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Increasing Resilience, Profitability, and Sustainability in the Retail Industry – Futurum Tech Podcast The Intelligent Enterprise Industry Series
by Daniel Newman | October 20, 2020

This episode of the Futurum Tech Podcast – Interview Series is the fourth installment of our Intelligent Enterprise Industry Series — done in partnership with SAP. I welcomed Robin Wilson and Randy Evins, two executive advisors for the retail industry at SAP to discuss how they are focusing on furthering their intelligent enterprise story.

The Interconnected Retail Industry

SAP recently partnered with Oxford Economics to conduct a research study to identify how an interconnected mindset impacts organizations, especially the connection between systems thinking and business outcomes. Many retailers have broken down barriers, but there is still a lot of work to be done to balance the human-centered, data-driven approach. The report includes findings from 3,000 senior executives, including 300 from the retail sector.

My conversation with Robin and Randy revolved around the following:

  • The changing business models in the retail industry and the type of technologies that are driving the change.
  • How organizations are using systems thinking to break down existing silos to be more productive.
  • Different ways leaders are taking advantage of the integrated approach to deliver value to customers.
  • The impact of talent in the workforce on the integrated approach to business.
  • An exploration of the ways organizations are getting the most from their data.
  • How intelligent technologies will continue to shape the industry for years to come.

Robin, Randy and I explored some of the findings of the Oxford Economics report: The Responsive Retailer: Agile, Data-Driven, and Focused on Experiences that will have a big impact on the future. We only explored a few topics in the report and there’s so much more to it. If you’re interested in a comprehensive view of the subject download The Oxford Economics report on the Interconnected Retail industry here.

Listen to my interview with Robin and Randy here:

Disclaimer: The Futurum Tech Podcast is for information and entertainment purposes only. Over the course of this podcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.

Transcript:

Daniel Newman: Welcome to The Futurum Tech Podcast, The Interview Series, I’m your host today, Daniel Newman, Principal Analyst and Founding Partner at Futurum Research. In this interview series, I’m going to be talking to Robin Wilson and Randy Evins of SAP, about SAP, the intelligent enterprise, a very interesting industry study with Oxford, and what is going on in technology across the retail sphere. If you haven’t had a chance yet to listen, this is part of a 10 recorded podcast series, where we talk to experts from many different industries from SAP, to better understand the data in this really great study from Oxford, as well as, what’s going on in these industries. What are some of the biggest digital transformation considerations? And how can companies in each of these industries become intelligent enterprises? And I also say, even if you’re not from the industry that we’re talking about, like in this case, retail, there’s so many great findings.

And part of the reason I love doing these podcasts, is you find commonalities and differences and getting great ideas, from what industries are doing, that aren’t necessarily yours. So without any further ado, welcome to the Futurum Tech Podcast, The Interview Series, Robin and Randy, thanks for joining me today.

Randy Evins: Our pleasure.

Robin Wilson: Thanks for having us.

Daniel Newman: Yeah, it’s that first moment, when I asked for the guests to talk, it’s always figuring out which one’s going to talk, it’s like, darn it, Dan, you got to cue someone, so they don’t both stare and wait for the other one. Robin, I’d love for you to quickly introduce yourself and talk a little bit about your role at SAP.

Robin Wilson: So I’m Robin Wilson and I’m the Industry Executive Advisor for fashion for SAP. I have over 20 plus years in the industry, working for some reputable brands, like Victoria’s Secret, Macy’s, VF Corporation and most recently, I had my own self-funded, women’s clothing brand, I had a two stores and an online business and designed and produced everything out of New York City.

Daniel Newman: Excellent, sounds like a lot of a long track record, welcome to the show, Randy?

Randy Evins: So Randy Evins, also titled Industry Executive Advisor and I focus on the food retail industry, so grocery store, drug store, convenience store. I’ve been with SAP for 13 years now and before that I spent 30 years in the grocery business, working for American Stores, which was the parent of Juul in Chicago, Acme, Philadelphia, and the former Lucky Stores in California and my last stint was at HEB in Texas and the 30 years I was in the industry, 25 were spent in the meat department, so I’m living, breathing proof, that a meat guy can spell SAP.

