. So the exact same problem. But I would always counter and say if one store is having an issue with one element that impacts the customer, that is actually one store too many. And that’s where you start drive the standards forward based on trying to eliminate as many problems as you can. And I think it’s just about truth and realism that that’s what we’re about here. Absolutely telling the truth. Be, you know, common sense, realistic about what we see this year. We come across as quite harsh and perhaps. But I think in retail specifically we do as we see in a number of industries, we have a post-truth world of know particular think about Boris Johnson. The UK knows it now Donald Trump in the states there was a lot they politics was almost like a post-truth where people knew what happened. But there was an attempt to sort of capture the narrative and change history. And I think I think in retail we’ve had that for a number of years where we all know where, you know, a visit has taken place. You know, we know where this is going to take place on how it’s coming. Everyone knows the shop. The shops are absolutely immaculate, pocket perfect, the shops full and it’s not a realistic picture for the customers. So the director of it when it comes in has a look around. Ever since we have a few hundred, off he goes and then that store is probably for the next quarter is absolutely screwed down on the ladder because they spend all the money on one debt and then the customer suffers. So I think we just tried to make it more realistic for our clients and just for the general public, just that this is what the customers see in there may be horrific. And, you know, sometimes I get flack on social media, you know, as if I don’t to the shows myself all I’m wrong for pointing out and I just say you know that the customer has seen that and they’ve drawn whatever feeling or whatever thought they have a your retailer if you will, from that example of of of about poor display, lack of cleanliness. And the retailer has to think about how they deal with that because they always say customers don’t give 28 days notice of their intention to go shopping a competitor. They’ll just go, you know, and then the retailer materializes five months later when they’re not going into loyalty jobs anymore, you know, they’ll send them vouchers to send them back £10 of 60, you know, 20% seven. And you know, the customer returns to that store and it’s and it’s as bad as it was before. So essentially the retailers pay the customer to show the customer just how bad they really are. So the lesson lost completely and I think there’s a lot that where we just get a little bit obsessed with the reason in retail rather than focusing on that. This is despite the growth of e-commerce, it’s still absolutely all about the shops. And I think the stores have to be good. If you want a customer to shop online with you, you know your stores have to be good, particularly if you’re picking from those stores or you want the customer to click and collect, use curbside and walk into your stores to pick up the extra bits. The stores have to be absolutely worn out as close as not as close to it as they can. Customers do not really, I think, put an intrinsic value on what a good store looks like. All they really think about that. But I think there’s not one customer in the land who would say, actually, you know, I quite like shopping in a store that looks as though it hasn’t been filled in a week and this queues at the checkout and no one cares because Crispin doesn’t say that doesn’t mean it doesn’t matter. So I think absolutely staff standards are so important. I think I have to fight daily, I think with clients and indeed people on social media wherever else to say they actually don’t accept the unacceptable. Where’s that line of acceptability? Because you can explain away anything. You could say, let’s not have any check ups tomorrow because we have staff shortages. People try to explain everything away. And I think to be so careful socially, you know, really hold the line, we store standards. Otherwise it’s just a race to the bottom. And then you just try to say, well, we don’t want the least worst stores at least. And then know, we just we are sort of ebbing towards a real homogenized market where standards are falling dramatically, particularly Newcastle. That’s true and I think that’s a real challenge for firms in the UK and retail generally. I think we’ve we’ve got to be running better shops opening up as a first and foremost. 

Ned Hayes [00:09:01] Well, Steve, that’s really fascinating. Could you tell us more about the supermarkets that you work with or the stories on High Street that you actually address as part of your client base? 

