Mike Graen discusses the state of on-shelf availability in retail, highlighting the impact of inventory distortion, which cost retailers over $1.77 trillion in 2023. He cites a McKinsey survey showing 62% of shoppers couldn't find an item on their list, leading to 39% switching brands and 32% switching retailers. Graen emphasizes the importance of meeting customer needs, referencing Walmart CEO Doug McMillon. He explores solutions like algorithms, audits, computer vision, RFID, and robots, noting that on-shelf availability is crucial for customer satisfaction and sales. He also mentions the role of buy online, pick up in-store (BOPIS) and research online, buy in-store (ROBUS) in modern retail.

Good morning, good afternoon, good evening,

wherever you happen to be, my name is Mike Graen, and it's a

pleasure to welcome you to Conversations on Retail and the

Supply Chain Management Research Council at the University of

Arkansas. This will be a 30 minute podcast or so that will

just talk about the state of the industry on shelf availability.

And we're going to dive a little bit deeper into some some of the

solution providers that I'm aware of that are out there, and

we'll get into that in just a minute. This is this podcast is

going to be sponsored both by Conversations and Retail as well

as the On Shelf Availability Group, and it's presented by the

Walton Supply Chain Center at the University of Arkansas. So

thank you for sponsoring this. They have been the undergraduate

supply chain program in 2020 2022 and we're happy to announce

that they were just announced the number one supply chain in

2024 so congratulations to all of the folks as part of the

University of Arkansas. We want to spend some time talking about

the state of on shelf availability in the industry at

this tape. At the moment of this taping, this is August of 2024 a

lot has changed, and I've updated some of the research

that we have found that's out there, and some of the solution

providers as well. So first, we're going to start with kind

of the quote we've we've used Sam Walton's quote before. I

thought it'd be appropriate to use Doug McMillon, who's the

current US, while actually international, global, CEO of

Walmart, and his he's he's had a tremendous career with Walmart,

starting in stores and distribution centers, working

his way through Sam's Club in international now has served as

the CEO at Walmart, but his philosophy is pretty simple,

which is, if you're not meeting the wants and needs of the

customers, you're done. There's not a lot of loyalty there. And

he actually used to carry this particular phone screen capture

with his phone. I'm not sure if he still does it or not, but one

of the things it shows, if you look at some of the progress

over the years about the top retailers in the United States,

where people in 1950s and 60s were people like Sears.

Obviously, Sears is not really around anymore, so Sears and

K-Mart and Shoe, Shoe, Heart you see some of the some of the

folks around where the 50s and 60s, they're not around anymore.

And that just a couple different things. Number one, it shows

that the customer is always changing and always has higher

demands. And number one and number two, if you don't

continue to innovate and meet those customer needs, things are

becoming very, very difficult. So once you hit number one, if

you slip down to number two, you see the history has not been

very favoritive. So people like Walmart and Amazon and other

really leading retailer companies out there know that,

and they spend a lot of time investing in new capability to

meet those customers needs. One of them is on shelf

availability, and we have continued to see disruption in

the industry. This is from a new article from the IHL study. They

talk about the fact that retailers have a inventory

distortion that'll cost over retailers, over $1.77 trillion

in 2023. Now some of that is international, some of that is

not out of stocks, but it could be literally overstated

inventory or understated inventory, where you have too

much inventory in the stores or in the supply chain that doesn't

need to be there, so you've got an unnecessary level of

inventory that you're carrying, and obviously there's costs

associated with that. But a couple more facts that we've,

we've looked at before, and I think they're, they're worth

mentioning again, retailers are missing out over a trillion

dollars in sales because they don't have what customers want

and they'll buy to buy in their stores. Every customer that that

I've seen, or at least, most of them, are walking around with

basically a buying device with them all the time. So if they

have got a situation where they are going into a retailer to

look for a specific item, and they're not able to find that

item, they can very quickly come out, use the retailer's Wi Fi

and order it from a competitor. And that's absolutely true

today, and it will continue. I believe the customers,

ultimately the boss, they're going to make the decisions

about where they get their products, but they are, they are

very loyal to those products, and they're going to get them

the second one, which is pretty interesting; Amazon Prime

members, facing empty shelves, are 52% more likely than other

consumers or shoppers to take out their phones and buy what

they need online. That's kind of the point that I just made.

Everybody's got basically an ordering device in their in

their hands. So if you are disappointing a customer, they

may reward you with a, you know, a choice to go somewhere else,

which is exactly what Doug mentioned in his quote. And the

last one is pretty interesting too, that 24% of Amazon's

current retail revenue comes from customers who tried to buy

things in store. First, fascinating quote, inventory

distortion, again, includes two things. It includes number one,

obviously, out of stocks. We talk a lot about out of stocks

in this particular chart, etc, but we also we talk a lot about

the fact that that 7.2% of retail sales, and there's a lot

of reasons for that, inaccurate demand planning, inaccurate

staffing, supply chain issues. We're going to we're going to

cover two or three of those here in a few minutes. But, but

definitely, the supply chain has been very, very impacted by lots

of factors of the economy, and certainly it's still making a

big impact in terms of out of stocks and overstocks for

retailers. Secondly, overstocks in 2023 computed to $417 billion

of out of stocks and overstocks, and that's, that's a huge number

that will continue to grow unless we spend a time as an

industry, kind of focusing against trying to figure out the

root causes and driving out those, those causes a lot of

stocks. This one's always an interesting one to me. This,

this talks about, okay, well, what does what do the shoppers

do? So respondents of this survey, and this was a McKinsey

survey from a few years ago, at least 62% of them could not find

at least one item on their shopping list. And one of the

questions is, well, what would they do about that? Well, you

see in this one that this these particular customers that were

surveyed, well, 39% of them switched to a different brand.

