Dr. Oliver Vogt, the newly appointed CEO of Transcend Retail Solutions (a subsidiary of Tesco), joins hosts Anne Mezzenga and Chris Walton to discuss the evolving landscape of e-commerce in grocery retail. The conversation highlights the importance of having a cohesive ecosystem that integrates hardware, software, and processes to ensure successful online operations.

Oliver shares insights from his extensive background in logistics and e-commerce, emphasizing that while automation is essential for scaling, manual picking can still be effective for certain volumes.

The discussion also touches on the significance of innovation in the grocery sector, noting that it doesn't always have to be large-scale but can be achieved through smaller, incremental changes.

Listeners will gain valuable perspectives on how retailers can navigate the challenges of the current market and the critical role of partnerships in driving success.

Takeaways include:

• Dr. Oliver Vogt, the new CEO of Transcend Retail Solutions, emphasizes the importance of logistics in grocery e-commerce.
• A successful e-commerce grocery operation requires a balanced ecosystem of software, hardware, and processes.
• Manual picking can be effective for lower volume orders, but automation becomes essential at scale.
• Micro fulfillment is still viable if approached correctly; experience and planning are crucial.
• Transcend aims to partner with retailers globally to streamline their logistics and fulfillment processes.
• Understanding customer feedback from both online and in-store experiences is vital for operational improvement.

This podcast uses the following third-party services for analysis:

Podcorn - https://podcorn.com/privacy

Ann Mazenga: 00:00:00

Welcome back, everybody.

Ann Mazenga: 00:00:01

This is Omitak Retail.

Ann Mazenga: 00:00:02

I'm Ann Mazenga.

Chris Walton: 00:00:03

And I'm Chris Walton.

Ann Mazenga: 00:00:04

again, live from grocery shop: 2024

Ann Mazenga: 00:00:09

Booth number a 210.

Ann Mazenga: 00:00:11

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

Ann Mazenga: 00:00:16

Chris, we have another guest.

Chris Walton: 00:00:18

We do.

Ann Mazenga: 00:00:19

Visiting?

Oliver Folcht: 00:00:19

I think we do.

Chris Walton: 00:00:20

Yes, we do.

Chris Walton: 00:00:20

Somebody in between us?

Ann Mazenga: 00:00:22

We have.

Ann Mazenga: 00:00:23

We have somebody between two omni talk.

Chris Walton: 00:00:25

Between two omni talkers.

Ann Mazenga: 00:00:26

We have Doctor Oliver Folcht.

Oliver Folcht: 00:00:29

Very good.

Ann Mazenga: 00:00:30

Close.

Oliver Folcht: 00:00:31

Very good.

Ann Mazenga: 00:00:32

The newly appointed CEO at Transcend Retail Solutions.

Ann Mazenga: 00:00:35

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

Oliver Folcht: 00:00:39

A pleasure.

Ann Mazenga: 00:00:40

It's great to have you.

Ann Mazenga: 00:00:41

How is grocery shop going for you so far?

Oliver Folcht: 00:00:43

It's been very good.

Oliver Folcht: 00:00:44

It's buzzing today is brilliant.

Oliver Folcht: 00:00:46

So busy and just such a good vibe about it.

Oliver Folcht: 00:00:50

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

Ann Mazenga: 00:00:52

Good, good.

Ann Mazenga: 00:00:53

I'm happy to hear it.

Chris Walton: 00:00:54

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

Chris Walton: 00:00:59

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

Chris Walton: 00:01:01

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

Chris Walton: 00:01:04

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

Chris Walton: 00:01:06

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

Oliver Folcht: 00:01:11

A good journey, indeed.

Oliver Folcht: 00:01:13

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

Chris Walton: 00:01:16

Okay.

Oliver Folcht: 00:01:17

Just to do something different.

Oliver Folcht: 00:01:18

No other reason than that, right?

Oliver Folcht: 00:01:20

Why wouldn't you?

Chris Walton: 00:01:21

I'm guessing you like math, right?

Oliver Folcht: 00:01:22

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

Oliver Folcht: 00:01:24

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

Oliver Folcht: 00:01:29

Supply chain, fulfillment.

Oliver Folcht: 00:01:31

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

Chris Walton: 00:01:36

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

Oliver Folcht: 00:01:39

Indeed.

Oliver Folcht: 00:01:40

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

Oliver Folcht: 00:01:45

Across three temperature zones doing grocery.

Oliver Folcht: 00:01:47

Because, again, for fun.

Oliver Folcht: 00:01:48

Why wouldn't you?

Chris Walton: 00:01:49

Why wouldn't you?

Chris Walton: 00:01:49

You're gliding for punishment.

Oliver Folcht: 00:01:51

Yeah.

Oliver Folcht: 00:01:53

Been in Tesco now nine years.

Chris Walton: 00:01:55

Wow.

