Tim Costello from UST Global joins Mike to discuss the role that future seamless checkout plays in the future of retail. Tim has years of experience at Walmart running stores, Amazon running warehouses and now is leader at UST global exploring the retail technology of the future.
Hello, my name is Mike Graen. And I'm extremely
Mike Graen:excited to talk to Tim Costello. I've known Tim for a long, long
Mike Graen:time. He spent over 12 years with Walmart in store operations
Mike Graen:and various stores in the Northwest Arkansas and Oklahoma
Mike Graen:area. So he had a lot of experience up to including the
Mike Graen:store manager. He then left Walmart and spent a couple of
Mike Graen:years at Amazon working on their warehouse operations. And now he
Mike Graen:has left them to go to a company called UST Global, where he is
Mike Graen:working on automated store technology. I can't think of
Mike Graen:anybody better to talk about store operations and the
Mike Graen:technology to support that then my good friend Tim. Welcome,
Mike Graen:Tim.
Tim Costello:Thank you, Mike. Thank you appreciate that fine
Tim Costello:introduction. And as a way of remembrance, my Walmart retail
Tim Costello:career, my whole retail career began when I was 49 years old.
Mike Graen:But you look 49 now, Tim, so how does that work?
Tim Costello:When you work for Walmart, they don't allow it.
Tim Costello:It's not part of the SOP.
Mike Graen:So the Walmart experience and then the Amazon
Mike Graen:experience and now you're UST Global actually started, you
Mike Graen:started that path when you are 49. Well, what do you do before
Mike Graen:you were 49?
Tim Costello:So before I was 49, out of high school, I spent
Tim Costello:12 years in the Navy poking holes in the submarines out
Tim Costello:there in the world. And I was a missile technician working on
Tim Costello:the Poseidon and Triton submarines and missiles. After
Tim Costello:that I got out I found a dove into a sales.com career
Tim Costello:because.com was coming along. And I grew that for a whole
Tim Costello:bunch of stuff. So I carried a bag and sold a lot of third
Tim Costello:party services down into the dark commerce throughout San
Tim Costello:Jose and everywhere else on the West Coast, living in Salt Lake
Tim Costello:City at that time. After that, I found that I was a decent
Tim Costello:operational mind and started consulting a number of years.
Tim Costello:And then that consultation grew into business structuring and
Tim Costello:asset protection and not the kind of asset protection that
Tim Costello:Walmart does. But multimillionaires who are
Tim Costello:looking to structure their assets so nobody can file a
Tim Costello:lawsuit against them in a court of law. So it makes it hard to
Tim Costello:get to their assets. So we did that for a while. And then I
Tim Costello:retired. And then we moved to Bentonville, Arkansas for Carrie
Tim Costello:my wife to get her career going after raising the kids. And I
Tim Costello:was literally, you know, became a master gardener and Benton
Tim Costello:County and just hung around did a bunch was Davis County. I
Tim Costello:can't remember what county was there now. But beyond that I got
Tim Costello:bored.
Tim Costello:So I applied to Walmart, and I couldn't get in the home office
Tim Costello:for about a year. And I didn't want to work for anyone else
Tim Costello:because I didn't have a Fortune 5 company on my resume. So I
Tim Costello:said I'm gonna go work for Walmart. Finally Carrie wakes up
Tim Costello:one day and says, hey, just go work in a store. And I said me,
Tim Costello:we're going to store what would I do? I don't know anything
Tim Costello:about that. Literally. Other than a shopper, I knew nothing
Tim Costello:about retail. Well, I you know, did what she said applied. The
Tim Costello:next day 2741 there across from NWAC gave me a call wanting me
Tim Costello:to be an overnight stalker. And I asked her the personnel person
Tim Costello:isn't that illegal? And she didn't get it. So I said, Yep,
Tim Costello:I'll be over.
Tim Costello:A very fine friend named Matt. Harold gave me my first
Tim Costello:interview. I think he's a market manager somewhere up in Missouri
Tim Costello:now. Fine fella and I began my Walmart career as an overnight
Tim Costello:stalker at 2741.
Mike Graen:Did you have to spell stalker to make sure that
Mike Graen:they were clear which one you meant?
Tim Costello:No, sir. There was no test after my job.
Mike Graen:That's awesome. Wow. Well, first and foremost, I had
Mike Graen:no idea about your Navy career. Thank you so much for your
Mike Graen:service. I don't think we say that enough for all the people
Mike Graen:who are suffering and making the ability for us to be able to
Mike Graen:live a safe lives, etc. We take some of that stuff for granted.