So if they were looking for Tide detergent, maybe they went to a

competitor. They still need a detergent, so they're going to

switch to another brand. That probably doesn't hurt the

retailer, but it definitely hurts that supplier. In this

case, it'd be Procter & Gamble. 32% of those folks switched

retailers. So it was something that we were very loyal to from

a brand standpoint. The examples that I use a lot are things

like, Hey, I've got a HP printer. I'm looking for a black

printer cartridge, and you don't have it, I'm not going to switch

to another, you know, another brand. It doesn't help me to

buy, to buy a cannon print cartridge to put into my HP

printer. It's just not going to work. So in those cases, they

switch retailers, and 13% of the time they just waited. They

waited for another option. And last one, 16% of them just

didn't buy. Now, obviously there's, there's

substitutability factors. I would imagine that people are

going to be more willing to substitute for substitute for,

example, a different brand of cereal. If it came to get cereal

and their favorite cereal wasn't there, they might switch to

another brand or another size of that. But when you get into

situations like clothing or general merchandise, like the

printer cartridge that I just mentioned, they're probably

going to be more suited to probably ordering that product

from another retailer. Either way, somebody loses, the

retailer loses, or the brand loses. Ultimately, the customer

is disappointed. Now obviously, we've got stores like Walmart,

like Target Home Depot, Macy's, they are becoming both a brick

and mortar store, and they're also becoming a fulfillment

center. The term that's been used a lot is buy online, pick

up in store, or bopis. You'll also actually hear people

starting to call about ROBIS. Dr Bill Hardgrave from the

University of Memphis, talks about ROBIS, and that's research

online and buy in store. So I literally, if I'm going to look

for something, I'll log on to the retailer's website, I'll

look to the store that's in my local area to see if they have

the item I'm looking for before I even get in the car to drive

to go pick up that item. Lots of retailers are doing this, Dick's

Sporting Goods, Best Buys, Nordstroms. A lot of them are

using different technologies, which we'll talk about later, to

be able to get that inventory more accurate. But I thought

it'd be interesting. Again, we've we've heard this quote or

this this talk before, by Bill Hardgrave. I pulled a couple of

comments out about the role that research online and buy online,

pickup and store have for today's retailers.

Pre-pandemic, you know, retailers kind of

looked at BOPIS kind of as a nice to have. It's like, yeah. I

mean, maybe we'll offer it to the consumers but during the

pandemic it became a lifeline for a lot of retailers, and many

retailers were absolutely not prepared for that. What I would

do is knowing that that we had, they were they were executed

poorly. I would, here's how I would, here's why I do it after

I started realizing this is really bad. So I would go into

the store and I would have my mobile device with me. I'd make

sure I wasn't on the Wi Fi, I wasn't using their app, so they

didn't know who I was, and they didn't know I was in the store,

right? And I would literally stand in front of a shelf

looking at the product, and go online and say, I'd like to buy

this and pick it up in store, and I'm standing there looking

at the product, and so I'll share with you some of the

things that I got. For example, in apparel, I'm standing here,

I'm looking at, there's five on the shelf on my mobile device

that says, Sorry, this product's unavailable at this location.

I'm looking at, there's four on the shelf online, it says

there's one left, another, another apparel item. There's,

I'm looking at, there's three of them on the shelf online. It

says it's out of stock. Another one, I'm looking at it. There's

nine on the shelf. It doesn't even appear on their website. So

Mike, that that I just want to share with you, that's just a

that's just a handful, and that I've got, I've got tons of these

where it's like, this is, this is such poor execution that that

you're that you're leaving money, or the retailers are

leaving money on the table. It's a combination of factors. The

biggest one, I believe, is that they simply don't know what they

have in store, and they just don't have any confidence in

what they have in the store. So when they don't, when you don't

have confidence, you do a couple of things. One, either you just

completely hide it, right? And so you just say, Oh, that's not

available, right? Or you don't even put it on the website to

even make it an option.