Oliver Folcht: 00:01:56

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

Oliver Folcht: 00:02:00

Logistics.

Oliver Folcht: 00:02:00

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

Oliver Folcht: 00:02:05

Yeah.

Chris Walton: 00:02:05

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

Chris Walton: 00:02:08

For the most part.

Chris Walton: 00:02:08

Right?

Chris Walton: 00:02:09

Give or take roundup.

Oliver Folcht: 00:02:10

Yeah.

Chris Walton: 00:02:10

Nice.

Ann Mazenga: 00:02:11

Tell us a little bit about transcend.

Ann Mazenga: 00:02:13

What is it?

Ann Mazenga: 00:02:14

Where does it begin and end?

Ann Mazenga: 00:02:15

Is it a software play?

Ann Mazenga: 00:02:17

A hardware play?

Ann Mazenga: 00:02:18

Give us the background.

Oliver Folcht: 00:02:19

Transcend retail solutions is all of the above.

Oliver Folcht: 00:02:24

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

Oliver Folcht: 00:02:34

nline grocery order came from: 1984

Oliver Folcht: 00:02:51

So it's a very long time ago.

Oliver Folcht: 00:02:53

Tesco.com dot.

Ann Mazenga: 00:02:54

I didn't know that.

Oliver Folcht: 00:02:55

Yeah, we then launched in: 2000

Chris Walton: 00:03:00

Is pretty fast for retail.

Oliver Folcht: 00:03:03

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

Oliver Folcht: 00:03:06

But even: 2000

Oliver Folcht: 00:03:09

So we had a good long run at this.

Oliver Folcht: 00:03:11

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.

Oliver Folcht: 00:03:25

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

Oliver Folcht: 00:03:31

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

Oliver Folcht: 00:03:34

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

Oliver Folcht: 00:03:38

And that's where the idea of transcend started.

Oliver Folcht: 00:03:42

We believe we developed quite good systems.

Oliver Folcht: 00:03:45

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.

Oliver Folcht: 00:04:00

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.

Oliver Folcht: 00:04:14

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

Oliver Folcht: 00:04:18

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

Oliver Folcht: 00:04:20

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

Oliver Folcht: 00:04:24

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

Oliver Folcht: 00:04:29

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.

Oliver Folcht: 00:04:39

And that must make transcend different.

Ann Mazenga: 00:04:42

What kind of retailers are you going after?

Oliver Folcht: 00:04:45

We want to be an international business.

Oliver Folcht: 00:04:47

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

Oliver Folcht: 00:04:54

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

Oliver Folcht: 00:05:02

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

Chris Walton: 00:05:09

Got it.

Chris Walton: 00:05:09

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?

Chris Walton: 00:05:22

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

Chris Walton: 00:05:24

I'm curious how you think about that too.

Oliver Folcht: 00:05:26

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

Oliver Folcht: 00:05:34

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

Oliver Folcht: 00:05:41

Right.

Oliver Folcht: 00:05:42

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

Oliver Folcht: 00:05:46

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

Oliver Folcht: 00:05:52

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

Oliver Folcht: 00:05:58

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

Oliver Folcht: 00:06:03

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

Oliver Folcht: 00:06:09

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

Oliver Folcht: 00:06:16

Right?

Oliver Folcht: 00:06:16

Having great software solutions is incredibly important.

Oliver Folcht: 00:06:19

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

Oliver Folcht: 00:06:26

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

Oliver Folcht: 00:06:32

Miss one piece and it starts to become problematic.

Oliver Folcht: 00:06:35

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

Oliver Folcht: 00:06:40

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

Chris Walton: 00:06:43

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?

Chris Walton: 00:06:54

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?

Oliver Folcht: 00:07:02

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

Oliver Folcht: 00:07:08

You do.

Oliver Folcht: 00:07:08

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

Oliver Folcht: 00:07:13

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

Oliver Folcht: 00:07:17

You've got all the inventory there.

Oliver Folcht: 00:07:19

You've got Val run store.

Oliver Folcht: 00:07:21

Putting manual in store.

Oliver Folcht: 00:07:23

Picking into that store actually enhances the store.

Oliver Folcht: 00:07:26

You've got the right systems.

Oliver Folcht: 00:07:28

You actually learn an awful lot about it.

Oliver Folcht: 00:07:30

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

Oliver Folcht: 00:07:35

The picker will tell you where.

Oliver Folcht: 00:07:37

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

Oliver Folcht: 00:07:39

Well, exactly.

Oliver Folcht: 00:07:40

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

Oliver Folcht: 00:07:44

Your online customer will through your pickup.

Oliver Folcht: 00:07:48

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

Oliver Folcht: 00:07:55

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

Oliver Folcht: 00:08:00

So.

Oliver Folcht: 00:08:01

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

Oliver Folcht: 00:08:06

It is not a bad thing.