Steve Dresser [00:09:11] Yes. So without specific names, yeah. We do it with a number of leading retailers across the world, in the UK, and also on a wider worldwide basis at different times of the year. And specifically our brief particularly in the UK, but I guess know overseas as well, will and can see us go to a number of stores and we would it was an overseas client, we’d go to a number of shops on a quite short term and this is quite intensive. So we maybe pick maybe 20, 25 shops and we’d visit every single one store and some competitors or just for balance and it’s always I’ll buy I’ll when I do stalls it’s always difficult forever on vacation I’ll always go to Florida wherever I always go to the shops are the list of stores on Google Maps I’d like to look at alongside Disney all obviously sound like it’s probably ecological sprouts farmers market where I’ll never I’ll always over how many stores I can actually do in my mind because I always take at least 40. 5 minutes in a store. I’ll always do every aisle because I think if I’m forming a perception of a retailer, potentially writing a or just sharing thoughts is important to every aisle judged to be absolutely fair and balanced and stuff. And anyone could walk into a shop and almost run around it for 10 minutes and take pictures about things and walk back out and then share that negative impression with the people, I think is important from my perspective to to do a full scale walk really and everything. I see that sort of interest in good and bad. I capture the image and very photographic memory perspective, so I don’t need to write notes. I’ll just go through my pictures, post of it, and I will know what I’m trying to say, I think by each picture, but most of the time it is more reliable than written notes. Often I can’t read my writing, whereas with page I can generally work out what I’m trying to share, and often that is best practice. Sometimes I will see every store I’ve been to. You’ll see one or two ideas where signage or maybe check out their merchandise. And sometimes I’m quite well versed in some of the clients could benefit from that. And it’s not about with the client sharing to say you must do a carbon copy of this used to be our idea generation trying to direct people into maybe what we think is good and maybe getting their thinking within their own lens of their own company towards that destination. I think as well, our work is obviously external, so we say external to the company. Typically we’ll report into C-suite CEO executives because I think it’s important from a truth perspective to get the news direct. That’s all. We all know that when you go in maybe at a lower level, the message can get sanitized. Further up the chain you go, No one says, I bring bad news to the boss. So we typically go into the CEO C-suite level and we share observations there. So I always say, you know, to every ending we can counsel the nonmembers. So if a buyer wants to do one thing, then that’s entirely up to them. You know, they’re not mind members to tell them which way to go. Specifically, I can only share what I see why think and that’s up to them how they formula that part of me you know typically think about your project is last year with the retailer with their entire star estate and every now and then some of the competitors as well. And we generated, you know, a huge number of action points. Once you see so many stars in a short time, you very quickly start to see where the issues are. You see it in every single store you go in, in various games from, then get a Google sheet and every single observation is grouped together and then we’ll just go through the framework that we have internally and we’ll then work out a resolution for every single one and typically speaking, customer experience within the company, but with the different retailers quite analytical and process driven as well. So we where we take a picture, we can generally understand the back of house as well as retailers processes, the replenishment. We can generally suggest better ways of working as well. But again, we can only suggest those. It’s down to the client to decide what they want to do specifically. But you know, we take a lot of photos. I think we do a lot of good things with them. We’d like to be at seasonal events. We just pull a lot of things together. You know, we’re working on value, value for money. So we can go right back to, I think 2011. We’ve got a February value campaign. The retailer’s done. So you can see right back to 2011, just after the Great Recession, what, you know, obviously it’s quite dated now ten years on, but what retailers are trying to do, that’s more price matching, somewhat leaning on loyalty. There was a lot of money off actually back in the day. There was five point I thought it in the newspapers. There was no real thought behind it. That was a bit of a joke that the market was on. So we can see it as we’ve gone through the particularly with all and little discounters where you can market Multiwall DLP, which is obviously what the Americans will be more familiar with. We can really see the good campaigns about campaigns, just how everything fits together and I think stand the test of time in January. And so what the best practice looks like and what you think works well because obviously when things launch you do see the bad as well as the good. I think that’s important to avoid the obvious pitfalls that befall and it come in initiative really well. 

Ashley Coates [00:13:31] So all these pictures that you take when you go on these store visits, you then make those photos available to your clients. I understand through your insight portal. 

Steve Dresser [00:13:40] A. 

Ashley Coates [00:13:41] Quarter of a million images already. So how do your clients use their photos? 

Steve Dresser [00:13:45] It would just actually get to the image portal. We’ve just got a new provider where they utilize the same technology that Google utilizes, so you can actually read the pictures. So you actually have picture on that. For example, it reads the word pizza and then catalogs to a search out our efforts because we obviously structured together as well. So what we do every week is we obviously collect our images. I think we run about five or 6000 a week across all the major retailers in the UK plus obviously if we travel as well, we have a number of to go in that as well. We collect them by week so of a weekly feed almost by retailer and then we do all the seasonal events as well. So every month of the year there’s something different going on. So at the minute I think we’re looking at back to school in the UK, we just get into early in the summer and then what we do then is we collect all the seasonal events as they happen. So once we close out back to school we then will collect that by. I’ve developed quite a specific subcategory for back to school, which will include stationery, school uniforms, signage, you know, you’ll have back to college of all those things. And so we will collect the images right down to that subcategory level. So I think for Christmas last year, I think we lost 57 gigs to the patients. You never look at Christmas the same way again. And it’s also you can even look at the turkeys that we had in December, week three, where you can look right down to the year retail Easter to helpful looking for clients to see what was going on often we all love. Adjustable, if you will, memories of when things landed in return. And we sort of forget some things happened. We assume that maybe everything went really well first time, but we just are predisposed to forget the problems. Whereas I think the imagery is quite good to show that actually things in London time off, we think Tesco actually quite good job here, so they’re really useful for us. When we produce our reviews of a seasonal event for a retailer off the market, we can say we think actually Tesco did really well. Here is some examples as they did really well in Jill Desserts. It’s just a really good sort of living factfile of what happened really. And I think by sharing this with clients it means that it can more self service so they can look at things without having to come through us all the time. But I think also internally as an organization, a small organization spending as we used to, huge amounts of time trawling through while these photos on my laptop, trying to remember when I went through certain stuff internally speeds is up significantly because everything cataloged and they can search if we need to we just going through best practice at the minute so we’ve got about 250,000 we tried to condense for example chill foods down to maybe a thousand pictures of the very best examples of meal deals and fixtures on level design. And then obviously we can actually laptop curated those imagery packs for customers because I think a lot of people don’t really want to read through two or 50,000 pictures well site as they are I think it kind of people people often found because I think that’s a lot to do so we just always curate and try to improve and try to refine it. And that’s an ongoing journey. I’m sure the more we feed in, the more we sell spits out. But it’s really effective really to take to the year plus. And we just had we just moved platform which which took us a full month to get everything moved to the right place. It’s the point. We had a call from our Internet service provider saying we need to move to a new package because we were literally 99% of our broadband connection. 