And so we've, Dr Hardgrave has had this before,

and again, he was talking a little bit about both buying

online and pickup in store, as well as research online pickup

in store. But when you get right down to it, there's a lot of

reasons why the supply chain creates problems, and we have,

ultimately, we have on shelf availability problems, and they

really come down to three. And you can bucket a lot of these

into these three. Number one, we just called it store operations,

the products in the store. It's in the back. The back room's

crowded. I can't get to all the product we've got product in the

back room that should be on the sales floor, available for a

customer. And certainly labor challenges create that

operations and not running processes correctly in store

causes that freight that gets put in the wrong location in the

back room. It can't be found lots of different reasons for

this, but basically, store operations, the product is in

the building. It's just not available for a customer to get

it Okay. Number two is the supply chain. And obviously,

when you think about all of the complexity it takes to actually

create a product and move it throughout the supply chain all

the way back to if I'm proctoring gamble, I've got to

get for detergents, I've got to get surfactants, and I've got to

get perfumes, and I've got to get all the other stuff that I

have to do to make Tide detergent, and put it into a

manufacturing process and label that product correctly, and then

put it into cases, and then send it to our the in store

distribution network, and then send it to the customers

distribution network, and then cross dock it a couple times,

and then ship it to The backroom of the store. That's all supply

chain. And lots of things can go wrong there, from raw material

supplier shortages, trucking shortages, you know, several

years during covid, we had a huge issue where we couldn't get

containers unloaded off ports, lots of different reasons, but

basically, the just in time inventory we used to carry, what

really got turned up upside down with supply chain during covid

Because just in time works great, as long as you have a

pretty predictable demand and sales forecast when you don't,

that's a problem. And then the last one is a really, really big

issue in the industry, and that's just store on hand

accuracy, the accuracy in the supply chain, for the most most

part, is pretty reliable, because it's cases and pallets,

and those are pretty hard to lose. When you get into the

store, you open up the boxes in the store, and you get each is

all over the place. That's where it becomes a problem and becomes

a challenge of on hand accuracy. And on hand accuracy is nothing

more than it thinks I have four or something, but I don't have

any of it. That's that's a example of an on hand accuracy

and discrepancy. And obviously, if it says I have four and I

really don't have any, I'm not going to sell any because I

don't have any. And secondly, I'm probably not going to

reorder any because it thinks I have four. So those are a couple

of examples these three. You can kind of bucket a lot of the on

shelf availability or availability of product issues

come from these three. This is one of my favorite examples,

just to go through it, and some of you have probably seen this

before, but this happens to be a four by four section in a

Walmart store of head and shoulders. Mostly it's head and

shoulders. Just some sell some blue on the bottom. But you got

a couple things. You can divide a lot of retailers up into four

foot sections. And in this four foot sections, you've got a lot

of facings, you'll have a lot of SKUs, different diversity,

different forms, flavors, sizes, for you know, scents, all that

kind of stuff. And if you just look at this as a normal

consumer, you look at this and go in, it looks like it's a

pretty good shape, right for the most part, everything's faced. I

can kind of read everything. Everything looks like, looks

like we got one out of stock right here. Out of stock would

be defined as I have a label and I have dental product. And so

all in all, from a from a casual observer, that looks pretty

good. Unfortunately, there's a lot of stuff that's going on

with this particular shelf that's a little bit harder to

see, but it's actually going on summer two, you have labels that

are missing. So on the top, on the top left, you may see label

number one, label number two, this is label number four. Well,

where's label number three? Well, label three, number three

is supposed to be right next to it, and for whatever reason,

it's not there. They have basically changed and gotten rid

of one of the labels. And therefore, if the label's not

there, then the product's not there. That's also called a

distribution void by must of the industry. It basically means the

label's not there, therefore the product's not there. So it is

just as much as out of stock as that red one down below. But

unfortunately, it's not as obvious. Pricing issues. The

pricing issues could be just we've got Prices, prices at the

register that are different than prices at the store, not

necessarily an availability issue, but certainly a pricing

modular issue, either prices is wrong at the register or the

price is wrong at the at the shelf. But the reality is that

you're going to disappoint somebody, and obviously

electronic shelf labels, which we won't get into in this

particular session, but electronic shelf labels, or

digital shelf labels, are playing in the normal sap to

make sure that the pricing at the register and the pricing at

the at the sales floor are the same. Down stocking is just

saying there's items at the top that potentially could come down

and be stocked. Maybe those items that are on top there

should actually come down and fill that out of stock spot. But

obviously they're out of reach of customer, at least most

customers, so they'll just assume that's an out of stock.

And then the last one, and this one's really hard to try and

trying to denote, is plugs. And plugs are simply the product is

there, the label is there. But unfortunately, the product and

the label don't match. So this green one on the top, it could

be a head and shoulders item, but it looks like somebody put

an equate item there instead that is known as a plug modular

that is a on shelf availability issue as well. So lots of

reasons we've already talked about the supply chain, reasons

of why things potentially wouldn't be on the shelf in

order to understand that you have merchandise moving from raw

material to manufacturer to shipping to the retailer DC, to

transportation, to the stores, to the shopper. In order for

that to happen, you have to have sleep seamless and accurate and

timely information going backwards to be able to do the

correct forecasting to make sure that that supply chain is

working correctly, the on hand accuracy one we just mentioned

here a few minutes ago. This is a situation where I've got a

store on hand for each one of these four SKUs have an actual

on hand, which is how much is actually in the store, which I

typically get. If I have to do a physical audit, I will be able

to see that you see the last three the last two items. Here

are ones where the store says I have product, but I really

don't, and these are, unfortunately, more normal than

that. We'd like last check inventory accuracy at retail,

especially in the non what I'm going to call the RFID

categories like apparel and general merchandise, are

somewhere between 50 and 65%; and that's an industry average,

that's not a good retailer or bad retailer. But typically,

these kind of accuracy exists, and it's no wonder we have

disappointed customers, because we think we have three 30x30

jeans on the shelf, and we really don't have any at all.