Oliver Folcht: 00:08:07

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

Oliver Folcht: 00:08:11

And only when you go into like larger orders.

Oliver Folcht: 00:08:14

Youtong three, four,: 5600

Chris Walton: 00:08:32

In a manual fashion.

Oliver Folcht: 00:08:33

And that works just fine.

Chris Walton: 00:08:35

Yeah, go ahead.

Ann Mazenga: 00:08:35

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?

Ann Mazenga: 00:08:45

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

Ann Mazenga: 00:08:51

What?

Ann Mazenga: 00:08:52

Or is it more of a function of cost?

Ann Mazenga: 00:08:54

Like what?

Ann Mazenga: 00:08:55

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

Oliver Folcht: 00:08:58

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

Oliver Folcht: 00:09:03

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.

Oliver Folcht: 00:09:11

Depending on how the stores are laid out.

Oliver Folcht: 00:09:13

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

Oliver Folcht: 00:09:18

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.

Chris Walton: 00:09:26

Right.

Oliver Folcht: 00:09:26

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

Oliver Folcht: 00:09:32

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

Ann Mazenga: 00:09:40

Right.

Oliver Folcht: 00:09:40

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.

Oliver Folcht: 00:09:56

That's when it starts making sense.

Ann Mazenga: 00:09:58

Well, go ahead.

Chris Walton: 00:09:59

You mentioned a word too, before micro fulfillment.

Chris Walton: 00:10:01

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

Chris Walton: 00:10:05

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

Chris Walton: 00:10:12

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

Oliver Folcht: 00:10:20

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

Oliver Folcht: 00:10:26

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.

Oliver Folcht: 00:10:38

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.

Oliver Folcht: 00:10:48

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

Chris Walton: 00:10:51

Right.

Oliver Folcht: 00:10:53

But I think that is the single biggest learning.

Oliver Folcht: 00:10:56

You don't have to innovate alone.

Oliver Folcht: 00:10:58

Innovation isn't isolation.

Oliver Folcht: 00:11:01

Right.

Oliver Folcht: 00:11:02

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

Oliver Folcht: 00:11:08

50 50.

Ann Mazenga: 00:11:11

Oliver, how do you think about that?

Ann Mazenga: 00:11:13

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

Ann Mazenga: 00:11:19

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.

Ann Mazenga: 00:11:27

Potentially a competitor would, would buy this solution.

Ann Mazenga: 00:11:31

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?

Oliver Folcht: 00:11:39

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.

Oliver Folcht: 00:11:47

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

Oliver Folcht: 00:11:54

A separate entity.

Ann Mazenga: 00:11:55

Right.

Ann Mazenga: 00:11:56

Smart.

Ann Mazenga: 00:11:57

Okay, you were on stage.

Ann Mazenga: 00:11:58

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

Ann Mazenga: 00:12:01

Have you been on.

Oliver Folcht: 00:12:02

I have been.

Oliver Folcht: 00:12:03

Yesterday.

Ann Mazenga: 00:12:03

Yesterday you were on stage.

Ann Mazenga: 00:12:05

What did you talk about?

Ann Mazenga: 00:12:06

What did Chris and I miss?

Oliver Folcht: 00:12:08

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

Oliver Folcht: 00:12:16

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.

Oliver Folcht: 00:12:33

So, yes, automation is one answer to that.

Oliver Folcht: 00:12:37

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

Oliver Folcht: 00:12:42

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

Oliver Folcht: 00:12:46

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.

Oliver Folcht: 00:13:00

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.

Chris Walton: 00:13:12

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

Chris Walton: 00:13:15

Without a doubt.

Chris Walton: 00:13:15

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

Chris Walton: 00:13:17

I'm curious.

Chris Walton: 00:13:17

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

Chris Walton: 00:13:22

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

Chris Walton: 00:13:24

How are you gonna define success?

Chris Walton: 00:13:26

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

Oliver Folcht: 00:13:30

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

Oliver Folcht: 00:13:35

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.

Oliver Folcht: 00:13:44

How can we truly partner with you?

Oliver Folcht: 00:13:47

Will someone describe us as a partner on that journey?

Oliver Folcht: 00:13:51

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

Chris Walton: 00:13:53

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

Oliver Folcht: 00:13:57

Absolutely.

Chris Walton: 00:13:58

That's wonderful.

Ann Mazenga: 00:14:00

All right.

Chris Walton: 00:14:00

All right.

Ann Mazenga: 00:14:01

That wraps us up.

Chris Walton: 00:14:02

That wraps us up, man.

Ann Mazenga: 00:14:03

Thanks so much to Oliver.

Ann Mazenga: 00:14:05

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

Ann Mazenga: 00:14:11

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

Ann Mazenga: 00:14:16

And stay tuned.

Ann Mazenga: 00:14:17

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