Mike Graen:But number two, you had you did have an interesting career
Mike Graen:before Walmart. But I do know, you spent a number of years in
Mike Graen:store operations and I really want to get your perspective on
Mike Graen:you've worked for a couple of really big retailers one being
Mike Graen:Walmart and one being Amazon different roles obviously but
Mike Graen:now you're working on kind of future technology for stores
Mike Graen:itself. So I want to start off with first and foremost you
Mike Graen:know, based on your previous experience, the first question
Mike Graen:we ask people is we are always involved interested in retail
Mike Graen:but I'm interested in any perspective you have. Have times
Mike Graen:you not as a store person but as a customer have been
Mike Graen:disappointed by a retailer. You thought you were gonna get
Mike Graen:something and you end up not getting it. You got any stories
Mike Graen:because I think these stories helped help the store operations
Mike Graen:and retail understand the pain that's created from a customer
Mike Graen:who gets disappointed any any, any stories like that.
Tim Costello:Too often. Like every single one of us have gone
Tim Costello:to the store and we want to put together something. Either it's
Tim Costello:a dinner or a picnic or a celebration, whatever it is. And
Tim Costello:we are, we have found ourselves frustrated, because we were
Tim Costello:gonna go to this store, get everything we needed, and be
Tim Costello:done, right one hour trip, you're all good to go. And you
Tim Costello:can go plan and do the rest. But then you end up spending two or
Tim Costello:three more hours, that particular day or the next day,
Tim Costello:wandering around trying to find the things that you wanted to
Tim Costello:find it that one store, or there's been bad enough routines
Tim Costello:where I've just left the basket set. And I just went to the next
Tim Costello:door. Right, so now that store has lost my wholesale, not part
Tim Costello:of it. Because I just didn't, I didn't have time to go to many
Tim Costello:visits. So yes, it's extremely frustrating to get into a store
Tim Costello:expect normal items to be there. I'm not talking about you know,
Tim Costello:unicorns, I'm talking about things you'd normally buy. And
Tim Costello:when they're not there, it's extremely frustrating.
Mike Graen:So you spend enough years in stores, working stores:
Mike Graen:as a customer, when I come in, and I'm looking for the five
Mike Graen:items for my barbecue, or whatever I'm going to go and you
Mike Graen:don't have two have them. I get frustrated, obviously. But I'd
Mike Graen:like to know from a customer perspective, why? Why is it so
Mike Graen:hard to keep items in available for a customer to purchase?
Tim Costello:It is a ongoing battle, to maintain the process
Tim Costello:in a retail store. If the store manager is not checking on that
Tim Costello:process, every single step of the way, which means that store
Tim Costello:manager now needs to know every part of the process. They're not
Tim Costello:going to be as good at doing that process as their associates
Tim Costello:because their associates become masters of that product. And
Tim Costello:they know the synergy of how that all works. But you're going
Tim Costello:to know all the checkpoints along the way as to what you
Tim Costello:should see when that process is done well. Right. So you rely
Tim Costello:upon your associates. So one you got to teach, you got to train
Tim Costello:them, and you've got to keep them going in that process. Or
Tim Costello:you will be out of stock. And if you're out of stock, like Sam
Tim Costello:Walton said, you know why that shelf is empty? And everybody
Tim Costello:looks quizzically at him? I don't know. Cuz the customer
Tim Costello:bought it all. Now what do you do? And they get all the
Tim Costello:shoulder shrugs? I don't know, order some more. Yeah, right,
Tim Costello:fill it up. Now, that was the old Kanban system to keep that
Tim Costello:filled, so that the customer doesn't have to look at an empty
Tim Costello:shelf.
Mike Graen:The supply chain is so complicated, is again, if you
Mike Graen:put your store manager hat on running a brick and mortar
Mike Graen:store, let's say you got several 100,000 items that are in a
Mike Graen:store. And the products are not in the store. What are some of
Mike Graen:the challenges you mentioned training is one but one of the
Mike Graen:other ones that I know that we've talked about a lot is
Mike Graen:perpetual inventory accuracy, which is it says I have five but
Mike Graen:I don't have any and therefore I don't sell any I don't order
Mike Graen:any. That may be one of the opportunities. Is there others
Mike Graen:that you can think of that, that the product is is physically not
Mike Graen:in the building?