Okay, so we gotta, we gotta distinguish this. There's a lot

of folks who talk about in stock and on shelf availability in

stock is typically a measurement which is used to detect if this

product is in the store. And it's got two numbers on it. One,

is the store on hand. How many of these do I think I have on

hand right now in the building? And then secondly, how much do I

think I'll sell? And so if i think i. Have five in the

building. I normally sell two on a daily demand, or for that day,

I would say I am in stock. Unfortunately, I just told you

what the on hand. Accuracy is somewhere in the 50 to 60%

range, and daily demand is obviously a forecast as well. So

we got two really sort of inaccurate numbers being used to

calculate something that's very important to the customer, which

is in stock. The second one is even harder to measure, which is

on shelf availability, which is, is it available for the customer

to purchase? That's the big question. Is it available if the

customer comes in, is it on the shelf so they can actually

purchase it at the register and walk out with that product?

Unfortunately, there's not a lot of easy ways to measure that,

but we're going to talk about some of the more important

things. What I would tell you is for the customer, that end

customer, that Doug McMillan says, 'we've got to be able to

meet their needs every single day, because there's no loyalty

there.' We got to have the product available for the

customer to purchase. Products sitting in the back room doesn't

help them. They want to be able to get to product that they need

and get it in a timely and efficient way, whether they're

buying product in a brick and mortar store or they're buying

it and having it delivered to their home or to their car

through the bopas process. And so one of the things that I

would strongly advise if you're not already doing this is you've

got to be able to measure just like you measure sales, just

like you measure profitability. There are current certain KPIs

of a retailer or the supply chain that have got to be

measured to know if you're in control. And this is an example

of of one particular company that uses a lot of data to

calculate and measure the on shelf availability. We're going

to talk a little bit about some of the different ways to do that

here in a little bit. But the point is, a couple things.

Number one, we're measuring this year's versus last year's on

shelf availability. So the overall is, hey, we're making

pretty good progress versus last year. At the end of the year, we

were probably at the 94, 93 or 94% before, and now we're almost

at the 95% but it's always really important to establish a

goal. What is your actual goal? We should be measuring our

progress versus the goal, and we're falling short of the goal.

Put corrective actions in place to fix that. And so as you see

here, we are occasionally hitting 95% that orange line is

the goal, and the goal is to continually, continuously meet

that well, some people say, Well, why isn't it 100%. Well,

100% on shelf availability is probably not financially

realistic. You could probably do it, but it would be extremely

expensive, which a lot of extra holding capacity and a lot of

extra products in the back rooms and stores to be able to do

that. So people are typically shooting for somewhere between

95 to 98% on shelf availability is what I'm seeing. But the big

piece is, what is it today? And are you measuring it? Are you

measuring it? Just as important is any of the other KPIs, like

sales and profitability that you need to be tracking, because

this is actually measuring one of the components of consumer

satisfaction and and here's a quote that I've used many, many

times before, knowing what you have and where it's located in a

retail store without human intervention. And I want to

stress that without human intervention, having people

count stuff, having having people scan stuff, having

people, even one stuff, it takes a long time. So directionally,

knowing what you have and where is it located real time, without

a human have to collect that data is a big disruptor in the

retail industry. And there's no single solution, unless you

happen to be an all in apparel solution provider or retailer

where you can use technology calls RFID. But most retailers

out there are going to have multiple different solutions

where you'll have to use both computer vision and RFID and a

bunch of other technologies to work together. So let's kind of

go into what some of those are. So how do I measure on shelf

availability, and how do I improve it? The first is,

there's a lot of companies, and we'll talk about some of them

that I think are worth looking into that will calculate the on

shelf availability based on an algorithm. And if you look at

this particular chart, you see these items. There's days across

the bottom, and there's a number that are being sold on the y

axis, and selling 12, then 16, then 12, then 10, and all

sudden, both of them go to 0000. Even if your system says you've

got 12 on the shelf, something's going on there, something is

definitely changed. And nine times out of 10, you think you

have nine on the shelf, but you really don't. So what you've got

is an on shelf availability problem. So what you do is you

take corrective action. You have the retailer sales associates

look into these items, or you have a third party broker, or

you as a company go in, if you're happen to be a store

coverage company that covers their own items, or third

direction. Or delivery, you find out, yeah, there's a problem.

That problem is, the product was in the back room. It wasn't a

sales floor. We go rectify that by going get the product, put it

on the sales floor. And when we do that, we do a couple things.