Daniel Newman: Absolutely, I think, everybody out there, this particular podcast and we do some on video, we do some with audio, but this one’s on audio but we’re on video capturing this and if you had the chance, I’d love to show Randy’s backdrop. Now, Robin, you’ve got a cool, a retail store background but Randy is legitimately, sitting in front of the butcher’s counter, with a stack of meat behind him. Based on the positioning of your head, you would actually be what the world would call a meathead but not really how they would define one.

Randy Evins: I’ve been accused of being a meathead once or twice in my lifetime.

Daniel Newman: Hey, I have not escaped that accusation myself, I definitely enjoy spending time at the gym but today we’re going to spend time talking tech, talking the intelligent enterprise, talking about some data that came out of a recent Oxford economics report, love to pick your brains. So maybe starting out, you gave your background and a little bit of history. Retail is, it’s an industry that’s I would say in flux, it’s got a lot of momentum in some ways and it’s had a lot of headwinds in others, with COVID-19, we’ve seen shopping change even more dynamically, we’ve seen digital transformation happen even faster. We are seeing slowly retail open back up, we’re seeing some positive momentum in parts of it but we’re seeing things like department stores trending out, we’re seeing outdoor malls and things like that trending up. And of course, you guys are specialized.

Grocery is not going anywhere, but Randy groceries changing, more delivered groceries, probably than ever before this year, that business model has seen exponential. But the thing is, is retailers, whether they’re doing it online or doing it in person, are still retailers and so in what you’re doing, it has to be intimate and critical to these companies evolving those business models and using technology to drive them forward. So I’d just love to get really quickly, before we talk about the study as a whole, just a couple of takes from each of you, on what you’re seeing in retail. And I think Robin, you can probably come through that fashion lens and Randy, you can come through that grocery lens. So Randy, I’ll let you go first.

Randy Evins: Sure, the pandemic saw unbelievable increases in sales, in grocery stores and honestly it destroyed their supply chains. They were not prepared for that 30 to 40% jump in velocity and I got to say, I wouldn’t have been prepared either, I was very, very happy that I’m sitting with SAP, instead of trying to figure out how am I going to deal with this onslaught of business? The other thing that happened with digital, just completely freaked out, in fact, 500, 600% increases were the norm and again, brochures over the years, have slow walked digital. They’ve said, well, it costs money, we don’t want to do it, it cost money and usually there’s not a lot of profit at the end of a digital transaction, so we really want to not do that. Well, the consumer pretty much said, “Nope, you got to do it because it’s happening, it’s real.”

Daniel Newman: Absolutely, Robin, any ads that you’re seeing in your space?

Robin Wilson: Yeah, so fashion was a bit different, so everything’s slowed right down. So the stores closed and so retailers were canceling orders, so getting on the phone and canceling orders, not ordering spring, not ordering fall, not thinking about what was going to happen at Christmas time and really, just uncertain as to whether anybody was going to get out there and purchase. Interestingly enough, what has happened is, is that the online business just like grocery, has escalated very quickly. What was probably, 10, 12, 14% of business, now becoming 25, 35, sometimes even triple digit percentage increases year over year and we’re seeing quite a bit of increase with the online business. So an industry, where mostly the revenue came from the stores, now making a big shift but going back to stores, now that they’re open, they’re kind of empty because they canceled all those orders from their suppliers. So the holidays are going to be interesting moving forward.

Daniel Newman: Yeah, yoga pants went on a binge and gym shoes but I think a lot of the higher fashion, I don’t remember the last time I put a tie on, even jeans have become kind of like a dressing up moment for me, at this point.

Randy Evins: Yeah, shorts or something else.

Robin Wilson: It’s true, there’s been quite a shift, yeah. There’s been quite a shift as to why … What really is happening in fashion is value, so customers are really thinking about what’s valuable to them. I do think you’ll see the luxury market coming back because high quality, those types of items, are very valuable to some people but we’ll also see discounters doing very well in marketplaces and those types of retailers will do well because it’s going to be the consumer thinking about what’s value for them.