Ned Hayes [00:16:35] It’s a nice problem to have, I guess, through so much data, so much useful data that you’re exceeding capacity. Well, speaking of useful data, you actually have a framework that you call customer that you use to identify challenges. And I understand customer is actually an acronym. So what does that stand for? 

Steve Dresser [00:16:53] It stands for. So the key is challenge. So what I would challenge you either we identify it and 98% of the work is self driven. So we will often find the challenges ourselves and the understanding. So understanding the challenge. So for example, if we see a lot of empty shelves and the weather is be 25 degrees and all the burgers are up, so we obviously would have a clear understanding to actually there is a huge issue here is weather driven. It’s actually a peak demand piece. It’s not necessarily indicative of availability year round. So we apply some understanding and I think we understand the importance of each problem to a customer, to the organization severity. Is it something that we think is an easy fix or a difficult fix? If I think about one specific problem we’ve identified with the retailer, that’s and I only picked it up on the second round of visits actually when I was actually with a client, but they didn’t change the price level when a promotion was active, they left the price level at the old price and they just had a piece of signage and from a value for money, particular customer, if not signage, wasn’t cited or fell off, the customer would assume that the prices hadn’t changed and therefore the price was still being charged in full. Even the store at the time, they assume that they were misled or that store wasn’t taking part in the promotion. So actually that became a huge issue for value for money where retailers started thinking that they perceive that their showing themselves as being expensive. They’ll put a ton of money into marketing, into lowering prices. But actually it was actually the shelf edge execution that was the big pitfall here and almost been overlooked with the clamor to do everything else. So that was a good example of where we, you know, we understood that challenge and how we played it within the organization. And then we have, as is for stores T for trading post operations and for marketing. So those are the four internal functions that would be exposed basically to this problem. So we try, as assume might try to think about what the impact on each division would be. So in the signage example, you would have us have a star perspective. They obviously get the signage and after site it. What can go wrong that and I guess any fix that we saw suggested if it was a nice level change, then obviously the stores will be accountable for that. So that’s extra work for them. She is for trading, so buying and merchandizing. So what’s the impact? Hopefully in the example it will be positive because sales would rise so potentially better by empowering. Obviously with the challenges, particularly around buying the merchandise in that specific element would be great for operations. So obviously that’s the operation centrally. So within head office donuts, briefs issued new routines, new processes. You know, again, if this thing was changed and a marketing would be different signage to look at holders that don’t fall off as easily. And it’s just, I guess, encouraging or encompassing the whole organization is, for example. So examples would be examples or we found examples of what good looks like and then I would be resolution. So that is basically go forward. What do you think about this? And then that’s at the end of the journey, substantive resolution of what we think. But that’s obviously, you know, is also at the clients shop to decide what to do. And that’s one problem. And often we can go into hundreds and hundreds of specific things that we highlight and identify. And some are quite small, but some significant and, you know, encompass all functions of the business. 

Ashley Coates [00:19:50] That must give you a very thorough look at your client’s business. I love that. 

Steve Dresser [00:19:54] We don’t forget anyone. So I think obviously the challenge of retail is we can get obviously very focused on. Stars are very focused on, you know, easy, I think if you work in a central office actually, you remember, I was easy to forget the stars, they have a lot to deal with. You know, deliveries come late, you know, the labor shortage, sickness. Corbett They’ve got a lot to deal with. So actually just being sure that everyone’s on the same page just means everyone’s a little bit more holistic in their view. And we tried to make sure that obviously any suggestion is busy work, is actually effective work. You know, the things that we suggest are improvements. So, you know, we quite we tried to be quite thorough with the things important to do that. 

Ashley Coates [00:20:28] Absolutely. So let’s chat about technology used in grocery stores today. I know that you mentioned on your website that you visit all kinds of stores in all sizes and stores, including Amazon. And so I’m curious how Amazon specifically has changed the face of grocery retail. If it has if you think it has, what impact have Amazon go and Amazon Fresh Store has had on the industry? 

