The Future of Grocery: Automation and Innovation With Transcend Retail Solutions CEO Dr. Oliver Vogt

Welcome back, everybody.

This is Omitak Retail.

I'm Ann Mazenga.

And I'm Chris Walton.

And we are here once again, live from grocery shop 2024, in the views and group Booth.

Booth number a 210.

We will be here for the rest of the afternoon, so make sure to come and stop by and see us.

Chris, we have another guest.

We do.

Visiting?

I think we do.

Yes, we do.

Somebody in between us?

We have.

We have somebody between two omni talk.

Between two omni talkers.

We have Doctor Oliver Folcht.

Very good.

Close.

Very good.

The newly appointed CEO at Transcend Retail Solutions.

Oliver, thank you so much for joining us today and for giving us some of your time.

A pleasure.

It's great to have you.

How is grocery shop going for you so far?

It's been very good.

It's buzzing today is brilliant.

So busy and just such a good vibe about it.

I think it's all around very, very good time.

Good, good.

I'm happy to hear it.

So, Oliver, I think you're honestly, I mean, we've done over 600 interviews in the history of Omnitalk.

I think you're the first doctor we've officially had.

We were joking beforehand that you have a doctorate in statistics.

So I'm curious, like, what is your background?

And then how did that lead you to become the CEO of transnd retail Systems?

A good journey, indeed.

So, yeah, I studied economics, but I've got a PhD in statistics.

Okay.

Just to do something different.

No other reason than that, right?

Why wouldn't you?

I'm guessing you like math, right?

I do a little bit, yeah, a little bit, indeed.

And I spent nine years at Amazon in many different roles.

Supply chain, fulfillment.

And that's where I really kind of picked up the bus around all things logistics.

Okay, so you kind of fell in love with logistics as well.

Indeed.

And from there, moved into Tesco just to make it more complicated.

Across three temperature zones doing grocery.

Because, again, for fun.

Why wouldn't you?

Why wouldn't you?

You're gliding for punishment.

Yeah.

Been in Tesco now nine years.

Wow.

Again, across various different roles, but all around, again, the same thing.

Logistics.

Supply chain distribution, in store and online, which is my passion.

Yeah.

So it's almost 20 years in retail logistics then?

For the most part.

Right?

Give or take roundup.

Yeah.

Nice.

Tell us a little bit about transcend.

What is it?

Where does it begin and end?

Is it a software play?

A hardware play?

Give us the background.

Transcend retail solutions is all of the above.

So we started the idea around the fact that online in Tesco has been around for a very, very long time.

We claim to fame in Tesco that the first online grocery order came from 1984, a lady called Jane Snowball who threw her to a television through a dial up and placed the first order into a Tesco shop, which then got delivered.

So it's a very long time ago.

Tesco.com dot.

I didn't know that.

Yeah, we then launched in 2000, quite a few years later launched Tesco.com, which.

Is pretty fast for retail.

But, you know, we've been at this for a long, long time by now.

But even 2000 is a long time ago.

So we had a good long run at this.

And the one thing we noticed in this whole story is that as you become a big retailer, sometimes the standard solutions out on the market, on the shelf, just don't do it anymore and you have to start developing your own solutions.

We do 1.3 million orders per week, large orders, that is.

So it's not a small part of the business anymore.

And as such, it's quite critical for us to be very good at what we do.

And that's where the idea of transcend started.

We believe we developed quite good systems.

We developed quite a good bit of knowledge around all of this in the manual space in stores, but also in the automation, because we're starting to automate our solutions in store, attached to a store topic of micro fulfillment.

And we spend the best part of three years fine tuning it and then thought that we have a good knowledge and solution to share with other retailers who then don't need to go through that pain again as we did it.

And that too spent 25 years making it to this point.

And that's why it's a bit of everything.

It's software for install picking, for example, but it's also hardware.

You can buy anything from the picking trolley to an automated facility from us.

And we pass it together with consulting, with our knowledge, with the right processes, with the right software, with people at the heart of it.

And that must make transcend different.

What kind of retailers are you going after?

We want to be an international business.

So our first retail partnership we just launched with three weeks ago is in New Zealand.

So a retailer called Foodstuffs cooperative, brilliant partners to us, they launched with our in store picking solution.

And, yeah, so we want to be literally help people across the globe.

Got it.

So I'm curious, because you got a long background in logistics and e commerce, what do you think are the key ingredients to e commerce success in grocery and then also, does that differ depending on the scale of the operation too?

You've mentioned grocers of different size and shapes already.

I'm curious how you think about that too.

Yeah, I think when it's just a handful of orders, people usually get by and the pain, you know, it's fine.

It's when it grows, you start to feel, actually the pain point is much more, it becomes much harder to manage.

Right.

You are starting to upset the customer if you're not on top of it.

And it starts costing a lot of money because being profitable in e.com isn't that easy.

So nevertheless, the problems for someone early on in the journey are more or less the same.

Someone really, really high up the chain who's done, you know, thousands and thousands of orders a day.

It is all around having one ecosystem which actually balances everything together.

Where for me, this is a nice balance of having great systems, whether that's hardware, whether that's software.

Right?

Having great software solutions is incredibly important.

If you've got automation, it is important to have a good automation provider, but it all needs to come together into one ecosystem.

And only then when you've got all pieces of that puzzle, it really starts to come together.

Miss one piece and it starts to become problematic.

And the bigger the volume gets, the harder it's going to be to lag it and to outrun it.

And that's when, you know, the problem starts to surface if you're not careful.

So, Oliver, I'm curious, as a statistician too, is there a rubric then by which at a certain order volume, you start looking at automation more overtly versus manual picking?