Daniel Newman: Yeah, I was actually doing some research on, this is a little outside of retail but it directly influences it, on real estate investment trusts. And there’s a big couple, that people know, like Simon Property Group and Maserich and some of these companies and I was looking at these A++ tier malls and huge high, high occupancy rates. It’s really interesting though, I guess the point was, at the very top end of retail, these stores are still very much planning to continue moving forward, they’re reopening, they’re paying their rent, they’re bringing inventory back in. So, as much as, like I said, we hear a lot of doom and gloom, there is some real positivity around the high end of the market. So to your point, Robin and then of course, Randy, in your place, the grocery side of things, never going to be slowing down anytime soon, if there’s anything I’ve done more of during COVID-19 and stay at home, it’s been eat, I’ve taken snacking and turned it into a profession.

So I’ve got a handful of questions, I would love to ask you, I’ll relate it to that Oxford Economics Study but also just based upon your experience in the industry and in the business. And I’ll start off here and Randy, I kicked you the last one, so Robin, I’ll let you start off on this one but you know, this based on the survey, they talk a lot about systems thinking and how that’s a top of mind focus for executives and the executives in your industry, how are they using systems to break down silos, to make the businesses more productive?

Robin Wilson: Yeah, so interestingly enough, retail is still struggling quite a bit with silos, so if you looked at the Oxford Study, a small percentage was not still siloed, so there’s still a little bit of work to do there, within most of the retailers out there. So it’s really about taking a step back and really putting the core in place. So I’ve got a couple of customers that I work with that, they know that having the right core in place to get the data that they need, to be able to break down these silos, is very important. If they were in the middle of a project, they didn’t stop the project, they continued because they know we’re going to come out of this, we’re going to come out of the pandemic, revenue will increase again at some point, it has already started to do that.

So how do they have real time inventory across all of their channels, including wholesale? How do they marry up that omni-channel view with their consumer? So it’s really important because consumers today, they want to be more online but they want a personalized experience. So how are you going to do that? You’ve got to have that data, to be able to break down those silos, to be sure that you’re talking to the consumer, the right way. And you’ve got to have the product there, if the shelf is empty, when you go to buy your favorite, whatever item it is, they’re going to go to another brand, so you want to make sure that you’ve got all the data you need, so that the shelf is not empty when they’re picking your brand because there’s lots of choices out there and they’re going to want to go to what’s there, it’s, what’s convenient, what can I get right now?

Especially with COVID, it’s become more important than ever. So making sure that all of that, those silos are broken down and making sure that you can really focus on the consumer, as a segment of one is going to be really important, it’s going to continue to be very important. That really is the focus in fashion.

Daniel Newman: I love that you say that, it’s so true, with the exception of some of the most prolific products. I laugh because I have teenage daughters, the Air Jordan’s, or the Air Force Ones, that are in so high demand, that even if you can’t get them, people will continue to just wait to buy but most things, people will go to next best, to your point now Randy, if your favorite Tombstone, isn’t there, you’re going to get the Jack’s Cheese Pizza right next to it. That is the way people operate, they’re not going to wait and come back or go to another store. And so you alluded to some things though, with really, where we’re getting closer to this fully connected supply chain, in this fully connected customer experience. And I know SAP is making investments in building out their full customer data platforms.

It’s going to be from the front end of the customer, all the way back to the end to end supply chain, so that all that data can be used congruently, to make sure that, the right products are in the right place, at the right time, for the right consumer. So I think the survey definitely dove into that too, that, that’s a trend and it really doesn’t matter if it’s fashion, grocery, or any other retail business. That’s going to become the expectation in the coming years and during COVID, that’s accelerated, Randy, I’d like to punt the next one year direction, and that’s, the study, it highlighted cost savings and speed, as the top two benefits of this integrated approach that we’ve been talking about. How are you seeing companies basically being able to take advantage of these integrated approaches and deliver value?

Randy Evins: I mentioned in my earlier comments, that grocery has kind of slow walked digital because of the cost. When you think about a digital transaction, all of the selection and delivery and all those costs associated with those activities, grocers taking on and paying for, so in order to be profitable, at the end of that, if you’re a 2% margin and it cost you 4% to select an order, you’re looking at negative two at the end of the day. So they’ve been trying to figure out how to turn that into a profitable order.