Steve Dresser [00:20:53] You know, it’s interesting question. I think we all look at Amazon, particularly the fresh in the go. You know, we’ve got a few and now they’ve opened up a bit and I think we all look at that checkout free experience as being really, really effective. I mean, I know we’ve been in a few times almost trying to not try to be the systems around for us, but to see how long it takes to charge you. Is it right? You know, put in I am open. They can open them down. And I’m always amazed. I think the tech so flawless. I remember the one in New York, we literally left and within minutes we had a receipt and it was so powerful. I think for me as a traditional retailer, we think about my kids and I think they care as much. But for me, I think when you leave the Amazon store, you do feel like, as if missing, it still feels quite wrong almost just to walk out of the store. They do offer a focus point for customers that, you know, you know, once you’ve done, you go to the register and you’re out, then you have to queue and you can have a chat with the offering. You self-serve, but there’s always an area where at least you can know it’s quite natural to flow. I think in Amazon when you go you just feel a bit, a bit odd to me really that you don’t have that end point. And I think, you know, those stores in the locations are in I think about Brookfield back in New York, which over the road from the financial district narrowing of Goldman Sachs. And those customers are in and out. They’re really not interested in talking. They’re working long hours for them. It’s ideal for Amazon. It’s ideal because actually from a labor perspective, there’s no need to worry about the front end, that’s all. I think it’s a similar story in London. If I think about the range in in New York, it’s obviously pre-COVID, although it was quite strange how the store was assigned in merchandise. I think the ones in London are better because they’ve got Brits run. It’s a bit more appreciation. The convenience market. So I think was quite interesting. I think checkout free for retailers is a huge labor saving potential because obviously to do it with the front end completely challenges the job losses where those jobs would be absorbed. It just flipped particularly big. So I think we are seeing some hate on social media, you know, in the UK, in the US about if you use self-service checkout which you are potentially doing people out of jobs at the front end. I mean you’ll see some of the Wal-Marts now, you know, they’ve gone just in the time being. The stance have gone from no cell service to 80% going to target targeted sorry to that six man checkout, you know only six. And you think that’s absolutely astonishing. It wasn’t a huge target, but it was it was a decent sign that we’re seeing more and more in the UK where more and more self-service checkouts are coming in and obviously the savings that go with that. So I think that is a potential sticking point. I think the tech works and we’ve seen different activation of Tesco try and it’s similar thing. But I think again the question is the roll out speed of that and Amazon have obviously this off with with checkout free there obviously they are retrofit into Whole Foods but I think it’s a slower process. There’s a definite cost with all the cameras and there’s like three black spots and things like that. If you look at the checkout register at Amazon, it definitely changed again. That was all thinking about what the possible is. But I think again, the costs are they are prohibitive. I think electronic labels as well, electronic shelf labels that we see in Amazon and we see in some UK retailers, but not enough really. If you were designing the retailer today, you would absolutely use electronic labels because you know you don’t need paper illegal. The prices change automatically, you don’t need people, but the cost is prohibitive for retrofit. And I don’t think that’s one of the challenges. Well, the retailers will understand how they get the economies of scale to work. I think for the positives of those elements with with Amazon where they’ve changed the checkout operation that change retail in that respect, the UK range in merchandise is much stronger than the US. So I think that’s that’s a positive as well. So they’ve learned. But I think if you look at Whole Foods, actually I think there’s a real challenge that from, from what I see seen in the UK, sorry, in Florida and in New York, particularly since I’ve have taken over, they just fill out hopefully at least some of it. So the two reasons for being, you know, they’re were very unique retail, you know, the whole pay joke and yeah it’s expensive even for a tourist doesn’t really watch the dollar signs in in Florida some of the price points are horrific but they serve a purpose. And, you know, it’s a very special retailer, I think. But if I look what they’ve done since they’ve taken over, I was over there when the takeover really happened. They actually were just trying everywhere the press overload of prime blue signage and almost if you if you were prime customer, you could save a significant amount. It was still expensive, I think, but it was very high, low in terms of promotional driven. But then I think as time went on, the obviously the refit some of the stores and that changed things around Columbus Circle as an example when you go from the real sticks out where they’ve taken almost a half. That style with the changes on counties, I feel, and I start to almost change that for the worse. And I think that’s my concern is what’s their end game there with Whole Foods? Because taking away those special elements of that retail, the profitability of the automated of was better, I’m not sure is not the right thing to do. And I think that’s something that does concern me and I’m not sure my comments have really got strategy for Whole Foods. If I’m honest, I think you could make the case a physical retailer fresh and go good, but the rest of it you had particularly helpful too big question mark for me. I think just trouble may actually be to look at the best practice photos from years before where you know a great number of bits that were really special actually they just become quite watered down and then it just becomes a retailer that’s quite healthy but charges a lot more than everyone else. Whereas I think when your Whole Foods in your Whole Foods and that’s clear, people are far more likely to pay that extra because they sort know what’s come in with Whole Foods. I think when you at the differentials, it’s quite difficult to maintain that premium price point well. 