Tim Costello:So we Walmart and many others, Amazon, et cetera,
Tim Costello:they're all very focused on that last mile delivery. Right? How
Tim Costello:do I get it from my distribution center, my fulfillment center or
Tim Costello:my store to the customer? The customer is going to come pick
Tim Costello:it up and all those are fine thoughts. And our friends at
Tim Costello:Walmart doing a great job I know some of right but the reality is
Tim Costello:that next to last mile delivery because that's how you're going
Tim Costello:to fulfill the last mile delivery with all the items that
Tim Costello:customers ordering. I can tell you I've ordered online
Tim Costello:sometimes and I've done them all Instacart Walmart target the
Tim Costello:whole bit right? Every single one of them shorts me a product
Tim Costello:every single time I ordered. If I'm doing a roast and they short
Tim Costello:me a roast, what else was everything good for? So so that
Tim Costello:next to last mile delivery, as I'll paraphrase it because I
Tim Costello:think nobody else is talking about that. But it's in stock,
Tim Costello:right? Oscar score, Walmart cars, everybody else calls it in
Tim Costello:stock, whatever you want to call the process to keep that shelf
Tim Costello:full, so that your online grocery pickers can pick it,
Tim Costello:your customers can choose it, et cetera, is crucial. Absolutely
Tim Costello:crucial. And that will never change in retail. It will always
Tim Costello:be keeping the shelves full.
Mike Graen:But I think one of the competitive advantages at
Mike Graen:least from my perspective and people that I've talked to as I
Mike Graen:can't remember a time where I ordered something from from a
Mike Graen:pure play online fulfillment retail like an Amazon and I got
Mike Graen:to I got it out of stock. Didn't happen.
Tim Costello:You know why? Because it doesn't matter what
Tim Costello:you order. That product is in stock somewhere. And my time in
Tim Costello:Amazon, I'm telling you I have never seen a more complex
Tim Costello:customer delivery model than they employ. Literally, you
Tim Costello:could order five items, and let's just say that your
Tim Costello:fulfillment center happens to be OKC one, the one that I ran,
Tim Costello:right, and you only three of the items are in that fulfillment
Tim Costello:center. The system knows it the minute you place by, right. So
Tim Costello:now it immediately employs a mechanism that's going to go
Tim Costello:find it wherever it is, get it picked at that facility, dropped
Tim Costello:into a tote, that tote go to a special truck called reactive,
Tim Costello:right? And that reactive freight moves within a couple of hours
Tim Costello:to the next fulfillment center, like DFW to OKC one, or FTW,
Tim Costello:six, to OKC one, see, one are told to to, you know, whatever,
Tim Costello:you're moving that in there. And as an operations manager at OKC
Tim Costello:one, I had five hours when that truck arrived to get that item
Tim Costello:stowed into a bin, right. So that's Priority Freight, we get
Tim Costello:that stone is customer orders, right? Yeah, once that's stowed
Tim Costello:in the system now it says, oh, all your five items are now
Tim Costello:here. Put them together, pick them, send them downstairs, put
Tim Costello:them in a package, send them out on the truck to one of the
Tim Costello:delivery centers. And then boom, all of a sudden, you get it. And
Tim Costello:to you and me, it's like magic. You can imagine the physical
Tim Costello:effort going on behind the scene for hundreds of millions of
Tim Costello:products. Every single day, I would get six or seven reactive
Tim Costello:trucks into my center every single day.
Mike Graen:Wow. Wow. Well, here's the other big interesting
Mike Graen:thing is we don't have these things called customers coming
Mike Graen:in and stealing product and Associates stealing product and
Mike Graen:third parties coming in here and moving product. You don't have
Mike Graen:those in an Amazon warehouse, right. So you've got a much
Mike Graen:better controlled environment. So a retailer like Walmart, how
Mike Graen:do they win in that environment against Amazon? Because they are
Mike Graen:winning. And they're doing very well, because they have these
Mike Graen:4600 locations that are within 10 miles of a store. How do you
Mike Graen:compete against an Amazon model when you're a retailer like
Mike Graen:Walmart?
Tim Costello:So that's a very interesting question. I just
Tim Costello:happened to be on LinkedIn this morning. And my distant friend
Tim Costello:Carissa Sprague, who knows the SVP over there ecommerce
Tim Costello:delivery, I see her taking photos in a distribution
Tim Costello:fulfillment center, and it looks just like the Amazon ones,
Tim Costello:yellow guardrails, concretes. Shelves the whole bit, right.
Tim Costello:That's how you compete. Walmart didn't didn't sleep. Right. I
Tim Costello:remember Doug McMillon, five years ago at a conference for
Tim Costello:all the store managers right store manager meeting, I forget
Tim Costello:whether it was year beginning or holiday meeting. I don't know
Tim Costello:which one it was. But he sort of portrayed the graph of retailers
Tim Costello:that don't make that jump. Right. And he intimated that,
Tim Costello:you know, Walmart could be one of those retailers that doesn't
Tim Costello:make that jump. But of course, he has seen too, with lots of
Tim Costello:smart, talented people to create this exact same thing. So as
Tim Costello:they're tying this together, as Walmart builds their
Tim Costello:marketplace, Walmart is very well positioning themselves to
Tim Costello:just run right alongside because quite frankly, I believe Amazon
Tim Costello:has peaked. I believe they are, they're going to build a few
Tim Costello:fulfillment centers. But they're done building 65 a year, right?