What types of rubrics can you share with us in terms of trying to understand how a grocer should think about what they're doing in this space?

Yeah, if you're low volume, you absolutely want to go in a manual in store fulfillment.

You do.

You do, because you already have the stores and they're close to your customers.

So why not make use out of that facility, which you already have?

You've got all the inventory there.

You've got Val run store.

Putting manual in store.

Picking into that store actually enhances the store.

You've got the right systems.

You actually learn an awful lot about it.

You know, when your bananas aren't there anymore because the picker will tell you.

The picker will tell you where.

If your in store customer can't find you too, right?

Well, exactly.

Your install customer won't feedback whether they could find that one item.

Your online customer will through your pickup.

So having a great data feedback from your solution will actually make the store a better place.

It is great for the online customer and for the in store customer at the same time.

So.

And if you've got the right solutions, you can get really good productivities out of a store.

It is not a bad thing.

It is not as evil as some people think picking in stores actually be.

And only when you go into like larger orders.

Youtong three, four, 5600 orders a day out of these out of a store, depending on the size of the store, obviously when you could start thinking about automation, but by all means, we've got stores doing over 1000 orders a day, comfortably in a manual fashion.

In a manual fashion.

And that works just fine.

Yeah, go ahead.

I was just gonna say what's kind of the breaking point then Oliver, when like what, where is it size or capacity to have the automation in the same, you know, physical footprint?

That kind of is the breaking point to get people to the next level or to maybe expand their automation capabilities.

What?

Or is it more of a function of cost?

Like what?

What kind of gets people from manual picking to the next level?

Quite, quite often a mix of at least a couple of things.

One is the congestion in store, okay, when it gets too busy and you've got too many shopping trolleys there, that can become a problem.

Depending on how the stores are laid out.

You know, depending on what you value, that can absolutely benefit the in store experience.

If you've got 100 picking trolleys competing with your in store customers, that might be a good time to think about this for sure.

Right.

But also it is a question of the pick rates you get out of your store.

Depending on how good you are, the benefits the automation will bring is also, you know, a big leap forward.

Right.

And then you start stacking business cases on top of each other and making sure, you know, you get multiple benefits from in store experience, over quality, over customer experience, over cost benefits and capacity increase.

That's when it starts making sense.

Well, go ahead.

You mentioned a word too, before micro fulfillment.

There's been some people that have told us that micro fulfillment is kind of dead in some ways.

I'm guessing you probably don't agree with that, but in what context is it the right thing to think about?

And then also how do you think about colocation versus a dark store micro fulfillment center?

The belief that micro fulfillment doesn't work isn't.

We've proven that it works for us, but it wasn't easy to get there and I think you're very well advised to ask someone who's done this before if you want to embark on this journey.

We, as I said, took three years to fine tune this and not everyone has got the headspace to necessarily go through that journey as well.

But of course, it works if you know how to go about it.

Right.

But I think that is the single biggest learning.

You don't have to innovate alone.

Innovation isn't isolation.

Right.

Go and ask someone who can help and don't be shy.

50 50.

Oliver, how do you think about that?

I'm curious because Tesco, we explain the ownership dynamic to Tesco owns transcend retail solutions.

So how do you think other retailers are thinking about that differently in that they're, they're giving, you know, they're buying from another retailer.

Potentially a competitor would, would buy this solution.

How is that different in the fulfillment space versus like, say, Amazon technology or something like how do you think the retailer's mindset is?

I think it is important to know that transcend is a separate subsidiary, but so it, it is ring fenced and it is arm's length.

So you can rest assured that your data is going to have, you won't pass this on to Tesco for a good reason.

A separate entity.

Right.

Smart.

Okay, you were on stage.

Tell us a little bit about what you are going to talk about.

Have you been on.

I have been.

Yesterday.

Yesterday you were on stage.

What did you talk about?

What did Chris and I miss?

We talked a lot about the challenges in the current grocery environment, in e commerce.

And I think we summarize this, the outlook over the next five years being very much driven by challenges in the labor market, whether that is availability, whether that is cost, it's going to get harder.

So, yes, automation is one answer to that.

But also, innovation doesn't always mean big and costly automation.

Innovation can be small, can be quiet, can be in easy steps forward.

For us, we believe that taking the cognitive load away from people, making decisions easier, making the learning curve as short as possible, will have an immense positive benefit on a constrained market.

If you have an operation in which someone can get up to speed in hours and get mastery in a few days, it's a very, very different world and it's much, much easier to manage.

Yeah, it's a tough proposition in the grocery business, for sure.

Without a doubt.

All right, well, let's get you out of here on this.

I'm curious.

We were joking before we got started, too, that, you know, you've been in position for about a month, right?

Give or take, you know, and it's a new venture.

How are you gonna define success?

Like, if we're talking to your next grocery shop, what do you hope to have accomplished?

We want to have helped as many retailers as possible on this journey.

It's as simple as that, that we want to help people do the steps, whether they're early on in this journey or whether they are, you know, in really high volumes.

How can we truly partner with you?

Will someone describe us as a partner on that journey?

I think that's the single biggest thing for me.

So having that reputation as a partner here at this time next year, that's key to you?

Absolutely.

That's wonderful.

All right.

All right.

That wraps us up.

That wraps us up, man.

Thanks so much to Oliver.

We appreciate you for being, for taking the time to be with us from transcend retail solutions.

Thanks again to fusion group for helping us bring you all of this content from grocery shop.

And stay tuned.

We have two more interviews this afternoon, but until then, be careful out there.