0:05

Welcome to the Productivity Podcast . Today

0:07

I'm delighted to be joined by Michael Fletcher

0:10

, who has over 30 years of retail

0:12

experience internationally and in the UK

0:14

and is currently UK Board

0:16

Advisor at Handshow . Hi , michael , hi

0:19

, how are you ? Yeah , I'm good . Thanks you , yeah

0:21

, very good . Thanks , great to be here . Good , well

0:23

, thanks for taking the time out and joining us . We'll

0:26

find out a bit about you and then we'll find

0:28

out about Handshow and today's

0:31

topics all around electronic shelf

0:33

edge labels . So , looking forward to

0:35

this one , I suspect it's a forefront

0:37

of lots of people's minds at the moment

0:39

. So before we start

0:41

, michael , tell us a bit about yourself .

0:42

You're kind of 30 years in retail

0:45

in the UK and abroad , yeah , no , so

0:47

I've seen a long time ago now , but

0:49

I joined Tesco in the 1990s

0:51

, early 1990s , on their

0:54

grad scheme . Probably spent was that 10

0:56

, 12 years working in commercial

0:59

within the UK . It

1:01

was a brilliant experience . Then was lucky

1:04

enough to spend some time out

1:06

in Ireland and then Malaysia and then centrally

1:08

Europe and a little bit more time back

1:11

in Asia before coming back

1:13

to run Tesco's procurement

1:15

function , which is where I first came

1:17

across ESLs Perhaps

1:20

we'll talk about that in a minute . And then

1:22

I joined the co-op 10

1:24

years ago and had a fabulous 10 years

1:26

at the co-op , ended up running their

1:28

wholesale business , nysa

1:30

, and at the back end of last

1:33

year I decided to pursue a kind of portfolio

1:35

career . And one of the businesses I've ended up

1:38

working with is Handshow , which has been absolutely

1:40

enlightening . I mean , I would like

1:43

to consider that I was pretty much abreast

1:45

of what was going on in retail technology

1:47

, but I think the progress that the likes

1:49

of Handshow have made on the landscape

1:52

is very , very different to one that I perceived

1:54

pre-COVID .

1:56

Excellent . So breadth of knowledge . And , from

1:58

your procurement point of view , you were the guy that

2:00

was beating everybody up on price right .

2:04

Having fair discussions about creating

2:06

value for both partners , I think

2:08

, is how we'd like to describe it .

2:10

Excellent . Well , it's all about perspective , but

2:12

yeah , if that's the aim , then

2:14

brilliant . So Handshow then

2:17

tell us a bit about Handshow and what's going

2:19

on there .