Tim Costello:We're running out of cities, they might expand around the
Tim Costello:world somewhere, but here in the US, they're pretty peaked.
Tim Costello:They're going to build a new one to move new technology into it,
Tim Costello:but they're going to abandon the old ones are using for some
Tim Costello:other purpose. And Walmart's ramping it up. But Walmart has,
Tim Costello:you know, 5000 stores. And when Greg Friend was in my store one
Tim Costello:day, he asked me a question, what do you think, Tim? I said,
Tim Costello:You know what, Greg, I think you ought to take about two thirds
Tim Costello:of a supercenter, right, shrink it down to about 60, something
Tim Costello:thousand square feet, but the most moving brick and mortar
Tim Costello:skews in that area, and use all the rest for a fulfillment
Tim Costello:center is now you've got you know, 3500 fulfillment centers
Tim Costello:around the country that you can now fulfill out and some of
Tim Costello:that's come true. They've, you know, Salem, New Hampshire, they
Tim Costello:retrofitted a place. They're doing the drone delivery out of
Tim Costello:my old store and a couple others. So they are trying
Tim Costello:everything. And like Greg, for instance, I don't care if you
Tim Costello:fail, just try, right. Let's give it a shot. Right? See if it
Tim Costello:works, because it might work and might work and true leaders are
Tim Costello:never afraid of failing, right? It's just one more way that
Tim Costello:didn't work. Keep on going.
Mike Graen:That's right. That's right. Well, I am going to put
Mike Graen:my money on Walmart for sure. And it's not because I've spent
Mike Graen:40 years working with them. But here's the reality. I can now
Mike Graen:get on my computer, order everything I need. And within
Mike Graen:two hours, it's sitting on my doorstep. I don't know that
Mike Graen:Amazon's ever going to be able to compete with that. So I like
Mike Graen:their chances. But there's a lot of process stuff that has to
Mike Graen:happen. So let's switch gears a little bit. I mean, I couldn't
Mike Graen:think if I was UST I couldn't think of a better person than
Mike Graen:you who've had all this experience running store
Mike Graen:operations at Walmart and then with Amazon, to say, Tim blank
piece of paper:What is the retail tech going to look like
piece of paper:to support what we need to do for our customers? Walk us
piece of paper:through some of the cool stuff that's going on at UST. And what
piece of paper:do you think is the top of the list for some of these retailers
piece of paper:to consider?
Tim Costello:Excellent. So number one is frictionless
Tim Costello:commerce. That's what it's called now, right? Don't make
Tim Costello:your customer work too hard for them to give you money. When I
Tim Costello:ran my store, I literally pictured people walking into my
Tim Costello:store with fistfuls of money, daring me to trade them, right?
Tim Costello:You got what I want, I want to give you some money. 99% of 1%
Tim Costello:we'll talk about later. But those things are never going to
Tim Costello:change. Right? brick and mortar is not going away. In fact,
Tim Costello:you'll find Amazon's moving towards brick and mortar. So
Tim Costello:we're trying to figure out how to make brick and mortar better.
Tim Costello:Right? So it's down to shrink into the most number of skews
Tim Costello:that moves. You know, the neighborhood market does that,
Tim Costello:well, they could use some GM enhancements to get some stuff
Tim Costello:in there. But they're doing really well with that. So let me
Tim Costello:let me stop here real quick, because I hear people go, Oh,
Tim Costello:with E commerce, everything's gonna delivered to your house,
Tim Costello:you never even have to go into a brick and mortar store, you
Tim Costello:obviously think that's not gonna happen? brick and mortar is not
Tim Costello:going away. Okay? I mean, I may not live long enough to see my
Tim Costello:prediction come true. But 50 years from now, brick and mortar
Tim Costello:still gonna be here. Yeah, brick and mortar has never changed
Tim Costello:from the general store right. Now, back in the general store,
Tim Costello:everything was behind the counter. So he his shrink was
Tim Costello:really good, right? He had everything accounted for, and he
Tim Costello:gave you in charge you. But now we have very open stores. And
Tim Costello:we're trying different mechanisms to keep most of the
Tim Costello:merchandise in the store until it's paid for, and account for
Tim Costello:all the inventory that's coming into the store, as we can get it
Tim Costello:stocked, right. So keep your keep your nest together. So that
Tim Costello:brick and mortar is never going to go away. Right? That's just
Tim Costello:going to stay through some notes out here that with brick and
Tim Costello:mortar, there now has to be a way to take care of it.
