Welcome to the Retail Rundown, your go-to weekly podcast where RETHINK Retail teams up with industry experts to discuss the news and trends defining the world of retail.

This episode is hosted by the incredible Carol Spieckerman. Carol expert on global retail trajectories and transmedia brand platforms.

Carol is also an author and contributor to leading media outlets, such as NPR, Reuters, and Forbes, as well as our very own RETHINK Retail advisor and the host of the Spieckerman Speaks Retail Podcast.

In this episode, Carol sat down with Simbe Robotics CEO Brad Bogolea, to discuss what’s ahead for retail robotics.

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Hosted by Carol Spieckerman; Written and produced by Gabriella Bock; Edited by Trenton Waller; Social media by Natalie Arana

 

TRANSCRIPTION

Carol Spieckerman:
Hi everyone. And welcome to the Retail Rundown. I’m Carol Spieckerman today’s guest host. And today I have the pleasure of speaking with Brad Bogolea. Brad is the CEO of Simbe Robotics, which is the company behind Tally that adorable inventory counting robot that you might’ve seen strolling down the aisles of a grocery store near you. So thanks for being with us here today, Brad.

Brad Bogolea:
Carol, it’s such a pleasure and thanks for having me.

Carol Spieckerman:
Yeah, it’s great to speak with you and I think it’s great timing because as we all know, 2020 has been transformative, but also very disruptive. And as part of that, retailers are absolutely looking to technology and automation to address all kinds of new challenges, but also new opportunities. And I think this is particularly true in the brick and mortar space. But of course, depending on who you ask automation is either really awesome or really scary. And at the end of the day, though, I think that retailers and no, and I think retail is always going to be about that balance between art and science. And so I think there’s always going to be room for both, but I want to get your thoughts on that. What do you see as the role of automation going into 2021 and more specifically the role of robotics?

Brad Bogolea:
Yes, absolutely. So as we all expect, or as we all have seen, the pandemic has really been unchartered territory for retailers or club across the globe. And it’s really caused them to not only rethink their supply chain, technology, workforce management, merchandising and assortment strategies, but really how they manage their overall business. And a topic we see coming up time and time again, is how can retailers, especially with emerging constraint business, better leverage technology like automation, or AI to help address these challenges. With the COVID-19 pandemic in particular, we all saw the scary pictures of what was happening to grocery store shelves and the stress across the supply chain. Technology like Tally, our robotics solution really has the opportunity to increase greater visibility about what’s happening and these physical stores and gain digital insights they’ve never seen before really been possible.

Brad Bogolea:
So we think most retailers are looking at ways to improve their overall workflow through technology and better data. However, the litmus test there is, what is the overall business case and customer experience related to that technology. And that’s where we see a lot of retailers focusing today.

Brad Bogolea:
Some of the other drivers we’re seeing is really consumer behavior is changing. We’ve seen how much online grocery has increased over the last year. And with the instant gratification that shoppers want, it’s presenting the heightened need for more accurate inventory data across these environments and empowering third-party partners like Instacart or DoorDash or Shipt with this type of information. And this is a critical area where shelf auditing and analytics robots can really help stores adapt to this type of changing landscape. And some of the other topics that are starting to come up, especially with a change of administration is, increased labor costs across the environment. And what stress that might have on the retailers overall bottom line. So we really see automation as a power tool that can help enable these retailers to extract more efficiency out of their environment.

Carol Spieckerman:
Well, that’s interesting. You mentioned visibility. I think that’s such a key word. Inventory visibility is just a baseline hope for a lot of retailers these days, because that inventory resides in so many different places. And you also talked about making the business case. So with all of these dynamics, all of these challenges happening and with retailers seeking solutions, are you finding that they’re reluctant to embrace robotics when you are making that business case? Do you have to do a hard sell on them? Are they really gung ho about it?

Brad Bogolea:
We’ve seen a massive amount of interest across the space, but what I would say is, we have a deep appreciation for what all of these retailers are managing from a day-to-day perspective. It’s really been inspirational to be on the sidelines and see how much their business has had to adapt or change over the last year. So we really look at ourselves as a partner to help retailers think through implementing this type of technology and how it can transform their business.

Carol Spieckerman:
So in general you’re seeing them being quite receptive?

Brad Bogolea:
Quite receptive and as we all know, going to our local neighborhood grocery store, there’s not a lot that has physically changed the cash register or the barcode. So there are a lot of questions upfront about what does it take to operationalize this type of technology, but what retailers quickly find is, it’s actually not that scary and you can measure return in the matter of days with the way this type of modern machine learning and artificial intelligence technology works.

Carol Spieckerman:
Well at the same time though, it seems that we have even just recently seen some advancing and then some retreating on the part of retailers. You’ve got Walmart, for example, stepping out into robotics with Bossa nova and then retreating from that strategy. I think their version of the story is that they found that human workers could perform about the same amount of work just as easily. And also there were some concerns about how shoppers were reacting to robots being in the shopping environment. So what’s your take on this? Obviously you’re biased on the robotic side, that’s your business, but how do you think humans, whether those humans are store associates or shoppers, how can they exist harmoniously with robots in stores and do so without compromising the customer experience?