Number one, we measure the fact what the problem was. We either

fixed ghost inventory or printed a label, or fix the supply

chain, and we said, we put the product back on the shelf, and

then we measure what we call recovered sales. And that

basically is what it says. It's not incremental sales, it's not

new sales, it's just recovering the sales that you did not have

because you didn't have product on the sales on the shelf. So

algorithms are one way, and we'll talk about a couple

companies that do that pretty well, in my opinion. The second

one is audits. And this happens to be a company called field

agent. This is where you actually send people out into

the store and capture in store conditions that could be at a

Walmart or a Kroger or target. Doesn't matter where it happens

to be, but they're capturing that in store conditions. We

have a lot of people out there doing it like the folks at field

agent, and what they deliver back to you is what is going on

the shelf. It says you're on the shelf, but you're really not,

and those could be pretty helpful for measuring your on

shelf availability as well. The third one is what we call

computer vision. This happens to be a form of computer vision,

which is called a shelf scanning robot. This video happens to be

by a company called Badger Technologies. It happens to be

running in all 19 Woodman stores and Stop and Shop stores in the

central United States, in the eastern part of the United

States. We'll talk a little bit more about how they work and

what they do, but they're basically performing an on shelf

availability audit. They're going through lighting up there

and autonomously, going through and capturing the in store

conditions and delivering that data either back to the store,

the retailer, or to the broker who happens to be in the store

that's looking to drive their on shelf availability. Couple more

quick ones, especially if you're happen to be in the apparel and

GM space. RFID is becoming much more popular. It has seen a

significant growth, especially in the general merchandise and

apparel stage. What you see is this individual who happens to

be from the Auburn University that's literally scanning these

items with an RFID one. It's engaging the tag. It's waking up

a tag that happens to be in the product, very similar tag that

would particularly be in a in a toll road, or even a baggage tag

with Delta Airlines. It's the same kind of technology it's

been around since World War Two, but what he's doing is scanning

that, and it's literally counting. Doesn't require a line

of sight, and it's counting those tags and identifying how

many of these shirts do I have, versus the blue ones, versus the

pink ones, etc. And very, very accurate up to the 95 to 99%

accurate range. A couple more different ways to do it. This

happens to be Instacart. This happens to be an online order

picker, so you can actually order your product from a

company, and they will go shop for you. If you have items that

are on your list that don't show up in the store, they will be

able to scan the shelf label and just indicate that that product

was on, not not on the shelf. So they can scan a blank label and

say, I'm sorry that product wasn't there. That gives

feedback back to both the retailer as well as the

manufacturer about what some of the on shelf availability

problems were. Last but not least, in a lot, in some cases,

people are using fixed cameras. There are fixed cameras that are

either tied to the shelf or they're part of it aisle, and

what they're doing is they're continuously measuring the

unshelf availability of the product in that store. So

certainly, things that are high value or frequently purchased,

I'll give you some examples, like bread or milk or cheese or

yogurt, things where you really need to have a real time pulse

because you don't want to be out of stock on those products.

Cameras are a way that you can potentially do that. So now

we're gonna switch into, for those of you who've kind of

heard this background before, we're gonna switch into part of

this is gonna be some of the key players out here that are doing

this well and how to contact them. What I'm doing to this is,

this is not an endorsement of them. These are the people that

I've worked with before, and that you always have to consider

their sustainable suitability for your circumstances. But a

lot of people are like, yeah, I really want to do an algorithm

based approach. Who are some of the folks out there do that? Or

I want, I'm looking into some robots to get into my store. Who

are the people I'm going to call so I'm going to connect you with

some some leading folks in the industry about that, and again,

you have to make your own decisions whether that's right

for you. The first one I'm going to talk about is what I would

call algorithms and in store merchandisers. So there's a

couple of companies out there that I've had experience with.

One is a company called bops. B-O-P-S, that's both a cpfr

forecasting company and an unshelf availability company.