2:21

So they're a Chinese technology company

2:23

. They've been around for

2:25

just over a decade . They

2:28

specialize in trying to increase

2:31

retail productivity . They've

2:33

got some really fascinating technology

2:35

around smart trolleys

2:38

and AI-enabled stock

2:40

control , but their core business

2:42

at the moment in the UK is about

2:44

trying to deploy ESLs , an

2:47

interesting market in Europe

2:49

. Penetration is 30-35%

2:52

. In the UK it's

2:54

less than 1% , with only

2:56

one retailer , which is

2:58

Aldi , aggressively rolling

3:00

out electronic shelf-hatch labels Henshawar

3:03

, their supplier . We've deployed

3:06

about 100 million labels so far

3:08

across Europe obviously not just with Aldi

3:11

, which makes us the number one and

3:14

the technology has moved on considerably

3:16

. Since I took my

3:18

time at Tesco , I remember

3:20

doing a business case it was probably about

3:23

2010, . 2011

3:26

, and the conclusion was look , these

3:29

are at some stage going to be mainstream

3:31

, but at the moment they are incredibly

3:34

ugly . The business case is probably

3:36

a two , three , four year return

3:39

and we'll just wait and

3:41

the technology will improve and the price will come

3:43

down . That is

3:46

exactly what's happened . We did a bit

3:48

of a review when I was at the co-op . This

3:50

was pre the pandemic and

3:52

I think that the business case was again around

3:54

two to three years and we felt it

3:56

was still time to wait . And

4:00

, as I say , when I started talking to Henshawar

4:02

I didn't realise how much the

4:05

technology had moved on and what

4:07

Henshawar was doing , which I was particularly

4:09

impressed with the thinking

4:11

much more broadly than the simple

4:13

business case which says , hey look , when the price changes

4:16

on the shelf , we can do it through an

4:18

ESL . Actually they're thinking

4:20

about every single time a

4:22

customer interacts with

4:24

a product at the shelf and every single time

4:26

a colleague interacts with the product at the shelf

4:28

. And when you start to build those

4:31

use cases in , actually you

4:33

get to I think you can get

4:35

to an in-year payback . Now the

4:38

one thing that each individual business

4:40

has is their own set of

4:42

agreements with colleagues on shifts , and that

4:44

doesn't include the cost

4:47

of change . And when businesses go

4:49

into ESLs , they do have to think about

4:51

the impact on colleagues , because the

4:54

truth is you do have

4:56

to move your shift patterns around , because that piece

4:58

of work that's done every day on

5:00

price or on stock control

5:02

or on RTC actually

5:05

doesn't need to happen anymore . And I see

5:07

a lot of businesses not

5:09

making the changes to the shift patterns and

5:11

then wondering why the business case doesn't stack

5:14

up . So it is a it's

5:16

a technology journey , but it's also a colleague

5:18

engagement journey as well , and I think all

5:21

retailers have to think of those in parallel

5:23

if they're going to be successful .

5:26

Yeah , interesting . I mean we've touched on electronic

5:29

shelf edge labels , on a few of

5:31

the podcasts and similar

5:33

things , more than just price

5:35

changes , which is the historic view

5:37

I think of you . Know I could take this

5:39

workload out . Yes , there's a cost

5:42

for the technology and to implement and to

5:44

run , but I chunk this

5:46

cost of labor out . I can be a bit more dynamic

5:48

in pricing . That's the business case

5:50

. It stacks up for me over X years or Y years

5:52

or it doesn't . In

5:55

terms of this end-to-end

5:57

store operation piece . What

6:00

were the things that surprised you when you came

6:02

back in with Handshake to look

6:04

at the world of electronic shelf edge labels

6:06

?

