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Podcast

Fobi Insider - Episode 6: The Next Big Change in Brick & Mortar Retail

Industry veteran Steve Gray of SG-Retail explains why he believes Fobi's Device is the game-changer for brick & mortar retailers.


How can brick & mortar retailers counter disruption from e-commerce and Amazon?  

Why can't more retail operators adopt modernized loyalty programs?

How does Fobi's technology help resolve these questions for brick & mortar operators seeking to retain their share of the consumer goods space worth $2 trillion in North America alone?

Having spent the past 3 decades devising retail strategy for industry heavyweights like Tesco and Kroger, industry veteran Steve Gray of SG-Retail explains why he believes Fobi's Device is the game-changer for brick & mortar retailers.

Listen to Fobi Insider - Episode 6: The Next Big Change in Brick & Mortar Retail

The following is a transcript of the conversation between Fobi Marketing Director Devon Seidel and Steve Gray of SG-Retail.

SG-Retail, Steve Gray: The thing that attracted me to Loop initially was the Fobi, because that really is a game-changing bit of kit. Find that a lot where the shops might have the same logo outside the door and belong to the same marketing group or the same wholesaler supplied group. But actually all the till systems are different and that's made it impossible for those businesses to take advantage of the type of advanced marketing we've been describing before. And that's what loop enables. We're getting a lot of interest in that from those types of businesses over here in the UK.

Fobi Marketing Director Devon Seidel:  Companies like Walmart are having a large digital growth as well currently. What are we looking at for some of these other Grocery retailers?

Hey, you're listening to the Loop Experience Podcast. Join us for exclusive interviews, behind the scenes updates in all things Loop. Coming at you from the head office storage room, I'm your host Dev.

Welcome back to the Loop Experience Podcast. Our guest today is Steve Gray director of SG-retail. Loop joined forces with SG-retail back in October of 2020 to help expand our services into the European market through referral agreement. One of the greatest benefits of this contract is bringing Steve and his experienced on board.

So Steve, welcome to the podcast.

Steve: Nice to be here. Thank you.

Devon: Let's kind of start with your background here. So you have a great career history that kind of got you to where you are today. Your experience has taken you from leadership roles, leading consumer brands like PepsiCo and Procter and Gamble to consulting to top tier retailers and brands. So give me a little bit more about your background.

Steve: Well, you're right. I grew up in the world of consumer goods. With P and G, joined them straight from university and spent 10 years there. Fantastic education in business. I did most of what there is to do, in a kind of CPG sales department. And then joined Pepsi with the intention of becoming a general manager, which I did. So I ran the business in Ireland and that was very good too.

I guess I always had this kind of entrepreneurial gene ticking away inside a little bit, and got approached by the Barilla, the big Italian food company, to set up a business for them from scratch in the UK. And the global general manager for Barilla was at ours, an ex P and G guy. That took me into the world of Italian food. Indirectly, that business took me into Dunnhumby because I was asked to create a market entry plan and to really understand the Italian food eating habits of the Brits.

So I knocked on the door of Dunnhumby, who weren't that well known at the time. And I said, "Hey, look, you guys surely threw your relationship with Tesco. And analyzing the shopping habits through Clubcard must know an awful lot about who buys, what type of pasta with what type of sauce and what type of meat. And we would really like to understand all of that in order to build out our plans."

Actually to my surprise, they said, "Well, we'd love to help you, but we're not allowed to under the terms of our contract with Tesco. But as and when we can, we'll get back in touch." Anyway, cut a long story short. They did get the agreement of Tesco to include suppliers into that type of programming.

They said, "Look, we need somebody to build out a business for us here." And that coincided with... [inaudible 00:04:01] had moved on from Barilla and the company felt it was a bit overstretched. The Italians said, "Steve, do whatever you want in the UK, but we're not going to be able to invest."

I thought, "You know, life's too small." I'm going to take this new opportunity that had sort of been offered to me to set up this business for Dunnhumby in partnership with Tesco. that was, gosh, that was just over 20 years ago now. And that took me into the world of customer strategy and data science and loyalty programs and CRM. I've kind of stayed in that world ever since. We had a great success working with Tesco to help Tesco use loyalty data to really transform their situation in the UK.

They went from the number two retailer to far and away the number one. They launched new services. They evolved to become, well, one of the biggest retailers in the world. Loyalty marketing was right at the heart of that. Then from that experience, Kroger, second biggest retailer in the US, came knocking on our door and said, "Look, we see what's going on there. And the work you've been doing. Can you come and help us do something very similar in the US?"