Ned Hayes [00:25:54] So maintaining the premium price point is important for grocers because the profit margin is so slim, as we know. Does technology actually help grocers to increase that profit margin? 

Steve Dresser [00:26:05] Yeah, I think so. I think if you can do it in the right way, I mean, obviously, you know, the crucial element is that customers aren’t impacted. So when Walmart had a robot going around the shelves doing the gaps and things like that is on the Internet. So a customer, everyone was quite happy. And I think that sort of is it’s a good example of a genuine service which reduces the need for someone to walk around the stores. And I think, again, electronic labels automatically exchange displays, digital signage and the rule where you don’t need to physically change packaging would be far more effective. They are really important and obviously they boost margins because you’re eliminating cost from the payroll. It’s the same with the front end of the checkouts. We scan and go scan on your mobile phone, all the sort of things where you actually install technology. Absolutely. You can save on payroll. I think the challenge is that obviously the capital expenditure to get there is quite hefty. So maybe think about electric labels have been talked about for years and I think prices we speak to about six, £7 a level so probably don’t pay, you know, and maybe they give you a Wal-Mart. It’s obviously less, but it’s still a significant amount of money. If you think about Tesco, maybe 25,000 products, £5 level per store, that’s a huge, huge capital expenditure despite the obvious saving. So you’re looking at a hurdle around about three or four years in a food starts paying for itself and there are some pitfalls of the digital, but I think benefits do outweigh I think it’s the same for the front end. Obviously with self-service, that’s a massive saving to suddenly instead of having one operator running one checkout, they can be 12 because they’re all going to have to deal with interventions. And you can bring, as do a trial that artificial intelligence in one and that starts the age verification. So you registered it looks at your face and it decides if you’re old enough or not. I think you have to pre-register within another service, the trial as well. So you can almost eliminate that friction point from the operator having to come across to a self-checkout won’t approve you. There are all these little bits and pieces that can be further improved with tech, but I think the challenge for tech is always about scalability. You we all get excited about the robot that’s a cabinet service suit. McDonald, I think is one in New York because the restaurants can’t get stuff. So he’s got a little robot where we all get very excited about those things. But I think again, you looking at scalability and thinking realistically, can you get to scale quick enough, spending enough money to actually impact the business in a positive way? And I think that’s a real, real challenge for retailers, is that fine balance because customers ultimately still want human interaction. They don’t want to walk under a warehouse where it’s see a single person. You know, for some customers, their only social interaction may well be with the operator at Walmart, Target, public, wherever it may be. And I think that’s a massive challenge as well, is that you’ve got to follow the customers always, but the customer doesn’t always want check out for the massive benefit of crosses. But whilst queuing is annoying, if you take the whole checkout run away as our customers want it to, the customers want the entire room to be self-service. I mean, we’ve seen examples in the UK where some stores have had to put money checkouts back in because they’ve gone too far with self-service and customers don’t want do want to be served, they do want some interaction. Therefore you get disproportionate use of the remaining month checkouts. So yeah, there has to be a real balance so we can all get excited about we get savings. I think the customers ultimately going to have judgment. 

Ashley Coates [00:29:04] So true. We’ve got to be responsive to the customer in the end. Well, we’d also love to hear your perspective on loyalty and customer engagement, which is a very important thing for all kinds of retailers right now. So what kinds of loyalty programs work best in a grocery store settings? Obviously, there’s tiered reward systems and points per visit and purchase. Do rewards in grocery need to be directly connected to the purchase price? 