6:07

The first was just how far the technology

6:09

had moved on . When

6:12

I first looked at it you had blackouts

6:14

of gray and very

6:16

limited functionality with what you could do

6:18

on the screen , and then relatively

6:20

few dimensions in

6:23

which to choose from , and

6:25

it meant that areas like health and beauty were

6:27

always really difficult to do . And

6:29

then typically you'd go around the store and you'd see

6:31

a lot of cracked screens and ESLs

6:34

on the shop floor . If you

6:36

take the modern ESL , you've now

6:38

got six-color functionality , pretty

6:41

much unlimited templates . As I said

6:43

earlier , the work

6:45

Handshake did on Halloween . A lot of

6:47

marketers say , oh , I don't like ESLs , they don't

6:50

work for customers . Take a look at

6:52

the Handshake Gallery at Halloween and

6:54

I think every single marketer would fall

6:56

in love with it . And then you think about how

6:58

you could develop that through Christmas

7:00

, through all the seasonal events , through barbecue etc

7:03

. Etc . It is a brilliant

7:05

way of communicating to customers . Battery

7:08

life now can be up to 15 years

7:10

. The screenstone crack , the

7:12

technology . The hardest bit is fixing

7:15

them to the shelf edge , but that now has

7:17

been solved . And

7:19

then , but more fundamentally , it's about thinking

7:21

differently about how you use them . So

7:23

the bits that have impressed me

7:25

about Handshake is the first one around

7:28

sort of stock control routines . Every

7:30

single store will have a version of a daily gap

7:32

scan , but you encourage the colleagues

7:34

to scan a gap and they know there isn't

7:36

product in the back room but that still produces

7:39

the report that then they go through and then they

7:41

do the various routines that each retailer

7:43

has . Actually , esls

7:46

can be really , really smart and prioritise

7:48

the areas that you scan and

7:51

when you scan them . And then I think the

7:53

most impressive one that I saw is around

7:55

reduced to clear where , as opposed

7:58

to going back to the shelf multiple

8:00

times a day , and you see lots

8:02

of retailers moving from perhaps four

8:04

visits to the shelf to three , even down

8:06

to two , to try and save the labour

8:09

. And you can see they're doing the business case , which

8:11

is let me trade off labour with waste

8:13

. Now , we don't want food waste . I

8:15

understand why they make the trade off , but really

8:18

it's not a trade-off we as an industry should

8:20

be doing , but actually the labour is

8:22

just too expensive to keep going back to the

8:24

shelf edge . And then you start thinking well

8:26

, hang on a minute , if all I'm doing is reducing

8:28

the price , why don't I reduce the price through the ESL

8:31

? Now , if you take that

8:33

to its nth degree , in theory , once

8:35

you've done the first visit to the shelf

8:37

edge , actually in

8:40

practical terms , you can

8:42

revisit that shelf a hundred times because

8:45

every single time you know that the idea . You

8:47

can do it manually to a set of rules which is go

8:49

10% , 20% , 30%

8:51

, 40% , 50% , 60% off , or

8:54

you can do it . A lot of retailers now

8:56

have the capability to look at live rates

8:58

of sale . They

9:00

understand the elasticity of the product and

9:03

they can change the rate the

9:05

price reduces right the way throughout the

9:08

day . You know , if it continues to

9:10

rain and all the barbecue products not going

9:12

to sell , then you have to go more aggressively . But

9:14

if the sun comes out , perhaps you don't

9:16

need to reduce as aggressively as you originally

9:19

thought . And again , as I said , lots of retailers

9:21

have the functionalities to do that , not just

9:23

on a national basis but on a store

9:25

specific basis . And once

9:28

you start doing areas like stock control

9:30

and reduced to clear , as I say

9:32

, I think you pretty quickly get to it in

9:34

your payback .

9:36

And that dynamic kind of pricing has been

9:38

prevalent in Europe

9:41

for a while , hasn't it ? Certainly ? Kind of petrol stations

9:43

in , I think , portugal and Spain

9:45

you get the price petrol goes up in

9:47

peak and then down and then back up in

9:49

peak the other way on the motorway .

9:51

Yes , look , absolutely . I've seen a couple of retailers

9:54

in the UK who have

9:56

very seasonal stores and very

9:58

seasonal around the weekend , and

10:00

I've seen them run a price file on

10:02

a Monday to Thursday and

10:04

then a different price file on Friday

10:06

, saturday , sunday and almost there

10:08

their local customers understand

10:11

this and sort of

10:13

take the benefit early on in the week

10:15

and perhaps don't shop for the weekend and

10:17

the sort of the tourist pay a

10:20

little bit more . So you know

10:22

that model can be deployed but

10:25

and that there's always

10:28

been the capability to do that , but that's

10:30

probably a slight reluctance by a lot of retailers

10:32

to do it . But now you know we have

10:34

member pricing , so why wouldn't

10:37

we have weekend pricing in seasonal

10:39

stores ? The same kind of logic applies

10:41

and an RTC

10:43

is something that you can do every single day . Well

10:46

, we know that we've got waste every single day . What's

10:48

you know ? We're an industry probably with

10:50

120 billion pounds

10:52

, with a turnover something like that . I'm

10:55

guessing waste on average

10:57

in the industry is running up somewhere

10:59

around 2% , something like that

11:01

. You know you've got two billion pounds with a food waste

11:04

. That's absolutely crazy

11:06

. And why wouldn't you use an ESL

11:08

to intelligently reduce

11:10

that price and try and get as much

11:12

good food as we possibly can into

11:15

consumer's houses .

11:17

And we kind of for the time of recording , just

11:19

come out of Black Friday . So those flash

11:22

sale opportunities or Cyber

11:26

Monday opportunities to drive revenue

11:29

based on turnover last week

11:31

or excess stock or competitor

11:33

activity must give a big advantage

11:35

as well with the flexibility .

11:37

Yeah , absolutely . So you know , seasonal

11:40

is a big thing . Now what I've seen when

11:42

you , when you go into stores and you try

11:44

and clear , you'll have a big piece of point

11:46

of sale that says sort of at least 20%

11:49

off everything , price

11:51

charged , a till , but

11:53

actually a lot of customers don't want to try

11:55

and work out 20% of what

11:57

that price is and I think is that good value

11:59

, is it not good value ? Actually

12:02

, what an ESL in aims you to do is actually list

12:04

the price for every single product . You

12:06

know and you can then be more aggressive on

12:08

some and others , whereas you know you're saying at

12:11

least 20% off , but some are 75%

12:13

off . But you can't really get that

12:15

message across . On ESL you can be

12:17

very , very specific and say , look , you know , let's

12:20

clear this product . This is really really good

12:22

value , rather than kind of the generic stuff that

12:24

you that you often see in retailers . So

12:27

yeah , I think there's a big business case about

12:29

clearing through seasonal

12:33

stock much more effectively

12:35

and , as you say , just just running flash sales

12:37

. So you know , if you are overstocked

12:39

on barbecue and the weather isn't

12:42

great , hey , just do 20% off

12:44

all barbecue products . It's not quite

12:46

as simple as just pressing a button . But it's not far off

12:48

and suddenly you've executed a

12:50

20% of barbecue promotion . You know

12:52

, by the time you tried to do that with paper

12:54

. Well , you just wouldn't get around to it . You wouldn't have

12:57

the colleagues in store to print

12:59

out the labels and put them out . Put them out , you

13:01

know , add a touch of a button and then the next morning

13:03

the price goes back up and

13:06

there must be a big piece around integrity

13:08

of pricing as well .