Brad Bogolea:
Absolutely. And that’s a really great question. In general, we don’t believe that this project being scrapped at Walmart is an indication of the broader market need or opportunity. Actually, as part of Q3 and Q4 last year, we saw our largest expansion as a business, really in the heart of the pandemic, but you hit on some really important key items where this isn’t really about the robot at the end of the day, it’s really are you capturing the right insights? And today we capture insights really outside of inventory and out of stock related information as well. So looking at things like pricing and promotion, understand product location in the environment.

Brad Bogolea:
So we really see a suite of capabilities that need to be operationalized in this environment to really make sense for the retailer. But the other piece you hit on is really the importance of thoughtful design in the overall customer experience. Most of what shoppers know about robotics is what they have seen in the movies, or they have a robot vacuum cleaner at home. So bringing this type of technology to a place that people frequent every week, you need to take a thoughtful approach and not only introducing that technology to the environment, but also how it operates.

Brad Bogolea:
So how do you blend seamlessly alongside shoppers and employees not getting in their way, have a slim narrow intuitive design not a big scary robot. And these are some of the ways that we’ve differentiated ourselves in the market both from a capability and user experience perspective. The other approach we’ve taken is business is… The eye on the prize for us has not been the Amazon, or the Walmart’s of the world, it has been helping every other retailer in the market really operationalize this technology and transform their business to better compete.

Carol Spieckerman:
So it sounds like you’re thinking all of that through from a retailer perspective. You’re not just trying to juxtapose your robots in these environments and dare them to succeed. That’s great.

Brad Bogolea:
Exactly.

Carol Spieckerman:
Well, speaking of expansion, you talked about your expansion. I think you have some really exciting news that’s come up. Not only have you announced a new version of Tally, but also you’ve expanded with Schnucks Markets, now you’re in over half of their stores. First of all, congratulations on the expansion and what can you tell me about Tally 3.0? What are the differences? What are the upgrades and what was all of that based on?

Brad Bogolea:
Yeah, absolutely. If we talk first about some of the exciting ways that retailers like Schnucks are using this platform and the value that they’ve actually received is, we have found that automation solutions like Tally find typically five to 15 times more out on shelf scenarios than store teams would over the same period in the various blind studies that we’ve done. So a massive amount of opportunity. Now, of course not all of those out-of-stocks are controllable, but we see in many of environments that 20% to 50% of them can be. So as we’ve begun to operationalize this in more than half of Schnucks stores and a number of other retailers, the insights we’ve seen across our customer base is a pretty immediate 20 to 30% reduction in the out on shelf that actually exists. So that’s the store teams or the direct store delivery vendors, being able to take more timely action associated this data to create a better customer experience.

Carol Spieckerman:
So the upgrades have been more about the timeliness of the delivery of data or?

Brad Bogolea:
Yeah, and what I was really highlighting here is, the core value that Tally has been providing as it relates to the expansions or why many of these retailers were thinking about expanding. Some of the other key areas have been evaluating pricing and promotional execution across the environment. And what was very surprising coming into this space was, it’s not unusual for us to go into a store where 3% to 10% of the price or promotional tags are not properly executed. And retailers have very precise financials around the way they expect their promotions to work in the margin lift that they should receive. So if these types of promotions are not being executed well at the store level, there’s a massive opportunity with this type of technology.

Brad Bogolea:
And then in addition, as we talked about having the up-to-date product location availability information to really empower an ecosystem of partners, whether that’s the econ vendors, the direct store delivery vendors, warehouse brands like the Unilever’s and Procter Gamble’s of the world that want to look deeper at category management, but this is some of the overarching value. Now, if we take it back to what’s new and our latest platform, late last year we announced our third-generation platform Tally 3.0, and this was really built on four or five years of key learning in this space, much like you get a new phone or PC every two years, we want to ensure we’re putting the latest sensing and compute technology in Tally to extract as much value within these retail environments as we can.

Brad Bogolea:
So some of the key pieces about Tally 3.0 were the latest and greatest optical system, and how do we best deconstruct optimal value from all areas of the stores, freezers or coolers, produce, a number of other environments as well as really focusing on how do we best scale our manufacturing capabilities to support the global need and interest we see around this product. So how do we best put the company in a position to rapidly build thousands of these types of units?

Carol Spieckerman:
Wow, that’s quite a feat, the constant iteration combined with trying to scale it up. That’s really having to strike a delicate balance, but we’ve talked a lot about grocery and obviously you’ve had quite a bit of success there and grocery is critical to retailers. It drives traffic, even if you’re not just a dedicated grocery store. It’s a lower margin category, but again, of course it accomplishes a lot for a lot of different retailers, but are your robotic solutions geared toward other categories as well? Discretionary categories, apparel, things like that, or is it primarily a grocery solution?