They have an algorithm that consumes large amounts of point

of sale data and scanner data through retailers like Walmart

and Kroger and Target, and then it basically provides an

algorithm like we showed you before, where you expect to have

something selling 12 a day, but you're suddenly seeing it sell

zero a day. It delivers an alert, either to the store

itself or to an Acosta or an Anderson or a third party broker

to figure out what's going on with that product and get it

fixed. Another one would be a Retail Insight. Retail Insight's

been doing this for quite a while. They're a UK based

company, and they also have an algorithm based approach for

doing that. A couple of the marketing the brokers that I've

seen do really good work with as it relates to these alerting are

Acosta and Anderson. They're, I believe they're both primarily

US based companies, but they do a lot of work with companies

like Walmart and Target and Kroger. So if you wanted to

create an algorithm based approach, work that works very

well with these third party brokers, and then you get a

dashboard that shows on shelf availability. It shows what the

causes of the OSA's were. It shows recovered sales if the

items were put back in the stock. These companies do a

pretty good job of both the artificial intelligence portion

with bops and retail insight, and the execution delivery of

that and the feedback back to the algorithms, making them much

smarter. Okay, so those are a couple examples for in store,

merchandisers, store audits. There's a couple companies out

there that I definitely would suggest that you look into if

you're looking for just routine coverage of you know, is my did

my new items get set? Am I right having an on shelf availability

problem? You can use both field agent and tracks, and obviously

there's other ones out there as well, but there's a QR code to

each one of those. You can take a look at those, but they

provide, basically people, arms and legs and technology you lay

out, hey, I'm interested in this particular issue in these

stores, and they can deploy crowdsourcing kind of resources

that will go in there and do audits in the store, take

pictures, provide verified results back that allow you to

know what's going in, out in the store, on the stores, um, if you

move to the next level, and this is primarily a retailer

investment, although suppliers are starting to get much more

involved with this as well, we've got autonomous robots. You

know, you see robots all over the place. Well, we're starting

to see a lot of robots in retail stores. Three of the robots that

I am familiar with that Brain Robotics, Badger Robotics,

Badger Technologies and Simbi, the QR codes to each one of them

are down there. They have all have their pros and cons and

things that they specialize in, but one thing that they all

specialize in is data capture of the store from a shelf, scanning

robotic perspective. So they will autonomously plug in

charge. They will do they will uncouple from the charging port

at a specified time. They will take a pre described route all

the way through the store, turning on cameras and turning

on lights to do a very, very thorough, deep investigation of

the on shelf availability, very similar to what I showed you

with that Head and Shoulders example. I've got a video right

here from Badger Robotics, but they all work, very similar. But

the Badger robots, I really like this the way it depicts it. It's

literally going to it's an animation that kind of shows

you, it turns on the lights, it starts going down the shelf, and

it quickly says, Hey, I see an out of stock. Oh, I see a wrong

products. That's a plug. Oh, I see a pricing mismatch. And

literally, it collects that data is it navigates down the aisles

very friendly to consumers. It'll stop and wait for

consumers and shoppers to do what they need to do. If they

wait too long, it'll very slowly go around them turning the

lights off so it's not an irritant. They're not capturing

any pictures in the stores of people. They're just doing a

inspection of the shelf, and obviously that particular data

then comes back to the retailer and saves them time from doing

having to do an out scan or anything like that, because this

particular robot is doing this on for them. So fixed cameras,

couple of different examples. One is a company called Focal

Systems. They have a shelf edge camera that basically reads

across and SES and Maga tag. Actually, they produce a

electronic shelf label, or digital shelf label, which is

pretty powerful. They actually drop put power to the shelf

itself, and then they run this cameras off of that as well. So

there's a power source built in that can capture and it's

basically shooting directly across the shelf. Of 24, hours a

day, seven days a week, and capturing any shelving

conditions that happen to be there. Now a lot of people have

asked me, Well, yeah, that's all great, but I'm interested in

just a solution that will allow me to be able to capture either

a CPG company or a retailer or etc, what's the what's the best

computer vision technology companies out there? And I can

tell you right now, it's a very crowded field. It really is. And

I can make this particular chart available as part of this, this

video itself. But what I've tried to do is both use previous

collaboration experiences I've had with these companies or the

solution providers, websites themselves, and basically can't

come up with a with a chart, and there's a total of about six or

seven of them on this chart, each one of them have their pros

and cons and an overall assessment. So I'd be more than

happy to share this with you again. This is my point of view.

I'm not endorsing any of these folks. I'm not, I'm not

promoting them. I'm not, certainly not being compensated

by any of them. I'm just trying to get people out there and get

information out there if you're interested in looking at

something that allows you to collect in store conditions and

deliver a audit of the store, whether it's share-shelf,

share-of-distribution or even on shelf availability issues. I

think some of these companies would be definitely some of the

ones that I would strongly recommend that you look into.

There's a couple others that I've actually done podcasts

with. They're on the history on the Conversations on Retail and

the University of Arkansas websites. But I have had

podcasts with each one of these companies. You can go check out

the history of that. But certainly in Intellect, Parallel

Dots, Snap to Inside and Trax have all been on the podcast,

going much deeper in terms of what the solutions that they

happen to provide. The last area I want to talk about a little

bit is as RFID. And this one I'm really passionate about, because

we've done RFIDs probably when I when I was with Procter and

Gamble, we did RFID with Walmart in 2003 I think it's one of the

first implementations of RFID between a retailer to supplier.

The retail industry has slowly migrated. It's taken a long

time, but today it is very common technology that's used by

people like Walmart and Target, Macy's, Nordstroms, Dick's

Sporting Goods. Just about every retailer are looking, if they're

not implemented already, they're looking at implementing this

technology to help drive their on shelf availability. Part of

the problem is, you look at this thing, you say, how do I count

this stuff? I would literally have to go and count every

single one of these shirts. How many green ones do I have? How

many blue ones I have? Size of shoes. It's very complicated.

And there's usually, well, it looks like there's a lot of

product there. There's typically not a whole lot of extra large

shirts in the blue, they have one extra large shirt or two,

but they probably have a lot of mediums and Smalls. And

obviously a medium or small is not gonna fit for me, so I'm

forced to make sure that the that I know what I have and

where is it located. And certainly RFID is one technology

to do that. Oops. I'm sorry I went the wrong way. So how does

it work? It's pretty straightforward. The RFID tags

are typically applied at source, so at the point of

manufacturing, it's a small tag, like you see in the upper left

hand corner. It has a little tag in the middle, that's the actual

tag. And then the the little metal, wavy thing that you see

is the antenna. Then you have, these are passive tags, so

there's not batteries associated to it. That tag actually encode

is encoded with a couple of pieces of information. Number

one, the UPC of the product or the G 10 of the product, and

then secondly, a unique serial number for that product. So if

I've got three pairs of jeans, they may all have the same G, 10

or UPC, but each one of them have a a unique serial number,

very much like the VIN number in your car. And this particular

reader basically energizes or engages these tags. It wakes up

and it goes, Hey, I'm right here. I'm here. This is my

information. And then it goes back to sleep once the reader

passes. And we'll talk about a couple of different ways to

capture this data as well, but this handheld is a pretty common

way that people will use to do that, that then. And this thing

counts very fast. You know, we're talking about literally

hundreds of hundreds and of tags in a few, very few seconds. So

you can do an entire apparel pad probably in 10 or 15 minutes.

Doesn't take you very long at all. Then it passes that

information to the local software, and then that software

used used to update the on hand and indicate whether it happens

to be in the backroom or the sales floor. Adoption is

exploding. These, some of the retailers that I've already

mentioned are already using it. Other ones are definitely

looking at it. It used to be just the big guys, like the

Walmarts and the targets, the Macy's that were using it. Now

we're seeing a lot of various verticals, like Adidas and Nike,

Dick's Sporting Goods, etc, all adopting it. For the most part.