I was fortunate enough to have been involved in the startup of that business and was on the board of the joint venture with Kroger. So that was a really, really great experience. And from there, I was hired to run a business based out of Europe and Germany, based in Munich. Company called emnos, part of the loyalty partner group, which is now owned by American Express.

The agreement was to create kind of Dunnhumby Marl Two. Working with retailers like Carrefour and Metro Group, Boots, Walgreens, many others to, in a similar way, help those retailers to use the data from their loyalty programs to improve the way they communicated and marketed to their customers. And use the data to make better decisions on things like pricing and promotions and range decisions.

That took me into BCG, Boston Consulting Group, where I had five good years as a senior advisor to their business. About seven or eight years ago, I thought, "Do you know what I've learned enough along the way to do this for myself." And so I set up SG-retail with a sort of similar proposition and yeah, here we are.

Devon: That's amazing. I can't imagine how exciting it must have been to go from where loyalty and customer engagement was back then and thinking you're on the cutting edge, to now seeing this digital transformation and all the different avenues and applications that you can do today. What are the big milestones that you've seen over your career from that start of engagement and loyalty to what we're offering now?

Steve: There's been a lot on the one hand, and yet on the other, it's interesting. I was talking to somebody recently about this, that within the world of supermarket loyalty marketing, there hasn't been perhaps been as much as you might've thought. But if I go right back to when I started in business, I can remember having to physically count the inventory in supermarkets in order to calculate how much had been sold.

Supermarkets were receiving a weekly delivery from companies like Procter and Gamble, and orders were transmitted through the post. So clearly very, very different times. That was right about the start in the sort of early eighties of scanning coming on board. And I guess scanning technology really, and the introduction of the barcode. You know, the barcode onto the pack. And then the ability of checkouts just scan those items.

I mean, that really was a transformational technology for retail because it enabled so much to be done through better logistics management, better forecasting, better stock control, speeded everything up. And I guess I've seen that world evolve and companies like Nielsen and IRI come. Then many, many software businesses built off the back of analyzing EPOS data.

Then I think the Tesco experience was interesting because that really was pioneering at the time of adding a customer ID to the EPOS transactions. Which created a sort of exponential increase in the analytical requirements too. I remember, Tesco, weren't actually the first UK retail to launch a loyalty program. I think they were the second, and Safeway had beaten Tesco to the march and had a pretty successful loyalty program. But they famously shut it down.

One of the reasons that they shut it down was they said, "We just couldn't manage the fire hose of data that was sort of coming out of this program." I guess one of the big successes that Tesco and Dunnhumby had was the ability to kind of corral that fire hose of data and make it manageable and make it insightful. Then I guess what we're seeing playing out is our other technologies and, Loop being one of these, that have then been able to build businesses off the back of that combination of scanning data linked to a customer ID. I guess that's been the two really big shifts within retail. And then I guess the introduction of the smartphones has then create a lot of innovation around apps.

And finally, in the last... It's only recently in the last few years that we've seen loyalty programs migrate, or partially migrate, to mobile phone apps. Whereas for many, many years, and even still now in many, many places, you still see the plastic cards, and the pieces of paper that are sent out with statements and vouchers and so on, and printing coupons at tills. The world of supermarket loyalty programs is still actually to a very, very large degree, analog and paper. Only laterally becoming digital in its fullest sense.

Devon: And then we see Amazon and their purchase of Whole Foods, which is kind of the complete opposite where they're coming from that main data connectivity, data first company. We saw a huge fall type period where the share price of major retailers and grocery chains during that acquisition were influx. Are we expected to see that a little bit more? I know companies like Walmart are having a large digital growth as well currently. What are we looking at for some of these other grocery retailers?

Steve: Yeah, there's a lot to unpack there. I mean, Amazon have clearly become the world's most successful e-commerce business par none. Hugely successful in the way that they've built an e-comm business globally at scale. Except that they've never really been able to crack selling groceries online for many, many reasons. Hence Whole Foods on the one hand, but it's also interesting in another way, because it also exemplifies multi-channel retailing.

If you look at Apple, another hugely successful business. One of its big successes was opening physical shops. They would clearly point to Apple retail, the shops, as a key platform in Apple's success. If you look at the companies that you mentioned, Kroger, Walmart, whose share prices were impacted when Whole Foods was acquired. They nevertheless have been very, very resilient.