13:09

So if you're a national or even

13:11

multinational chain , the

13:13

the reality is if you're using paper

13:16

labels , they'll always be some

13:18

that are missed because they're in

13:20

dual locations or there's not enough resource

13:22

to put them out . So that that price integrity

13:25

must be a big benefit not only for their consumer

13:28

but also for the company , because they're

13:30

doing less markdowns at Tills where

13:32

there's a query about price .

13:34

Yeah , absolutely so . You know , I

13:36

know through the inflation that we've had , you'll

13:38

have a lot of businesses that haven't

13:40

been able to get the inflation that was

13:42

necessary away as quickly as they

13:45

would have liked because perhaps they're

13:47

limited to 200 price changes

13:49

per store per day . I'm clearly

13:51

a sales . You can do it all in one go

13:53

, both up and down . And now you see

13:55

, with most of the sales is this kind of positive

13:58

confirmation . So you get an exception

14:00

report back that says the confirms

14:02

that this price is now live in this

14:05

store . And let's say you have got an ESL

14:07

that's been damaged . It will actually go and tell the store

14:09

manager that arm , for whatever reason

14:11

, on this particular product the price

14:13

hasn't Gone up

14:15

and therefore you risk trading

14:17

illegally . So again , it enables

14:19

store managers to lead their

14:21

store much more effectively because they they

14:24

can absolutely guarantee that the price changes have

14:26

gone through and in the odd case where

14:28

it doesn't happen , they're given an action

14:30

, this right key . I need to go and fix that . So

14:32

incredibly important to give customers

14:35

confidence about that . The price on the shelf

14:37

edge is actually the price they're going to be charged at the

14:39

till .

14:40

Yeah , nothing , nothing more frustrating

14:42

is there and then trying to get that remedy didn't

14:44

? Things like VAT changes . So

14:46

I remember when we last changed

14:48

and there were people trying

14:50

to reprice stores overnight

14:53

and you know inherently that leads to to

14:55

error and you know back to some of the the

14:57

previous part of the conversation . So things like

14:59

that must be a lot more future proof

15:01

.

15:02

Yeah , absolutely , absolutely future proof . Again

15:04

, you know I can think of my time in

15:06

retail in BWS

15:09

. You know when big duty changes

15:11

happened or bad changes happen , typically

15:14

, you try it . You probably change over

15:16

three or four days just because

15:18

of the sheer volume of shelf edge labels

15:21

that you need to change and the colleagues that you've

15:23

got a payable to do it . You know you can

15:25

. You can execute the

15:27

change , as with the speed it takes

15:29

to upload the new price file , you

15:32

know it makes absolute sense . And then you know , in

15:34

periods of deflation , you know how many

15:36

times of actually we talk about customers

15:38

getting charged too much . But you know we'll all remember

15:40

times as well where you need bought a

15:42

product and thought , well , that's cheap . Then it wasn't the shelf edge label and

15:45

that's because colleagues in the shop haven't had a chance

15:48

to sort of put the product that put the new prices

15:50

out . So I'm you know it is

15:52

about telling customers the right price and it is

15:54

about executing inflation . But then

15:56

it's also a great opportunity

15:58

to tell them when you know when there's a great deal for them

16:00

. And again , that sometimes doesn't happen

16:02

and I've been in shops where you know

16:04

you prioritize , quite rightly , the movement

16:07

of prices up in order to make sure

16:09

that you trade legally , but you then haven't

16:11

taken advantage of the prices that you've reduced

16:14

and the customer doesn't know and get the benefit

16:16

at the still still , but they're

16:18

probably not aware that they've had that benefit . So

16:20

you know it names

16:22

you to do the job properly . Now it has to be

16:24

seen in the wider context . I

16:26

think what I like about working with handshift is

16:28

that they they're thinking much more

16:30

broadly than this is about

16:33

an ESL . They're talking thinking about

16:36

a digitally enabled store and

16:38

actually how you can make the customer experience

16:41

a lot better and how you can make the colleague

16:43

experience a lot better . Esls

16:45

are at the forefront of that digital technology . But

16:48

you know we've all seen the camera technology that the

16:50

likes of Amazon have deployed . You

16:52

know that is going to come over

16:54

time and be more and more accessible

16:56

and I think retailers Need

16:59

to you know , constantly be having conversations

17:01

with the likes of handshift about . You

17:03

know what's available now and , as I

17:05

say , you know I spent 30 years 30 years in

17:07

retail and relatively close

17:10

to the shop floor and my perceptions

17:13

about what technology was

17:15

out there to improve

17:17

productivity and what's actually out

17:19

there and what businesses are

17:21

doing in Europe more so than the UK . I

17:25

was really really pleasantly surprised and

17:27

hence taking up the role and having a great

17:29

time doing it .