Brad Bogolea:
Yes, Carol, we do work outside of grocery as well. So Tally itself actually has two different sensing modalities. So computer vision, which works incredibly well for the fast moving consumer goods environments of drug stores, grocery stores, mass market, hypermarket that we’ve discussing, but we also have RFID reading capabilities where RFID has become much more common in some of these higher value retail environments, whether it’s apparel, sporting goods, home decor, etc. So today we have partnerships with folks like Decathlon, the world’s largest sporting goods retailer. Today, all the products within Decathlon store tagged with RFID.

Brad Bogolea:
So Tally takes precise store-wide inventory counts for them on a daily basis. And that data is incredibly helpful for them for supply chain planning, understand, did what we intended to go to the store actually made it to the store, addressing areas like shrink or goods that may be lost, damaged, stolen, or misplaced. And as well as many of these physical retailers drive a deeper e-comm strategy out of their physical store. There has been a greater focus on inventory accuracy than ever before, because the folks who are ordering things online and want to be able to pick it up at the curb or have it shipped quickly, you want to ensure what you’re advertising to the customer online is really within the environment. So because of that, we’ve seen heightened interest in non grocery retailers in this type of technology as well.

Carol Spieckerman:
Wow, that’s great. It sounds like you can flex the capabilities to meet those different challenges in those different environments. Well, you’ve talked about some of the data that tally Gathers, but when you look at this disruption that we talked about in the introduction, and just the fact that there’ve been these massive unpredictable demand surges, there’s been panic buying, particularly in a lot of those staples categories in grocery. So how does Tally help mitigate that and help retailers manage these really unpredictable surges particularly when historic data isn’t necessarily going to prepare them for what’s coming?

Brad Bogolea:
Yes, absolutely. We had some really great case studies throughout the pandemic of ways. Tally can best assist in these environments. So one is, most of these grocers depend on a perpetual inventory auto-replenishment type system. For auto replenishment to work well, having accurate inventory data, understanding what is on the shelf is absolutely paramount. And what we saw in the early surge in panic buying phases of the pandemic is, there was no product on shelf, no product in the back room, but there was distortion in the inventory system that actually said, well, we think product is in store. So the way retailers leveraged our solution was to help to zero out these types of scenarios rapidly to help ensure product gets back on the shelf as quickly as possible. So this accountability around what is the true balance on hand and what are the store teams actually doing? Did they get what they wanted to use on the shelf or what they were expected to?

Brad Bogolea:
The other pieces that we’ve done a lot of work around is really helping to put these stores back together or keeping up with the changing assortments. So there’ve been heavy constraints on the manufacturers, instead of 80 varieties of toilet paper in stores, you might only have 30 because of supply chain-related issues, but you want to take advantage of all of your shelf space. That is fundamentally changing the planogram and the way the store was originally intended. So one of the advantages of Tally is Tally’s able to note any of these changes in merchandising that is happening within these environments and report these back at a corporate level.

Brad Bogolea:
And that data can be used in a number of different ways. One, if you have third parties servicing online orders, you’re going to want them to know if product is out on shelf in a primary location, is it actually available in a secondary location somewhere to make sure you get that sale. And in addition, we saw some of these categories be decimated so deeply. The store teams really needed a blueprint to actually put the shelves back together. And Tally’s data was incredibly helpful to do that because these planograms and assortments were changing so much.

Brad Bogolea:
The last piece I would mention is, the store teams that we work with today have really embraced Tally. Automation or robotics can… The term can be scary as you mentioned in the beginning, but once the store teams have experienced with the product and understand its value, they really view it as a power tool, much like their handheld scanner is a power tool to them and allows them to work more efficiently or a drill is a power tool to a carpenter. They understand that Tally can help take some of the mundane and monotonous tasks of doing shelf audits off their plates, allowing them to focus on higher-order and higher value tasks, such as restocking, backroom pools, servicing customers directly, or picking online grocery orders. So these are some of the ways that we’ve actually seen retailers leverage this type of technology firsthand throughout the pandemic.

Carol Spieckerman:
Well, that’s a great synopsis because it sounds like you’re getting that store team buy-in because to your point, they see it as a tool. And then to me that mitigates that conversation around this is a replacement for people-powered processes. It’s more of an enhancement. And I think once you get that store team buy-in, then everything else follows and the corporate teams get on board and it becomes a really powerful tool. So yeah, that’s really exciting to hear what you guys are up to and I look forward to following your progress and your expansion. Again, congratulations on that. And thank you so much for joining the Rundown today to talk about the power of robotics, where automation is going next, and I’ll ask you, Brad, how can people get in touch with you if they want to learn more about your solutions?

Brad Bogolea:
Absolutely, Carol, we would encourage them to reach out to us directly on our website so they visit simberobotics.com or just simply Google Simbe, they will find us and we have a number of tools that they can reach out to us directly online. And I’d love to connect with individuals directly as well. Of course, love to hear more about the various challenges retailers are experiencing and engage in thoughtful dialogue on how technology like computer vision robotics, AI or RFID may support some of their initiatives.

Carol Spieckerman:
That’s great. Thank you. Thank you so much, Brad. And I’ll look forward to following all of that and checking it out. So thank you for joining us today for the Retail Rundown. I’m Carol Spieckerman. It’s been a pleasure hosting the show today and I look forward to next time.

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