It actually ties into the previous question as well, it’s about synchronization across business processes and getting after supply chain, so that when you say cost savings and speed, you’re talking supply chain. It’s how do you address the gap in the supply chain? That’s another thing that’s happened over the last four months, COVID has exposed those gaps, incredibly, the inability to recover inventory, to fix an out of stock, to manage the process of finding additional supply, are all part of that speed to shelf and they’ve got an impetus now, more than they’ve ever had to focus on.

How do we stop with disjointed business process and completely, totally, no matter what portion of the business you’re in, focus on the shopper and her needs or his needs or their needs? Even your supply chain leadership is no longer focused only on the metrics that drive them, on shelf, on time, all those things that go into it and always focused on, did I get the product to the customer in a timeframe and in a cost-effective way so that they’re happy and we’re making money?

Daniel Newman: Yeah, this doesn’t happen by magic though, either and I’d love for just a quick way in here because I’ve got a few more questions and I don’t want to go too far on the sidetrack, but this is hard, yes, you have a lot of technology and SAP is among the leaders in many of the categories that compete but to make all these things integrate and work together, I imagine a lot of people think, “I can just pay and if I spend enough money, it happens” but it’s so much more than that isn’t it?

Randy Evins: It’s culture, we have the most firmly integrated solution out there, our S4 Retail Solution, goes from finance, to supply chain, to store ops, it’s one system that does all of that integrated but if you don’t have adoption, that’s the key, you can have the best technology in the world but if your supply chain is willing to sacrifice customer service, on the backs of efficiencies, you’re still going to have that lack of ability to satisfy that customer. So it’s all about change and adoption at the end of it.

Daniel Newman: Yeah, the study alluded to that quite a bit and in my seven books that I’ve written, the last two, before my most recent was called Building Dragons and Future Proof and our studies overwhelmingly found culture was a more critical component than technology to digital transformation. It’s odd because obviously, we want to move tech, we want tech to be consumed and tech is the enabler. So if you really want to transform tech, tech has to work but the adaptability and adoption of technology does firmly reside in the culture of the organization. By the way, you perfectly transitioned me Randy, to my next question, which I was going to ask you about because this integrated approach, it does change the customer experience. You talked a lot about that but it also has a huge impact on talent and the workforce and how are you working with companies? What are you seeing in terms of these, the impact of all this change on the acquisition and retention and building of talent systems within organizations?

Randy Evins: I’ll start with that one and I’ll try to be brief, so that Robin can add some comments too but it’s a big deal. We like to tell our customers, if a technology company shows up and talks to you about, “Hey, we’ve got some AI or we’ve got some machine learning, we want you to look at,” you run the other way because in the way we approach it, AI is there and machine learning is there, but it’s not a button you push, it’s how the technology works, it’s automation in an appropriate way.

And you mentioned it in your opening statements, the industry is under, let’s say it’s under evolution, it’s being assaulted by its customers. And the ability to transition from administrative tasks, that can be done by the technology, then those should be done by the technology and then take those labor dollars, those tasks that are administrative, turn them into value added tasks, for example, put your stocking strategy and buy stocking, I mean, putting products on shelves, not following somebody around the neighborhood, put it behind the wall and let them let the robots do it and take the dollars, your shavings, don’t bank them, put them into value added services, like health advocates and meal planners. And so you’re now selling and adding value to your customer and creating loyalty. I could go on and on and on because it’s-

Daniel Newman: No, I’d love to hear from Robin here too.

Randy Evins: Robin needs to have some time-

Robin Wilson: Very similar, I think this is why, Randy, I like to do these types of things together because we do have a lot of synergies. So this integrated approach, when you think about even from an executive level, the marketers need to know what the buyers are doing, or the merchants are doing. You don’t want to give away a product, if you’re not aligned and you’re not thinking about from a holistic view, what’s going on for the organization and what is it that you’re trying to go after? You’re going to have a disjointed approach and the customer’s not going to have a great experience with you, you’re not going to have a smooth customer journey, which is really important and again, it’s about taking the cut, the customers, employees, and really retooling, and rethinking.