It's growing like crazy. You can see here, this was the RFID.

This is a chart from the Auburn lab. Auburn RFID lab. In 2023

we've obviously had over 45 billion RFID tags. Versus in

2018 we were only at 14 billion. And therefore, obviously the

cost has come down, and the speed and accuracy have gone up,

like most technology, couple things that I would recommend

after 20 years of doing this. Number one, this is a business

driven product project. It's a Brisbane business driven

opportunity. Is not technology driven. It is driven usually by

the top merchant and the top operations folks in the company

saying they want to be much more, much more accurate when

they've got to be able to find out what they've got in the

store, where's it located? Number two, it needs to be

driven by the top of the organization, retailers. Top

letter leadership. Sponsorship is critical. It has to be driven

from the top, senior leaders, you know, all the way up to the

CEO. Have to be sponsoring this work and driving adoption and

correctness. Thirdly, industry standards, there is no

competitive advantage to creating a different way to be

able to identify up an EPC and RFID tag. Okay, there's industry

standards out there, both at Auburn University and the GS One

standards are using and adopting. I strongly recommend

that you leverage industry standards. There is no

competitive advantage to creating your own standard,

other than if you're different than everybody else, then you

become an exception, and that becomes a tougher thing to

happen on a regular basis. Data capture, you need to focus on

the future business theme. I'll show you a chart here in a

second that kind of talks about that the data capture will

either be a handheld or fixed infrastructure or other

automated. Data capture really depends on what all you want to

get done with it. People typically start with a handheld

and use it for on basically on hand. Accuracy. But as you get

to other use cases like asset protection and and backroom

Salesforce scanning, etc, people will typically move to more of a

fixed infrastructure and the last one measure everything the

in process results, how well the hardware is working, how the

software is working. Solution, accuracy, on hand, accuracy

those things will drive on shelf, availability. They have

to deliver data to the people to make those things happen.

Obviously, the numbers are important, but obviously taking

advantage of that and actually driving replenishments of the

shelf and make sure that customer is satisfied, is the

end goal, which ultimately drives sales. I thought it would

be really helpful to hear from Deanah Baker. Deanah Baker, we

took, we took about five different runs at RFID when I

was at Walmart, different reasons, whether the technology

wasn't quite ready yet, or was too expensive, or couldn't get

critical mass. Or, you know, lawsuits in the industry from

from an from a from, from a licensing and a patent

perspective, lots of different reasons why we had starts and

stops. Deanna Baker was a senior vice president president at the

time, and I firmly remember having a conversation with her,

and she was seeing her stores delivering online picking and

delivery of groceries to customers, which was really

great. It was really exciting. But she was in apparel, and so

she wasn't part of the grocery channel, but she wanted that

same ability to deliver that apparel product to her

customers, just like the online picking and delivery of

groceries, and she wanted to know why she couldn't do that.

And I said, Well, part of it is we've got such an on hand

accuracy problem that there's absolutely no way we could send

a associate to go find the product, because at a 50% or so,

60% on hand accuracy, many times they'd go find the product and

they couldn't find it. It would just be a frustrating experience

for the associate, and clearly a frustrating experience for the

customer. And so she asked how we could solve that, and I said,

I think we should go back and look at RFID. We tried it

several times before, but a lot of things have improved about

it, both from a cost standpoint and a accuracy standpoint and a

speed standpoint. So I'm gonna let her tell her story about how

she drove it, but again, I gave the example of the importance of

having top leadership. She was the senior apparel merchant at

the time, and I think single handedly, re-engaged Walmart to

get involved with RFID at Walmart.

I wanted to be able to leverage the store

pickup process within what I saw as developing in the stores,

through grocery pickup for apparel, and be able to really

leverage that inventory. Also knew that resource investment

would only occur if there was trust in our inventory accuracy.

No one was going to spend precious labor to chase down

phantom inventory to then just ultimately disappoint customers.

And then when you said that the entire apparel industry, not

just Walmart, had an accuracy rate of about 50% that was

shocking to me. You know, it wasn't just my problem. It was

an industry problem. One of the first steps was in understanding

how RFID actually worked, and not what I remembered from some

attempts in the past, and overcoming that, I think was a

huge step change for our organization. We communicated

with all of our supplier partners, right, and really

rallied them, and it took a full year to flush through the

inventory to be all RFID tagged. The truth is that none of this

really would have come to fruition had we not had

advocates and champions within the various disciplines of the

box to really help us bring RFID to to Walmart and our dream a

reality.

So she does a good job of laying that out, and what

we really did was focus on what I call the RFID business

triangle. The bottom line was the bottom two parts of this

triangle were the most important, which is, can I get

my own hands to reflect what I've actually got? Can I get

accuracy of inventory at least to 95% and if I get the on hand

accurate, and I get the product onto the sales floor. In and of

itself, I should be able to increase sales. We made a very

conservative estimate that we could increase sales by 2% just

by getting product on the sale sales floor for customers.