Tim Costello:So when they converted my store to 100% self checkout on the
Tim Costello:front end some of the complaints from the customers were where's
Tim Costello:my W2 for bagging my own groceries? And after a while, I
Tim Costello:thought of a good response that was sort of funny and sort of,
Tim Costello:you know, ease the tension a bit. And that was: Did you stop
Tim Costello:driving because you had to pump your own gas? It worked on a few
Tim Costello:not all of them, right. But they were more concerned about the
Tim Costello:cashiers. Where's my cashier? Where's the one that took care
Tim Costello:of me all the time. And there's still some that I'm friend on
Tim Costello:Facebook with that were in my store, right? And they're
Tim Costello:wonderful people, they show up to work, they take care of the
Tim Costello:customers. They didn't go away. What they did in my store was
Tim Costello:take all of those hours and shift them into that ecommerce
Tim Costello:world. Right? So they made it run more efficiently. Yes, the
Tim Costello:customer can now check themselves out. In fact, Walmart
Tim Costello:has done such a great job of reducing the cash registers on
Tim Costello:the front end to all the self checkouts that now they don't
Tim Costello:have enough self checks. Yeah, that's true, literally, that now
Tim Costello:you're in line at the self check, right? So if you use
Tim Costello:their scan and go, and you're running around the store
Tim Costello:scanning, now you'd have to wait in line at a self check to get
Tim Costello:up there to bag your groceries, checkout, that kind of stuff to
Tim Costello:figure that out. But now they have lines self check. Could you
Tim Costello:imagine? Yeah, it's amazing. So brick and mortar is not going
Tim Costello:away. So with frictionless commerce, the idea is twofold.
Tim Costello:One is, how do I keep my inventory in the building till
Tim Costello:it's paid for? How do I detect when it's picked up? How do I
Tim Costello:properly put that into a virtual basket? Right? And how do I
Tim Costello:assign that virtual basket to someone I know and who's going
Tim Costello:to pay for it. So in some of the smaller stores I'm working on
Tim Costello:there's a turnstile that lets you in the store. Right, and you
Tim Costello:scan your QR code, the door is open. We know who you are. We're
Tim Costello:tracking you with cameras and sensors. And then they're doing
Tim Costello:3D modeling to know where your arm is up and down from the
Tim Costello:shelves. And then the shelves are scaled so that it knows what
Tim Costello:you pick up. It puts that in your virtual basket. When you're
Tim Costello:done shopping, you go to the turnstile, you walk out, it
Tim Costello:opens within eight or 10 seconds, you get a receipt. What
Tim Costello:if I change my mind, I pick something up and I look at it I
Tim Costello:decided I want and I put it back. You can put it down
Tim Costello:anywhere in the store. Why? Because of the scale of shelve.
Tim Costello:It knows what was in your basket, how much it weighed.
Tim Costello:When you pull that out of your physical basket and place it on
Tim Costello:a shelf somewhere in the store. Couple of things happen. One,
Tim Costello:the store manager app gets a notification that has a
Tim Costello:misplaced item. And at Walmart that might be like the Keystone
Tim Costello:Cops running around trying to put the store back together,
Tim Costello:right? But it doesn't sit there long because you know it's there
Tim Costello:and you got to clear the alarm.
Tim Costello:The second thing is it knows what it weighs. So unless they
Tim Costello:put it on the floor, right which doesn't have a scale; as long as
Tim Costello:they put it on a shelf that scaled, it knows where it goes.
Tim Costello:Now there is some technology a little bit in its early
Tim Costello:advancement, where we don't need any scaled shelves, and we can
Tim Costello:detect and see items with all these cameras takes a tremendous
Tim Costello:amount of computing power, as you might imagine, and that's
Tim Costello:being developed. But we're deploying it here and there to
Tim Costello:try it out and check it right. The whole idea is have your
Tim Costello:customers walk in, tell you who they are, shop, whatever they
Tim Costello:want, and then leave, and then you get a receipt. So obviously,
Tim Costello:for the folks who are listening to this podcast, they have seen
Tim Costello:the Amazon Go commercials way they call it just walk out
Tim Costello:technology. Yes. Zooming that says what you're referring to,
Tim Costello:that is part of the technology. Correct. I visited that store in
Tim Costello:Bellevue, Washington in the Factoria square. And I spent
Tim Costello:four hours in that store one afternoon to check out all the
Tim Costello:technology, I wanted to know everything that was going on, I
Tim Costello:talked to the associates, how do they stock the service counters
Tim Costello:is the cool technology because they're slicing meat and all
Tim Costello:that cheese and stuff. And then when they had right before they
Tim Costello:hand it to you, they scan it with a barcode scanner, because
Tim Costello:it's got just the typical label, then they hand it to the
Tim Costello:customer and the systems pick up who that customer is right. And
Tim Costello:then they go about their business. Now they've got two
Tim Costello:types of customers in that store, which is really cool.