Steve Dresser [00:29:31] I think if you asked pre-COVID, I think the answer would be different to where we are now without the cost of living. Obviously that’s worldwide with gas prices, with energy prices through the promise of food inflation and general inflation. I think customers always want money off of that. They don’t really want to be serving down the line. That can be difficult. So on the flip side, you know, retailers are broad churches. They know they have to appeal to everyone without eliminating wealth and the council be so generalist in their appeal that they appeal to. No one. So it’s quite a difficult balancing act. There are customers who prefer to serve their points, if you will, all the year and then redeem them at Christmas to use it as a savings scheme. What we see in the UK is Tesco have gone 100% Clubcard prices, a cook carries out loyalty scheme and obviously the loyalty schemes are only as good as the data it gets and we know that. Some think that in some stores you don’t get much swipe. I think is the internal knowledge people swipe the card. There are some stores I feel don’t really swipe the cards if it’s a convenience store, quite busy and people are in a rush, they don’t care about loyalty. So so the data flow into the big engine, if you will, of the arteries is quite sporadic and you can make decisions based on there is this imbalance because if you get a really rich source of data, it is quite easy. But we know that it can be quite volatile as well. So Tesco went for the Clubcard price maybe a couple of years ago and then they had a couple of meal deals that they left off so any customer could access them. And I think early this year they went to so if you want to buy at lunchtime a £3 sandwich snack in a drink, usually I buy that anywhere they change it this year. So it’s 3.50, they should have a look. So every deal now we have to kind of look at to basically get the savings. So that’s a benefit of there being the customer. I think it’s quite exclusive as they do Christmas, quite like Thanksgiving, actually. I’m part of the club, I’m Tesco. Look after the test, we get the benefit of all the data. They still do the points as well to the Tesco, but the points are almost seconds. I think in the old days when you first came to prominence in the UK it was quite heavily centric on points. So if you spent the pound you got two points and you could set them up and you got 500 points or £2.50 voucher and you could save your vouchers for like triple bonus on airmiles or whatever it was. I think over time we sort of lost sight of the points. And I think it’s more about the instant rewards. So with digital coming to the fore now centers in other reach in the UK have a nectar card they do points to other, they have an app where they will send you targeted deals. So for example, if they know you buy bleach or nappies so you’ve got your kids, they’ll target you with specific deals when you’re in-store. Next time you can get a pound of nappies, so they’ll try to drive, spend that way. And obviously then the competition follows the whole odyssey to competition with a leading brand to win an experience. I think that we’ve seen a lot more of those. I think the challenge for me is the buyers can get quite excited about that. They still get the money from the suppliers supporting the signage everywhere, and then they still lose their effectiveness because customers are just seeing too much. I think at the minute I think cash is king. I think people want to be saving money there and then and I think that sometimes is challenging for Tesco because if you don’t have a Clubcard, it is almost stupidity to not have one because you’d literally have to pay them all for the promotions, but you also open them up on the flip side from it, from a cost of living viewpoint if the deals aren’t strong enough. So it’s a promotion system. I’ve been to a 10% savings of customers and actually these aren’t all that. These deals aren’t exclusive. They aren’t really that special. I’m going to go to X, Y, Z retailer who have better promotions that can be so it can work against you cannot be a promotional piece I think at the minute the actual cash it is really important and we know retail is almost in this black market under the counter are often sending customers £10 of £68 or seven to 12 to 4 weeks. We get them regular healthy. When the wife shops that send receipt, she’ll still get the vouchers to try, incentivize, to stay or to spend more. So loyalty opens up that door as well. So I think I think it’s a real blend, but I think at the minute customers want savings. They don’t want to be saving points of money for a later date. And I think if they can sell it for less, I think they want the choice to do that. But you know, I think if I think back to Tesco this week, I’m looking looking on the website and they were out to advertise that you could save your Clubcard vouchers for Christmas and it’s August now never seen that on the main website before that you know at this time of year Tesco particular all retail generally want to incentivize customers to not spend vouchers with the retailer because the margins are so thin. They want to travel them up at the cinema of travel of the points of Pizza Express, a restaurant in the UK where you can obviously get travel value for your points because that’s doesn’t want the customer spending vouchers. But I think it’s a sign of the times where they’re actually helping customers. Well, because if they do, say, vouchers and they get a bonus for doing so, if you put more money in, I think that was the scheme people believe in. Tesco would be a bonus in November. Tesco know that that Christmas shop will for that customer will be majority will be will be done at Tesco and know the chance of going to Aldi’s minimized. 

Ned Hayes [00:34:19] So one thing that you said the sign of the times what we’ve seen with the past few years, sign of the times is that shopping habits have changed, right? So people are more willing to order online and pick up rather than having to pick out everything themselves. People are interacting in different ways with retail stores, including grocery stores, that they’re beginning to treat a store as a pick up location rather than just some place that they go to purchase items themselves in person. So do you see that that kind of change in behavior impacting loyalty and how loyal people will be to stores? 