It's still the case today that most of grocery shopping is done in a physical store, even with COVID and the pandemic. I mean, I think the UK is probably the most advanced online grocery market in the world. Probably we're what, 10 or 15%? So still 80, 90% of food is bought in a shop. That kind of says that multichannel shops and e-commerce is the way to go, but a lot to do before more people buy more food for home delivery.

Devon: Kind of touching on that as well, too. What are your expectations to the future? I know the pandemic has escalated this shift to online grocery purchases. Do you think that is just solely because of the pandemic and we'll slowly start moving back to in-store shopping as vaccines come out, and everything starts to level out a little bit? Or is this just the beginning and we're just going to see exponential growth of not only online shopping for groceries, but online delivery and automated delivery? Where I basically open my front door every day and what I need for the day is there.

Steve: Well, there's definitely been a rapid explosion in, let's call it home delivered food. Because groceries is one aspect of that. But, you know, there's also home delivered meal kits and obviously home food that's already been cooked. Deliver through Uber Eats, Just Eat, all very, very successful businesses. And the HelloFresh and meal kits all very, very valuable, successful businesses. But still very, very small part of overall food consumption and still the vast majority bought in a shop.

On the other hand, the growth has been held back a little bit by supply. So as the pandemic hit, the supermarket saw demand for home delivered groceries rocket and have not really been able to properly, fully meet the demand. I would be surprised if we saw too much of a dip in a full return to shopping in a shop. But I'm not sure that we're going to see explosive growth from here on in, unless the supermarkets can really, really add so much extra capacity and do that whilst keeping the cost down.

The dilemma for them is that's not easy to do, even for the businesses like Acardo. I mean Acardo have not been able to add extra capacity to keep up with the demand. So no, it's not easy for them to do that. I would say that there will be continued growth in market share of home delivered food, but nevertheless, still now 80, 85, 90% bought through a shop. And it's going to be a long, long time before that's 50-50 in my view.

Devon: And with that 80 to 95%, you say, it's very important to look at not just waiting for this transition to online delivery. It's important to still look at what's happening in store and increase engagement, increase, loyalty, increase the customer experience in store.

I want to kind of bring it back to kind of a broader view specifically with Loop and how we're in a lot of different verticals and creating this change. And yes, we're working on grocery and pharmacy to create that change in those industries. Our technology is first and foremost developed to address specific needs for brick and mortar retail operators. During these digital transformation times that we're living through, how do you see Loop as being a solution?

Steve: Well, the thing that attracted me to Loop initially was the Fobi because that really is a game-changing bit of kit. Because all of the advances in retail that we've talked about before have all been predicated on the ability of organized retail groups to analyze their sales data across their stores. To be able to join up its till systems and integrate all of the data that's that the till systems generate.

And that just has not been physically possible in many industry and retail sectors. It's the Fobi that enables that. The small internet of things device that you can just literally plug into a printer. It's as simple as plugging in a phone charger. But suddenly, that then enables... And the second part is the way that Rob and the team have built a really, really smart analytics platform off the back of it so it can integrate the data generated from the Fobis and provide real time analytics on that, across stores that haven't got the same till systems.

And you find that a lot in certain industries that are franchised or symbol group retails, or independent retail where the shops might have the same logo on outside the door and belong to the same marketing group or the same wholesaler supply group. But actually all the tilts systems are different and that's made it impossible for those businesses to take advantage of the type of advanced marketing we've been describing before. That's what Loop enables. I've not seen anything like that. We're getting a lot of interest in that from those types of businesses over here in the UK.

And then, like I say, off the back of that, we've got the real time analytics. A lot of analytics in retail is still requires data to be polled overnight in batches. Then when you involve third parties like suppliers, and others want to analyze it, often there's a delay. Can be a week or sometimes even longer to get the data to the users. If that wasn't enough, but what the team have done is have built out a loyalty front-end. Which then brings with it, the ability to connect with a customer and to integrate all of that with the mobile phone. That then enables marketing to audiences. There's some really, really smart stuff there.

Devon: That's great to hear. What have these large retailers, when you're in meetings with them or conversations with them, what's kind of their reception? I know that data is a very privacy... In lots of these large retailers, like to keep it close to their chest, but it's all about how they're able to use data. Are you finding that they have a really positive reception to what you're pitching, the capabilities that you're pitching to them?