Tim Costello:They have a traditional shopper, and then they have a just walk
Tim Costello:out shopper. So if you want to traditionally shop, all the
Tim Costello:events that you're creating in that store by lifting items, and
Tim Costello:all that kind of stuff are tracked but not attributed to a
Tim Costello:basket. Right when you get to the cashier, you do the normal
Tim Costello:cashier thing, they bag it up and out you go. But if you're a
Tim Costello:just walk out customer, you do all your picking and grabbing,
Tim Costello:and then you get to the front of the store. And there's a
Tim Costello:turnstile. You scan your QR code or palm or whatever you've got.
Tim Costello:And then it opens and it starts generating your receipt. Now,
Tim Costello:Amazon does have humans in the loop. So nothing's leaving the
Tim Costello:store, they're going to make sure the the because it's so
Tim Costello:technology technologically beginning that they're trying to
Tim Costello:make sure the receipt is accurate, because an accurate
Tim Costello:receipt is the ultimate gift to the customer. Right and to you.
Tim Costello:So they've got humans in the loop. So you might not get your
Tim Costello:receipt for two or three hours. But when you get it, hopefully
Tim Costello:it's correct.
Mike Graen:Well, I've done that in the Seattle store. And I was
Mike Graen:a little bit surprised when I walked out. It probably took not
Mike Graen:two hours, it probably took 45 minutes before I finally got a
Mike Graen:receipt and an actual debit from my account. I was like, Well, I
Mike Graen:wonder what it took so long. I should have done it right away.
Mike Graen:found out later they were doing an audit process to make sure
Mike Graen:that that was in fact correct. Because I don't I'm assuming the
Mike Graen:world's worst thing is somebody who didn't buy something and
Mike Graen:gets charged for it. And then the PR that goes with that.
Mike Graen:Right?
Tim Costello:It gets charged for three of them.
Mike Graen:Yeah, good point. Good point. Yeah. So where do
Mike Graen:you where do you see this going? So clearly seamless technology,
Mike Graen:because the front end is probably the number one. I mean,
Mike Graen:well, it's probably a lot of things, dirty parking, lots
Mike Graen:dirty bathrooms, you know, product that's out of stock. But
Mike Graen:I hear more than people anything waiting in line to check out
Mike Graen:either self checkout today, or main checkout is the most
Mike Graen:frustration. Your technology sounds like it's game changing.
Mike Graen:Why isn't it everywhere?
Tim Costello:It's expensive. Right? It's not cheap, per
Tim Costello:square foot. Right?The most of the stores we're doing are sub
Tim Costello:1500 square feet. Because they're sort of the bleeding
Tim Costello:edge. They're the early adopters. We're working all the
Tim Costello:bugs out there and all the features and trying to make it
Tim Costello:work seamlessly because frictionless can't create more
Tim Costello:friction, correct and called the enemy called frictionless,
Tim Costello:right? So you got to take care of the customer.
Tim Costello:To do something like a Walmart store, it'll have to be an over
Tim Costello:ceiling retrofit more than every scale on the shelf type of
Tim Costello:thing. Correct, because it would be so tremendously expensive.
Tim Costello:And then you get to items clothing, right clothing hangs
Tim Costello:on a hanger. Now you got to have some kind of scaled hanger RFID
Tim Costello:helps there a lot, right. Do you segment up your store? Do you
Tim Costello:divide it into chunks and make people checkout three times?
Tim Costello:Again, that's not frictionless. So all of us are trying to
Tim Costello:figure out exactly how that does. Now, us t is a systems
Tim Costello:integrator. Okay, so we bring all the different hardware
Tim Costello:together. And we write the back end to make it all sing. Right.
Tim Costello:So that's our function, we build it and we make it work
Tim Costello:altogether, right? And so, so it's an expense type of thing.
Tim Costello:You remember when you're in my store Naira and putting the ESL
Tim Costello:is in? Yeah, it was a huge expense, just to put the
Tim Costello:electronic shelf labels all around a neighborhood market.
Tim Costello:Right. And I don't know if they're even still there,
Tim Costello:because I've been gone from that store for three years. But you
Tim Costello:know, don't know.
Mike Graen:Well, I can tell you, I can tell you, I think
Mike Graen:there was a brief pause but I think if you would go to the
Mike Graen:store 4108 in Elm Springs, Arkansas, the new Walmart kind
Mike Graen:of future store, which includes a lot of things, which is right,
Mike Graen:you're gonna see electronic shelf labels in that entire
Mike Graen:Supercenter. So I think they're, they're coming back to that
Mike Graen:because it makes sense. It just eliminates one more task for
Mike Graen:associate to do a bunch of price changes and things like that.