Steve Dresser [00:34:55] I think pre-COVID, I think, you know, I think in post-COVID, I. Prico in particular, the online customer was the customer that you wanted because if they look to your delivery scheme, so nuclear is often, you know, if you if you subscribe to a delivery parcel, it’s at £10 a month, you get for deliveries a month. You do have to pay an extra, you know, you get priority slots at Christmas. You almost wanted that customer because they were so loyal they would spend 50 quid a week with you and that would be guaranteed every week. So it’s almost like, you know, guaranteed sales and they just take a hit on the delivery as a retailer because they’re probably going to use their deliveries. But on the flipside is, of course, he didn’t want because they wanted the best quality, they didn’t want to pay for delivery or picking, even though that was the cost of the retailer because they wanted no availability promotions, there were no substitutions whatsoever. They wanted the perfect shopping experience, but to not pay for it. So it was like sort of caught between, you know, the worst of both worlds, a real growth engine in online dating in the UK, but everyone was hooked on £1 delivery slots and you know, being able to select the hour, you want your shopping to be delivered and retail and you get really made a rush for its own back because it became so competitive on a market with diminishing returns, frankly, because obviously it’s so hard to make money online. I look at it from a storefront, but I just can’t understand that lower cost with delivery, advance fuel, you know, leasing drives everything else. It’s so hard to understand. And I think clicking collect was a big thing that there is no one in the UK really doing well by around because obviously the customer then does the legwork which takes out like the retail doesn’t have to fulfill. So click and collect is a big thing. So then if the retailer or tourism picks up a store, they’re more likely to go in, as I mentioned, for that, maybe they don’t trust the retail to pick produce properly. They like their bananas a certain color that they don’t they as they like to pick their own mate. So the customers and customer at the site, of course, they’re going to more likely to go into something. I think Walmart identified that if the customer that clicked and connected with Walmart, they were, however, a percentage likely to shop with Walmart and start reaching importance of good styles and good stores are important for online if if it comes from a store because of the availability of that store that online customer experiences availability is appalling. And so a lot of the gaps, the online customer then suffers with substitution. So you’ve still got a room, good shop service that you also fill in the line. So I think definitely in terms of the pickup element, I think, you know, so stores are so important really and I think we’ve we’ve seen particularly obviously I’m sorry and I was obviously, you know, because I was struck by just how much curbside is taken off with Aldi, for example. I think at five stations at one of the stores I went to, I was astonished. A customer actually picking up Aldi’s quite is very formulaic as a retailer you know business of under $2 and it’s all quite cheap and the everyone goes in and has a look down you know the click and collect people utilizing that we’ve seen in the UK have rolled it to a couple of sites, not not many, but I think they’ve done it in a slightly fashion and they do charge because they quite lids the price they’re able to charge what you consider to be a, you know, an appropriate fee for picking them back in the retailers. I mean we know the scale of Wal-Mart, but the one of the I went I think that’s when they announced a 30 pick of 40 pick up parking spots in the carpark and they were queue into the parking space. So people just like literally we’re talking to the customers while the owner of the shop. The actual scale of it is absolutely off the charts because of us in the UK we have so many maybe have two parking spots where you drive in and then you’re off 40 and the queue just in the picking operation is just beyond belief, you know, for a Brit particular. But I think it’s that loyalty piece that, you know, trying to do a great job on them collection on drive up, you can do so much. But I think Walmart obviously get it right because obviously they have the prices and they have to be able to carry the range of customers around. I think if you look after those customers, then obviously, you know, you don’t have the delivery. I know. Well, I’ve tried with different delivery options. The electric vans and Uber drivers and Amazon have tried that flex system as well because no retailer wants to take that final mile logistics cost like we have in the UK because it’s so expensive. I think that’s a real, real challenge. 

Ashley Coates [00:38:54] Well, if I could ask Steve, you mentioned COVID just now and we’ve touched on the pandemic a couple of times, but we’d love to go deeper into what has actually changed. So can you walk us through the experience of your clients over the past two years and how the pandemic actually affected their business? 

Steve Dresser [00:39:10] Of course, yes. I think overnight for me personally, I was so busy, it became quite difficult in the UK because it’s the same, which was quite difficult for single store at any time you see anything. So suddenly you were faced with stores that were, you couldn’t really critique standards because there was just nothing on sale. So it was quite high, was all in survival mode. So each ensuite we were helping with different things actually, and the whole planning piece. So a lot of stuff we work on typically. You know, if you think about the horizons Christmas, often by July it’s completed for December, you know. So all the horizons, all the funny work went out the window and it’s purely really basic retail survival of the fittest almost. That was quite interesting. And, you know, even elements like signage, you know, in terms of direct to the customers around the store, one way systems mask, you know, in the question of reimbursing the retailer whether you should consider using a non corporate color. Almost like going against your brand guidelines because customers would see that and you didn’t want to just become wallpaper like everything else. So, I mean, of course productive to view that. It’s just don’t see most of the stuff. They just go around like almost either in a trance that you wanted customers to see things like safety signage. So there was all these decisions being made and I think from food retail it was a great time because, you know, suddenly your ordinary store colleagues and associates were, you know, heralds really, you know, freshly going into the front line with a pandemic, the whole or none. I think in the UK in particular, I think in the US and similar they were not testing really for a great deal of time. We never any mask the PPE. I think it masks monetary math when it came in and I think in the UK in the August of 2020. So at the peak everyone was one room we know masks on you know people would it was almost you know you try to foster teamwork wherever you go between stores, you know, everyone gets together and works as a team. You have you have difficulties of camaraderie. And that was almost overnight eliminated because you couldn’t, you know, bubbles and you didn’t want to be too close to people. 