So a buyer or a merchant might have a very set job but that job’s going to have to evolve a bit, it’s going to have to change because what’s going on is they’re going to have to think a little bit more about just the items that they’re buying, they’re going to have to think about the stores and the sales associates who now become, maybe stylists and there’s more clienteling, as marketing, working with them hand in hand, to help promote the products. So that integrated approach, just because you build it, doesn’t mean they will come. So you can have a great product but if you don’t have great service, that’s not going to get you anywhere. So it’s really important, especially because it’s an item that’s not needed, these are items that people just, they desire and they want, how do you entice them to buy your brand? And so it’s really about thinking about the integrated approach from end to end and really what’s going to make that customer want to buy from you and continue to buy from you.

Daniel Newman: Absolutely, that’s great inputs and so much of this though, is fundamentally rooted in data, whether it’s creating these better employee engagement levels and experiences, better connectedness across silos, supply chains, its data, data, data. And we hear a lot about this but the intelligent enterprise, the connected enterprise, that you are so busy focusing on at SAP, is dependent on this data story.

I’d love to just hear, if you guys could share, just a couple of stories, maybe, because again, I wish I had all the time to hear about them all, but I’d love to hear about one in retail, one in grocer. How are these companies really putting this data to use, to get more? And if you can be specific and name a customer, great, if not, maybe just a hint.

Randy Evins: So data from our perspective has two sides, it is experiential and it is operational and experiential is customer focused. How am I doing? How does the customer feel? What’s the information the customer is willing to tell me about their experience with my brand? Operational is, how do I take that data and seamlessly infuse it into everything that I do? We talked earlier a little bit about, supply chain folks focused on customer satisfaction. Well, this is how we do it, it’s experiential and operational. We have a lot of internal policies about sharing specific customers and events like this. So I can’t put the name out there but we’ve got several customers that are focused on their shoppers, emotional connection to themselves and taking the results of that information, that experiential data, and then driving it into their business processes.

So how do I understand what the shopper’s looking for and incorporate that into all the things that I’m doing operationally, to support them as they continue to shop with me? It’s a concept that’s different. I know when I was a category manager, back in the day, I had no idea what my customers were thinking about my products and in the world that we built today with SAP, there’s the ability to understand this product, I’m responsible for, has this reaction from my shopper, to its presence and its quality and its pricing and its place in their lives. So it really adds some context to the process.

Daniel Newman: Robin, what about in fashion and retail on your side, how are you seeing data really being plugged to change, to accelerate how these companies are moving?

Randy Evins: Yeah, so I think there’s two pieces of the puzzle when it comes to the data, just as Randy had mentioned, and then, I think, I’ll just take it down one level. So from a marketing perspective, understanding what the customer is buying and where they’re buying it, meaning what channel, is really important but then taking that data and adding it to what’s happening from an experimental experiential side, is also very important. What’s the pulse of the customer? What are they really saying? When you take a step back, we have a customer who, when they looked at their marketing and wanted to go to the next step and really wanted to put the technology in place to be the backbone of all of this, they had to really step all the way back and think about who is their customer? They actually named them, they actually gave them personas, they actually socialized the personas out to the customer, out to their internal customer right out into the organization.

So that when they started to think about the merchants starting to buy, who was the persona they were buying for? When you started to market, who was the persona they were marketing to? So really trying to take, how do I market to that segment of one and take one step? Really get to that, where I start with the persona and then I can really get down to who is Robin? What is she buying? Where is she buying? What’s important to her? How do I get her to buy again very quickly? And organizations who are doing that, can see double digit increases, the ROI can be unbelievable. And that’s the type of things that our customers are seeing, when it comes from a marketing standpoint and really getting into the data and really understanding what the data can do to help with marketing campaigns and tying that within the entire organization, to be sure, that the supply chain is there. All those types of things are important to make sure that that happens.

Daniel Newman: And in the study, Robin, speaking of the data and watching this happen, AI, IoT predictive, so those were where investment is going. So this has to be a leading indicator that what you just mentioned is only going to get faster?

Robin Wilson: Yeah, so it is going to get faster and what’s really going to happen is, you’re going to take the manual labor out of things, the small tasks that really probably didn’t give you a great ROI and move that to those higher value added tasks, everything from finance to marketing, to supply chain, it’ll be embedded in that. And so we as employees, spend our time, to really bring the dollars to the bottom line, is going to be important to really focus, there just isn’t going to be enough time. It’s not about eliminating people because that’s not going to happen, what’s going to happen is, then you’re going to retool those employees and then take them to really focus on things that will add a higher value. And really add to the bottom line.