Tim Costello:Nobody, nobody liked doing price change.
Mike Graen:Nobody liked changes. So let me ask you a
Mike Graen:question. Let's talk about USD a little bit. I wasn't one
Mike Graen:planning on going here. But I think you open up the door for
Mike Graen:something because I'm a firm believer, if you're going to be
Mike Graen:in retail these days, especially in a brick and mortar
Mike Graen:environment, you have to know two things: you have to know
Mike Graen:what you have. And you need to know where it's located all the
Mike Graen:time? Do you really want to participate that level?
Mike Graen:Unfortunately, as we talk to many different technology
Mike Graen:suppliers, somebody goes, well, I've got the answer. It's RFID.
Mike Graen:Not for everything. It's not. I've got the answer. It's a
Mike Graen:robot with a scanner. Not for everybody. It's not, I've got
Mike Graen:the opportunity, which is a fixed camera over you know,
Mike Graen:dairy, not for everybody. It's not, oh, I've got an up me
Mike Graen:algorithms. There's all these other things. So what is the
Mike Graen:future? And that will you and I didn't talk about this question
Mike Graen:before, but the future is multiple sensors based upon the
Mike Graen:category type, which allow you to know what you have and where
Mike Graen:it's located for both on shelf availability purposes, but also
Mike Graen:from a seamless checkout. If I've taken one, you can tie it
Mike Graen:to me. I think that's possible. I don't think it's possible
Mike Graen:tomorrow. But I think it's possible to figure out how that
Mike Graen:seamless checkout experience you does us t play a role to
Mike Graen:integrate that kind of stuff together.
Tim Costello:We do. I was just on a conference call the other
Tim Costello:day with a company who I won't mention yet. But they have
Tim Costello:something that goes on a shelf that will tell you your instock
Tim Costello:level. So it's measuring the can a can of vegetables only weighs
Tim Costello:so much, right? If you've got an average, and then you've got a
Tim Costello:bunch of these on the shelf sitting on that particular mat.
Tim Costello:Now it tells you you have 12 of that thing.
Mike Graen:Excellent. Because usually it's either binary, it's
Mike Graen:either I have it or I don't have it, which is helpful. But it's
Mike Graen:not real helpful. Because by the time you know, you don't have
Mike Graen:it, you've got an out of stock, right?
Tim Costello:That's correct, okay, or somebody else, put
Tim Costello:something on that mat in the wrong spot, you should get an
Tim Costello:alert, hey, this thing weighs 79 grams instead of 65 grams, right
Tim Costello:might be the wrong product, you could run around the store and
Tim Costello:fix those type errors. But on shelf availability, is the
Tim Costello:number one focus for many retailers worldwide that I
Tim Costello:visit, no matter what the technology is, no matter what it
Tim Costello:is on shelf availability, is it in fact, we talked to one, and
Tim Costello:they said if they could simply get on the shelf, what they've
Tim Costello:got through distribution, you know, and get it to the store
Tim Costello:and get it on the shelf. Their sales, top line revenue would
Tim Costello:increase five points. Into the size this retailer that is
Tim Costello:billions of dollars.
Mike Graen:Wow. That's huge.
Tim Costello:So I mean, Walmart's the same right? When I
Tim Costello:was at Walmart, if if I go visit this Walmart over here in
Tim Costello:Georgia, where I'm sitting and I say where I'm at, right, but But
Tim Costello:I can tell you, I can walk around that store. If you give
Tim Costello:me about eight weeks in that store, I'll increase the sales
Tim Costello:in that store three points, just by getting in stock. And you
Tim Costello:know, sometimes it's just zeroing out something that you
Tim Costello:think you have that you don't have. Revenue matters.
Mike Graen:What's interesting, Tim, is that's what this podcast
Mike Graen:is all about. The only thing that we want to talk about is
Mike Graen:this concept of on shelf availability. And first off,
Mike Graen:it's not something that you can measure very easily because the
Mike Graen:way you measure on shelf availability, for a high volume
Mike Graen:thing may be an algorithm like Oska. For apparel, that doesn't
Mike Graen:work, because I may sell one pair of jeans every two weeks, I
Mike Graen:can't tell if it's not on shelf. And frankly, they all look like
Mike Graen:the same size and color combination. So I think it's
Mike Graen:going to be multiple different sensors, algorithms, fixed
Mike Graen:cameras, robotic cameras, RFID, all working together. But
Mike Graen:somebody's got to figure out how to put all that together to
Mike Graen:really say what do I have and where is it located? Because to
Mike Graen:your point on shelf availability is not an option anymore for
Mike Graen:customers, because here's the deal. If I go to a Walmart and
Mike Graen:they don't have it, I'm pulling out my phone, I'm using Walmart
Mike Graen:Wi Fi to order it from Amazon. Congratulations: you just had me
Mike Graen:switch over to Amazon, and then you would make it worse as you
Mike Graen:used your Wi Fi to order it from him. Right, which is really
Mike Graen:good.