Ned Hayes [00:40:57] Right. Right. Meeting in person was also problematic, you know? 

Steve Dresser [00:41:00] Absolutely. Yeah. Yeah. So Zoom and team do things like that. So the whole way of working shared. So it really were difficult on emails and teams all your life to try and move things forward. 

Ned Hayes [00:41:09] Yeah, it’s been really challenging for the past few years. I’m curious if we could turn our attention to kind of the future. Where do you think we’ll be in the next few years for grocery retail? Where is that segment of the market going? 

Steve Dresser [00:41:21] Yes, I think, again, you know, briefly, I’m if I think about the change in the UK market, obviously we seen a big acceleration towards e-commerce and obviously is pulling back a little bit in terms of the growth on the figures, but it’s falling away but not back to where it well. So I think online stock in that respect, but I think food shopping online is still quite a boring job experience, frankly. I think it’s very difficult to translate food shopping to a computer screen. I think that’s incredibly difficult. And I think I think the convenience aspects has worked for customers and then no longer if they weren’t native to digital, they’re no longer frightened by by online shopping, whether you have delayed it previously, particularly on elderly customers. So I think there’s a shift that drive acceptance towards online QR codes as well as an acceptance towards mobiles as well. Now QR codes were always a marketing person’s dream, but no one really understood them, whereas I think now QR codes are the norm, so customers are more likely to feel confident in scanning it and to get various information and digital elements if they so wish. Something is an element of cutting through the noise, but I think there’s more appreciation for things like self scan scan as you go as well, where you can eliminate as it used to be eliminated due to checkout. Actually, customers are now more keen to do things themselves. I think in the UK we saw Sandridge and the retailer close all their fruit counters down because of supply and focusing on filling ambiance. But then they never reopened. Those counters announced they weren’t going to reopen, which I think is as a standard, as a long standing, longer term view. That’s quite sad, actually, because we’ve lost that retailers lost element of differentiation there. But it’s easy to say we can save £60 million. Fantastic. But those countries aren’t coming back. And I think that’s a real challenge for us as a market in the UK with the retail, theater and the environment. I mean, I think that Whole Foods, Wegmans, places like that where it’s absolutely superb when you walk in, you feel like you want to spend money and you almost welling up thinking about it. And you know, being the UK is becoming quite homogenized in that respect where everything’s we just dropping things down a peg or two. I did think with the focus on the pandemic and health that actually we’d see a great shift towards healthier eating and organic and things like that. We haven’t really seen that in the UK. I think that’s maybe that could potentially be a longer term thing. Maybe people are relieved at the end not to be in the restrictions. Actually everyone’s in the pub. Good going wild, but I think it’s going to be longer term elements, as I said, about customers going to start for interaction, you know, vulnerable customers and lonely customers, that that interaction piece is still very important. I think it will have affected colleagues not being able to deliver the service to regular customers and other customers because the masks and the checkout screens and all those barriers. But like I said, again, I would I would have hoped for a greater sense of respect for colleagues longer term, because, you know, given what they did for us at the height of the pandemic. But if anything, we’ve seen shop theft and shrinkage through the roof. I think in the US is a similar story in some cases sitting outside as well. But I think overall, you know, you would you would hope to think that there are long standing benefits. You know, I think the art of the possible, I think I think change may be is one that you think retailers and some retailers are quite resistant to change. You go through several steering committees to get anything signed off. Suddenly overnight when they were put in the firing line, they had to adjust and they did it and nothing bad really happened. Everyone got through it. And that should be a key lesson for retailers going forward that you don’t need to do everything by ten committees and contingency plans. And no, you know, I’m not saying be ad hoc and callous, but there are perhaps a lot fewer barriers to change than we think. 

Ashley Coates [00:44:46] That’s so true. You can implement it faster than maybe we didn’t think we were. 

Steve Dresser [00:44:51] Absolutely. I think digital helps that solution digital. But it does enable things a lot quicker. Teams, I think. Zoom, for example. But I think there is a risk that I think digital the answer to everything. And obviously that’s not the case. But I think a blend of it all should work for us. 

Ashley Coates [00:45:08] Steve, we so appreciate chatting with you today. You have so many insights, grocery insights, and we’re very happy to hear them today. We do have one last question for you, which is what would you like your legacy to be? What would you like to be remembered for? 

Steve Dresser [00:45:22] It’s one who told the truth about what was going on. And I think someone who stayed on the right side of acceptability. So, you know, sort of knew where the standards were and wasn’t afraid to sort of hold the line, if you will. 

Ashley Coates [00:45:34] That’s fantastic. Well, thank you again for joining us today. 

Steve Dresser [00:45:38] It’s a pleasure. Thank you so much for having me on. 

Ned Hayes [00:45:40] Smart Plug is a wholly owned property of Snowshoe all content and copyright 2021 Sparkplug Media.