17:31

Excellent and in that kind of digitally

17:34

enabled world we've we've clearly got things like picking

17:37

to , picking to light or picking

17:39

orders , which helps the colleague journey

17:41

. But will we get to a kind of point where Almost

17:45

customers can pick and pay at the shelf

17:47

edge ? Do you think ?

17:48

Yeah , well , I mean , you know we've got smart trolleys

17:50

. Now handshift got a smart trolley , which

17:52

means that you know , as you place the product in

17:55

the trolley it registers the sale

17:57

and if you take it out of the trolley

17:59

it deregisters the sale . Now I think

18:02

one of the things customers don't

18:04

like about the camera technology is you

18:07

don't actually know what you've been charged for

18:09

. You just walk in with your basket and you put the product in

18:11

the basket and you think , okay , what now ? Whereas

18:13

this actually has a screen on the

18:16

trolley that tells you that you've been charged

18:18

two pounds for that particular product

18:20

. I think it gives you a lot more confidence . You

18:23

know it's you've

18:26

got to take customers on a journey with technology

18:28

. There's a group of customers that'll always be massive

18:30

early adopters and there's a group of customers

18:32

who probably want to be taken

18:34

more gently . You know it's interesting that Boots

18:38

are taking out their self-service scanners

18:40

, aren't they ? You know that's

18:43

probably a subject that for a whole new

18:45

podcast . But

18:47

you kind of wonder , you know , would

18:49

there be a better way to take

18:52

customers on that journey , those Boots customers

18:54

on that journey ? Because for some customers

18:56

it's just the way that they shop and they want to shop

18:58

and they don't want to interact

19:00

with retail

19:03

colleagues and for others , you know , sometimes

19:05

it is it's their only interaction

19:07

of the day .

19:08

Yeah , and we were discussing this last week . It's interesting

19:10

, I mean , they're leaving it in their

19:12

two largest stores , which kind of tells

19:14

a story , and while

19:17

everybody else is opening up choice to some degree

19:19

, they're reducing it . So I think , as long

19:21

as they invest in their till-manning and

19:23

make sure they've got the right till-manning

19:26

to be peak , if they're just creating

19:28

cues , then maybe there's something

19:30

they'll revisit . But you know , time

19:32

will tell , won't it ?

19:35

Yeah , it's a really interesting point of service difference

19:37

for them . Look , we all know

19:39

that labor is becoming

19:42

more expensive . The kind

19:44

of labor you want is becoming increasingly

19:47

scarce . We

19:49

are in the middle of a

19:51

cost of living crisis and customers are looking

19:54

for value , and one of the ways

19:56

that they're able to deliver value is

19:58

by increasing the productivity of colleagues

20:00

in a way that is engaging

20:02

for them Rather than

20:04

used to be preferred to me at the time , being

20:07

nasty to suppliers and getting better prices . You

20:10

know you have to look at your entire P&L and

20:13

you have to look right the way through . Okay , where

20:15

can we shave a little bit ? Where can we shave a little

20:17

bit ? And you know that's where you add the value

20:19

, and the accumulation of that enables

20:22

you to improve your proposition , and improving

20:24

your proposition at the moment is

20:27

going to be largely around trying to become more price

20:29

competitive .

20:31

Absolutely so . If people want to find

20:33

out more about what Hancho do

20:35

, Michael , where's the best place for them to get in touch

20:37

?

20:38

Uh , they jump on the website . They've

20:41

got a website , wwwhanchouk . That's

20:44

got some contact details . Or find

20:47

me a note on LinkedIn and I will connect

20:49

them up with the right people .

20:51

Brilliant , so we'll put the link to the website

20:53

in your LinkedIn profile on the show notes so

20:55

people can find you easily

20:57

Fascinating to chat the

20:59

subject . I'm really interested in that

21:01

whole retail technology , and seeing

21:04

more and more of the electronic shelfage labels

21:06

always makes me smile , and then hopefully

21:09

we'll see a lot more in the future . So thanks

21:11

once again , michael , and we'll catch up soon . Pleasure

21:13

, thank you .