Tim Costello:It is is a double edged sword, you know, for the
Tim Costello:customer, so you gotta be installed. That's what everybody
Tim Costello:is talking about worldwide all the time. That's right.
Mike Graen:Well, this has been fascinating. Tim, here's the one
Mike Graen:final question for you. What have I not asked that I should
Mike Graen:have what's burning in your mind that the boy, I sure wish he
Mike Graen:would have asked this question because I think that would be
Mike Graen:really helpful to hear. What do you think the future looks like?
Tim Costello:So no matter what we do, and I was actually on
Tim Costello:LinkedIn reading a couple of Sam Walton letters that somebody had
Tim Costello:posted up that he wrote in 1980, about taking care of the
Tim Costello:associates, right, who take care of your customers, he never said
Tim Costello:a bad word. But he said, our associates make the difference.
Tim Costello:And that's an associate anywhere, right? If you're in
Tim Costello:retail, and you're an associate, you are the frontline soldier
Tim Costello:with that with that customer.
Tim Costello:As a store manager and a leader, the only thing that I would love
Tim Costello:to tell other store managers and leaders is how to empower your
Tim Costello:people. And Walmart gives you a number of these right? Number
Tim Costello:one is a tool, right? We call it a TC 70. We call it a RFID
Tim Costello:scanner, whatever. And then along with that tool, you have a
Tim Costello:process, right? So now I got a tool, I got a process to use
Tim Costello:that tool could be a number of processes. And then you give
Tim Costello:that associate a strategic vision of why that process is
Tim Costello:used with that tool and what the ultimate goal is, all of a
Tim Costello:sudden, now, they are empowered to make decisions that you don't
Tim Costello:have to make, they are empowered to take care of your customer.
Tim Costello:So all you need to do as a store manager after a couple of years,
Tim Costello:once everybody's perfect in your store, which never happens, is
Tim Costello:kiss babies and shake hands. That's the ultimate goal, the
Tim Costello:store manager is to have nothing to do. Because the associates
Tim Costello:are that awesome. So brick and mortar is not going away. Retail
Tim Costello:associates are not going away. Stocking associates,
Tim Costello:distribution associates, they're not going away.
Mike Graen:Tremendous. And let me just throw out one more
Mike Graen:compliment to you because you and I worked together at one of
Mike Graen:your the Neighborhood Market store when we were doing
Mike Graen:electronic shelf label process. I specifically heard you more
Mike Graen:than more than a number of times: teach, coach, ask
Mike Graen:questions. And one of the things you always asked is "What does
Mike Graen:help look like?" "How can I help you?" "What can I do for you?"
Mike Graen:And little did I know that two minutes later, you're driving
Mike Graen:around in a floor cleaner. Now why is the store manager
Mike Graen:cleaning the floor? That's somebody else's job? No, you
Mike Graen:decided that was one thing that you could do. And somebody said
Mike Graen:that could look like help. You're driving around the floor
Mike Graen:cleaner. So you embodied servant leadership, when you ran stores,
Mike Graen:you ran really, really good stores. They were every time I
Mike Graen:was at the home office, they said yeah, to go over check out
Mike Graen:Tim's store because he's really on it. He knows exactly what's
Mike Graen:going on.
Mike Graen:Is it and I'm not telling you that just because we're on the
Mike Graen:podcast, but you were always very well thought of in the home
Mike Graen:office. You know, if you want to go to a store and really figure
Mike Graen:out what's going on, go to Tim store. And it was if you didn't
Mike Graen:have the biggest store the biggest volume and the most
Mike Graen:number of customers or center but you had a store that people
Mike Graen:trusted you are running the process and treating your people
Mike Graen:with respect and kindness. And I think that's what really
Mike Graen:matters. So, Tim, I appreciate your time so much. We'd love to
Mike Graen:have you back on a future podcast because the future of
Mike Graen:technology to your point is going to be how do you make that
Mike Graen:more of a seamless experience? How do you make sure that all
Mike Graen:the products that the customer wants when they come in are
Mike Graen:there and available for them so you don't disappoint them and I
Mike Graen:think you're spot on with the work you're doing at UST.
Tim Costello:It's a lot of fun, a lot of fun and the reason I
Tim Costello:work at UST because it's bleeding edge.
Mike Graen:Awesome. Well, thank you very much safe travels my
Mike Graen:friend and I appreciate all your time.
Tim Costello:Thank you, Mike. Always a pleasure.
Mike Graen:We'll see you later. Bye bye