Steve: Yeah certainly for what I would call distributed retail, where you take the independent grocery retail or garage forecourts as they're called here. Or petrol forecourts, or convenience retail. Where the stores are owned and operated very, very often by individuals. These businesses, obviously they have to have a till system, but they're not thinking, "Let me have the same till system as my neighbor." They just have different ones. So when it then comes to those businesses wanting to group together to take advantage of co-marketing or buying agreements, or work with the big manufacturers who supply into that sector, they can't do it because the tills don't speak to each other. And that means that you can't run loyalty programs, you can't capture the data and aggregate it and make it valuable Procter and Gamble, or a Phillip Morris, or whomever.

Yes, the entities that supply into that market are finding it really, really very interesting. There's always been a little bit of a disbelief actually that this tiny device can do what it does. That it can capture all of the information that's printed on a till receipt. It can then send that in real time to be aggregated and processed and the data then to be visualized and consumable in real time.

In parallel, it can then print onto the till receipt, either digitally, it can create a digital receipt which are increasingly the way the world's moving. Or it can print onto the receipt some kind of message or a coupon. There's almost a bit of a disbelief that it can do that, and can do that cost effectively to enable it to be deployed.

We're just beginning those trials, but I think we're going to have a very nice business. It's an enabling business, then we can layer over that the loyalty programs. We can layer over it involving the big consumer goods manufacturers who increasingly want information. They want it to understand how their brands are selling. Especially they want to be able to market one-on-one to the consumers who shop in those sectors. I think we're onto something very, very exciting.

Devon: I read a really interesting article that you wrote on LinkedIn about the concept of collaborative CRM. You identify that advantage of this model and a few reasons why organizations have been able to implant successfully. Can you summarize for our listeners a little bit more about what you mean about collaborative CRM?

Steve: Yeah. People are familiar with the term CRM. It's often used in different ways by different businesses, and by different software companies, and so on and so forth. Broadly when people talk about CRM, what they mean is the process or the technology, or the tasks of communicating with customers. Typically, it's kind of one way. They probably talk about conversations and feedback loops and so on. But typically it's kind of emailing, or printing a voucher or a coupon, or getting some content to a customer through a website or through an app, or perhaps even through print mail. People are familiar with that. It's very rare now to find any business that isn't doing some aspect of CRM.

But if you say "Are you doing collaborative CRM?" That sort of begs the question. Well, what is that? And there, we see far, far fewer. Really what I'm referring to is the process of integrating into CRM. The big brand is suppliers that operate in certain sectors. So in supermarkets, in pet food shops, convenience stores, drug stores, you've got companies like Procter and Gamble. You've got Unilever, you've got PepsiCo, you've got Phillip Morris. You've got these consumer goods giants who are amongst world's biggest companies and have huge budgets that they spend on advertising. If you're a retailer that operates in that sector, collaborative CRM is a monumentally big opportunity for you, because if you make it easy for these brands to find their audience through your marketing databases. And of course if you're a consumer goods company, then your audience shops in supermarket.

If you're able to make it easy for the pet food brands to identify who the dog owners are, and the companies that sell diapers to identify mothers with young kids and so on and so forth. If you do that well, you can convert big sums of advertising dollars that otherwise would have been spent with companies like Google or Facebook, or through traditional media channels to your audience. There's then two things that happen. Firstly, you get a huge increase in marketing spend and equally you can charge a media fee because the brand owners will be very, very happy to pay a media fee just as they would do to Facebook or Google or others. Provided they can see that it's working.

Then here's the brilliant thing. That if you're a retailer with a good CRM loyalty program you absolutely can see that it's working because you can measure what people are buying. So in effect, you have this closed loop marketing platform, so that's what we're describing. Then what you need to think about is how do I make it easy for those brands to understand who their audiences are? How do I make it easy for them to choose campaign types and to execute those campaigns?

In the old days that that required an army of people, and it was only something that companies like Tesco and like Kroger and a handful of others could really afford to do. Because it was very labor intensive and costly, even though it did deliver huge returns. But what's happening over the years is that's become increasingly automated, it's becoming digitized, and that's a space that Loop can play in.

Devon: And is it the Fobi device that's enabling this level of transactional data, this level of data connectivity to supply back to these large brands and distributors?

Steve: Yeah. Because at the core of it, you can't do anything without the data. You've got to have the data and you've got to have the audience contactability. And you need the Fobi internet of things if you're retail estate is distributed and doesn't have a joined up till systems. Equally, don't forget that the Fobi can integrate joined up till systems. Either way it can extract the data and make it analyzable.