Randy Evins: Yeah, that’s the concept, it’s find the administrative tasks that the technology can do and then let it do it. We’re trying to put people on it, when you can ask the technology to do it and it will actually do it at a rate that’s faster and probably with more accuracy but don’t take the dollars and put them in the bank because that’s traditionally what’s been done, follow a business model that says, “my gains, I’ll take those labor dollars, I’ll invest them in areas for a while, I’ll be improving revenue and margin and getting a better overall result for my company.”

Daniel Newman: Absolutely and not to mention, those investments are really transforming the shopping experience, in my neighborhood, just nearby, there’s a new grocery store, that’s being built by a very well-known e-commerce company and it’s going to change the way we shop and we’re seeing that. And that omni-channel experience, IoT and AI, those two things being mentioned, that is the core of predictive, you hear a lot about edge, well, the data at the edge that knows your behavior, knows what you’re looking at, it knows what you’ve bought, it knows what you might want to buy and it puts you in those spots, it moves you through the store. And I talk about this being really, an every industry thing and it’s certainly an every faction of retail thing, whether you’re shopping for high-end fashion, consumer electronics, a vehicle, groceries, these technologies are really going to be the cues and the more intelligence and the more data is put to good use.

And so the study really indicated that, that’s what companies are seeing but to your points, the culture of these companies, Randy, to your point, the reinvestment of these companies into these capabilities, is going to be the difference between, I think, those that thrive and those that are going to fight to survive to a big extent, COVID-19, was a great equalizer of the market, to see which companies were going to make those investments and which companies were going to fall behind quickly, even quicker than the old Blockbuster jokes, that used to go in every digital transformation presentation ever. So I was going to ask you guys a question about culture but I tell you what, we kind of hit that.

So I want to kind of go to a closing question here, you both have shared a lot and you know, between the study, between your experience, between your conversations that you’re having with customers, what you’re seeing happening in the back office, as well as, the front office, what would be one or two big takeaways, that each of you would love for the audience, that listened to this podcast to have today?

And Randy, I’ll start with you and Robin, I’ll let you have the last word.

Randy Evins: For me, it’s like, “Oh my gosh, how do I come to one topic? How do I say one thing?” So I’ll say it this way, change is hard, culture change is harder but the results at the end of the process or at the end of the rainbow, if you will, are going to be spectacular and well worth it. So don’t give up, keep going.

Robin Wilson: Yeah, so I would say again, if you build it, it doesn’t mean that they will come, so the culture and adoption kind of go hand in hand, so what I would say is, as you’re going through with thinking about how to change that culture and how to get everybody moving in the right direction, how do you get each of the departments to adopt? And then make it actionable. So don’t just say, I’m going to build this huge data lake and all the answers will come. Really narrow it down and figure out what the problems are first, so that adoption happens and happens quickly.

Daniel Newman: Those are some great wrap-ups, Robin, Randy, really appreciate you joining me today on this, Futurum Tech Podcast, Interview Series. SAP, thank you for investing in this program, bringing all these great experts. I recommend everybody out there hit that study, it’s going to be in the show notes, it was a big investment, you can tell a lot of thought went into this. It doesn’t really matter what industry you’re in, there’s a lot of very useful nuggets about transformation, about culture, about data and analytics and investment. And there’s so much to be learned, this year has been a challenging year for every business, in every industry. But there’s so much that can be seen of companies, that have been more successful, that have been able to accelerate their transformations, that have become more intelligent enterprises. And that’s something that we can all definitely learn from and benefit from, hit that subscribe button. We’d love to have you as part of our community and listen into all these podcasts.

If you liked this show, if you like, what Randy and Robin had to say, like I said, in the beginning, we have nine more of these from experts in different industries. So almost any industry that you could be in, I’m sure there’s a podcast here for you and check out the rest of our episodes, executives from across the industries, across the businesses, across the tech and of course our own opinion of the analysts and Team Futurum Research. But for now, I’ve got to say goodbye. Thank you so much for tuning in. We’ll see you later.

Daniel Newman