Secondly, is omni channel, getting that product available

and having enough confidence to expose those on hands to

customers through the buy online pickup in store or bopis

process. Now, a lot of that you can get with just a handheld. As

you start to move up the supply chain and other use cases in the

store, it becomes more difficult to be able to get some of these

benefits without putting some level of fixed infrastructure in

things like asset protection, things like elimination of food

waste, things like backroom picking, things like claims

reduction, that requires, usually, much more technology.

And I'm just going to put this up there. And this is just a way

that I kind of think about it, try explain it. If you're

looking just to have on hand accuracy once a week, or once

every couple weeks, etc, to be 95% and you're okay investing

the labor to be able to do that a handheld will be perfectly

fine, not a problem if you're looking to be able to be able to

use some basic finding of merchandise. So these are these

particular technology users have what's called the Find It

feature that turns that RFID wand into basically a Geiger

counter. So we call it the micro location of merchandise. It

basically gives you kind of a Geiger counter, or hot cold. It

tells you where the product is to find it. You can do that with

a handheld. Some of these other things you can do with a

handheld if you want to be able to start to do things like

measuring, what did I get in the back of the store versus what I

paid for? So if I paid for 100 shirts, that I actually get 100

shirts, or did I get less than 100 shirts? Or, if I want to

measure, Hey, did everything that left the store get paid

for? Okay, did I have some kind of point of sale bypass

something left the store that didn't get paid for. I got to

put some kind of RFID fixed infrastructure. I've got control

points here, but I can use control points at Tubby. Things

came into the store, things went to the sales floor, things left

the store, and match that up against my receiving and my

point of sale data to see if I have some abnormality where

things are not getting we receiving less than what we

expected, or things are leaving the store without being paid

for. Some retailers are looking at doing control points plus

automated data capture, which basically puts fixed

infrastructure and then puts a robot. Remember, we talked about

the robots to do computer vision. Some of those robots do

RFID as well, so they can actually do the RFID cycle

count. The Badger robot, for example, can do the RFID Cycle

Count while it's doing the computer vision Cycle Count and

automated data capture. And then last some retailers are looking

for full real time, full infrastructure so you literally

know exactly what you have in, exactly where it is in a real

time basis. And again, as you go up in the technology, you get

more business capability, more benefits, but obviously it costs

more. Okay, so a couple of my other quick kind of summary

things. Number one, I don't know the whole lot of reach. Hours,

unless you're a pure play. For example, you know, apparel

retailer, you're going to be into environment where you have

to use a lot of these different things together, computer

vision, AI, RFID, 2d barcode, lots of different technologies.

It's not going to be a single technology. You've got to figure

out, how do we use those technologies together to tell

the story of what do you have and where is it located. Number

two, there is a new and I says sunset, 2027 that's a mistake.

Should be called Sunrise 2027, we didn't have a time to go

through it here, but I do have a podcast with Gina Morgan from GS

One, and we talk about the fact that by 2027 you will actually

be able to scan a QR code, which will take place of the UPC that

we've used for the last 50 years. In addition, it's going

to give you additional information. Some of it will be

that serialized data, data which is in the RFID tag. Some of it

will be just more information about the product, lots of

websites and lots of podcasts that I've done with GS one

describing that. It's definitely worth checking out. It's going

to be a huge enabler when we when we get to that and the

sunrise 2027 date is just a date that is being asked for by GS

One that the retailers are able to consume those QR codes at

registers. Two other quick things leverage the

Conversations on Retail and the University of Arkansas OSA

platform. There's a lot of great content you can go much deeper

on some of these topics. And last, is I've got and I host as

part of my Conversations on Retail a site called

onshelfavailability.com; lot of resources out there, and some

some podcasts and some some information about if you want to

go a little bit deeper on some of these topics. So that is,

that is a summary of where we are with 2024. On shelf

availability continues to be a very hot topic. Lots of

innovation coming through, lots of technology that's being

introduced into the marketplace, a lot of work process, but

everybody else also understands that. Just go all the way back

to the first Doug McMillon: there's not a lot of loyalty by

customers. They're going to get the products they want, and you

may or may not be the retailer that takes advantage of that for

them. So and it's a team effort, it's obviously, it's obviously

the retailer, it's the CPG suppliers, it's the brokers,

it's the direct store delivery people, it's everybody in a

store that's putting work in the supply chain that really makes

the retail supply chain work. So thank you for your time. We

really do appreciate it. We've got a couple of pretty fun

podcasts coming up here in the next series. Number one, we're

going to go a little bit deeper in RFID. We've got some industry

experts in the asset protection space, Joe Cole at Macy's, and

we're hoping to have somebody from Lowe's talk about 'Project

Unlock' pretty exciting technology opportunities that

really drive asset protection use cases, leveraging RFID. And

then we've got some special we're going to do some special

things where I believe the stories can be told better when

we actually have the retailer or the supplier with the solution

provider having a discussion about what the problems were.

We're going to have Badger Robotics in Woodmans, a retailer

in the Chicago area, Chicago and Wisconsin area, talk about their

implementation of a Badger robot to help drive pricing accuracy

and on shelf availability and even engagement with the

supplier community. So I'm really looking for 2024 and 2025

that can be a continuing version, but instead just having

solution providers on bring real business problems to folks, tell

them what the situation was, tell them how they implemented

the solution, and then what the results has been. So I look

forward to another busy year as part of Conversations on Retail

and the University of Arkansas and until till that, we

appreciate you spending the time with us. Take care.