Then, yes, you're right. It's then presenting the information to the suppliers or the vendors, as they can be called, in a way that looks at the world from their point of view. I think that's know that's also something that Loop does very, very well. The key thing with data is, data of itself isn't inherently useful. It's only useful when it's visualized in such a way that you can easily see what's happening and make decisions on it. And different entities look at the same data through different lenses, and they want to see it cut and presented in different ways.

If you're a store owner, you're less interested in individual products. You're more interested in certain categories. You're more interested in how your store is performing compared to other stores. You want to see how different groups of customers are shopping with you and hopefully increasing their frequency and increasing their spend.

If you're a brand product owner, you're not so much interested in that. You clearly are very, very interested in individual products and who's buying your product. How frequently are they shopping? You know, you want to see that across a range of stores, not just one or two. You clearly want to compare how you're doing versus the specific competitors to your brand. You also want to see how the customers that you've marketed to are responding to that marketing.

Therefore, you need to see the data in a different way and to appraise that and to act on it. If you're a regional director, you want to see a clearly a regional view. If you work in marketing at a big retail group, you want to see things in a certain way. If you're the buyer of a certain category, you want to see that category in depth. So everybody needs a different of the same data and I think what Loop have shown is that they've got a very, very fast, very flexible way of visualizing and presenting that data to the different audiences who need to consume it.

Devon: Yeah. I think that's definitely a piece in our roadmap too that's super important, and has been right from the very conception of this devices. Yes, Fobi is providing those analytics and real-time data to the store level, but who is the major level above that as well, too? It's those brands, and where currently are those brands getting their data and how often are they able to get it? Because if we're able to apply real-time data to the individual stores, and then we can look and take a wider view of that and see, okay, so now these are how these stores are operating in real time. Brands really now have access to the market data in real time. From your experience, are they kind of a third lens away, where they're receiving information quarterly, monthly?

Steve: Generally, in fairness, pretty well served on understanding sales data. I mean, that market's been well supplied by companies like IRI, Nielsen, and many retailers make their sales data available and brands can pour over that and analyze it apart from, in certain sectors.

Certainly in just about every country in the world, there's in grocery, a large percentage of the market is supplied by independent shops. There it's just anybody's guess what's happening because there hasn't been any way of understanding the sales performance in those independent shops and that's what Fobi is solving.

But the other area that is far less well served is how are individual shoppers behaving? Because in my experience, brands will pay so much to find things out and to understand things, but they will pay much, much more if they can act on that and market directly to a consumer and then see what happens. Again, what Loop is enabling retailers to set up and operate these programs in places where it's not previously been possible. One where the ability to then measure whether that customer acts on it in a way that you just can't do that with advertising on social media or advertising in traditional media.

You might best know that your message has been received by a certain number of people, but you clearly just don't know whether they acted on it and went and bought something. The combination of those two things, that's what gives retailers that have large loyalty programs, groups of independents that collaborate together to create something like that. Such a big opportunity if they exploit it effectively.

Devon: That's great. Kind of want to wrap it up here with our last question. We've been asking a lot of our guests on the show. What's one thing that you've learned during this pandemic? And it doesn't have to be something business related. It could be maybe a hobby you were able to pick up or a new skill that you were able to learn.

Steve: Yeah. Probably a few things, actually. I think the thing that I'm proudest of was I learned to code. Well, that's probably not quite, would be the right to describe it. I learned how to build websites. And I learned that through Webflow, which I really like actually. A sort of a low-code, no-code platform.

Devon: Such a great program.

Steve: Yeah, I was quite pleased with myself. I'm not particularly.... I'm not particularly mathematically minded. I can't write code, but love what technology can do. I learned that and I was quite pleased with myself for that. So that would be one thing.

Devon: That's awesome.

Steve: Yeah. I think... I see... I did something similar with some like Canva. Similar in a way that you can kind of create... You know, a creative output. There's a few of these sort of low-code no-code apps that I've learned. I see a really, really interesting future unfolding for companies like, well, I guess, you know, Microsoft and Salesforce and others, that are thinking about how do they make it easy for people with low technology skills to build out applications and flows and things on platforms.

That's going to really create a huge amount of innovation, I think, is people who just can't code, but they can figure out how to do simple things that basically take them into the realms where previously they would've needed an army of coders to create something. That's quite exciting.

Devon: Yeah. It's great to have that time when you're forced to stay at home to actually figure out, "Okay, well, what am I going to do with this time? How am I going to make a benefit of that time?" I think that's a great thing that has come out of this. Thank you again, Steve, for taking time out of your busy schedule to be on the show with us today and thank you to our listeners. We will see you again next week.

Steve: Great. Thanks so much.

 

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