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Revolutionizing Retail: Insights from Tesco’s Transcend · The Retail Podcast

• 0:00
  But I generally think the decisions they are able able to
• 0:04
  help us with will get them bigger and more useful.
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  I also do believe humans will still be there and will be
• 0:12
  absolutely needed. Hello and welcome to the Retail
• 0:26
  podcast. As part of our deep dives into
• 0:31
  supply chain, following the Doctor Richard Wilding's
• 0:34
  fantastic episode where we were talking about bimodal Zoomodal's
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  supply chain, I thought it would be interesting to take a look at
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  what one of the largest, oh, sorry, the largest retailer in
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  the, in the UK is doing and also one of the largest across the
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  globe. And I'm fortunate enough to be
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  joined by Doctor Oliver Wok from who is the CEO of Transcend,
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  wholly owned company of Tesco's. Is that right, Oliver?
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  That's right. And and do I refer to you as
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  Doctor? No, please go on.
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  I'm Oliver. OK, fantastic.
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  Well, welcome to the show, Oliver.
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  Your ex Amazon, you were, but you've been at Tesco's.
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  But maybe if you can just take us through your career, what's
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  LED you to this moment? And then we'll talk about
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  Transcend. Yeah, so thank you for having me
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  and really excited to be here. I spend most my, my working life
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  in this space, right? Start my background, this, you
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  know, in, in statistics and economics.
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  I, I got the, the, you know, the retail back when I started
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  working for Amazon and spent many, many years there in
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  fulfilment and supply chain. But then joining, you know,
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  Tesco in one of the the leaders in in grocery and grocery is
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  always regarded as the most, although the the most complex
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  operations in supply chain. And it's been a fantastic
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  journey within Tesco ever since I had multiple roles in here.
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  But my, you know, the the most excited 1 to date is the CEO of
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  Transcend. Transcend to say business.
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  We, we launched a little while back, we only, you know, talked
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  about it now since 2-3 months in the public, but we are offering
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  the the tried and tested solutions which Tesco has
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  developed over many years to other retailers in the world.
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  So when when you're talking about this, what's the lens that
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  you're using to talk about supply chain?
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  We like like to focus on on data on having really, really good
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  systems in place and, you know, having the best visibility you
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  possibly can on what is actually going on and supporting the
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  people in in the supply chain. Now, what do I mean by that?
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  Supply chains are alternatively operated by people and people
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  make decisions all the time. I am a great believer of
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  supporting those decisions with the right systems, with the
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  right tools. Take as much as those decisions
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  away to make, you know, remove the cognitive load and let you
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  know machines where that you know that's possible make make
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  those decisions for them. Quite often those are better
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  than many, many hundreds of thousands of individuals taking
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  certain decisions which are non coordinated.
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  Having the right data to support that decision making is critical
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  though. I am and the big believer that
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  if you have these things present, you can have a far more
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  standardised outcome, which ultimately we would for more
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  predictable supply chains, more predictable operations.
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  Then the results will come, the the accuracy will get better,
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  then the execution is better. And you know, it all starts with
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  data and having the great, great systems in place to to support
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  people. I got you.
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  And one of the things I've noticed is how obviously
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  different SAS providers, you know, whether it's your
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  fulfilment centre, whether it's picking from store, whether it's
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  the final mile or, or the OR even micro fulfilment centres.
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  Sometimes you see as a retailer, I'm challenged because I've got
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  15 different softwares that I'm running for each each component
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  of my supply chain. How, how does that?
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  How's that for Transcend app or what?
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  What is it? What's the secret that Tesco's
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  has cracked in that space? Tesco has been in this space for
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  so long that you know, we you know, we look at our online
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  operation. We our claim to fame is that the
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  first online order was placed in 1984, a lady called Jane
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  Snowball who placed a, a grocery shopping through the TV through,
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  you know, dial up version of the TV at that time, right.
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  So andtesco.com is, is online since 2000.
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  So it's, it's been pretty much near 1/4 of century that we've,
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  you know, been in this space, you know, with, with ever
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  growing volumes and the systems were never readily available for
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  us. It was of such critical
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  importance to have the right tool.
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  So we ended up developing many of these ourselves.
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  The moment something is at the core and it makes sense, we want
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  to own the, the logic and, and the software ourselves and the
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  systems solutions ourselves. And that over time has developed
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  into, you know, quite a, quite a extensive landscape of solution.
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  Tesco operates all over the, you know, the supply chain stores
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  online network. It's about putting, you know,
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  your, your, your very specific grocery knowledge and, and
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  taking it into your own hands. Grocery is very specific.
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  And if, if not the right tools are out there, then it was very
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  important to us to build it ourselves.
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  That then has, you know, LED us away from, you know, having such
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  patchwork of many, many different solutions and starting
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  to tie them more and more together, which is what we are
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  now quite proud about and and want to share with others.
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  What's top of mind right now? What are those big things that
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  are top of mind? I think most retailers have this
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  conundrum of growing further in a very, very competitive market
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  and Gross quite often comes from an online channel.
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  Online is a is here to stay. It's been growing, you know, in
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  most countries across the world. If you look at the UK, it's a
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  very, very prominent vocal market when it comes to to
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  online shopping and very predominant here.
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  How that is something you can and want to grow seems to be a,
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  you know, a headache because quite often the online
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  operations are not that easy. They're not very
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  straightforward, yeah, but they might not have the best customer
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  experience. They might not be very, you
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  know, cost efficient. And growing something like that
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  is a need, but something people don't want to do because it is
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  so challenged in so many ways. So for many people, I think the
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  question is how, how can you relieve those issues?
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  How can you make a much better customer experience?
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  How can you step change your cost base so that growing that
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  business is fun again? Because if you don't, other
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  people might, you know, take that online share and eventually
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  that might even hurt the, you know, the total growth of the
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  business. You know, the growth has got to
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  come from somewhere and getting it through the online channel is
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  usually one way forward and the predominant way forward at the
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  moment. So when you marry up, obviously
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  normally when I ask leaders, what do you want to do in your
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  business? Are you looking?
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  Obviously pre inflation, it was all about saving money, right?
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  That was like, because I, I sorry, it was about making money
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  before the inflation crisis or cost of living, I would say to
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  CEO, do you want to make money or save money?
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  They'll say, well, I'm not going to be famous for saving money.
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  I want to make money, right? I want to grow the business.
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  Then obviously inflation hit and everyone was like I need to find
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  another than 1215%. So efficiency sort of came up
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  in, in the ranks. Did you see them balanced in
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  terms of for example, I don't know last mile delivery, driving
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  efficiency in that or driving more better and shorter delivery
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  times? So Mike, because what you were
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  saying there, happy customers, more customers spend more
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  because obviously we're providing a better experience
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  than that. Where is it?
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  Is it, are they 5050? Are they?
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  You can definitely get both. I'm, I'm, I'm a firm believer
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  that if you get the efficiencies right and if you're never
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  satisfied with where you are and continuously improve your
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  systems, your processes, it will be the enabler to further
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  growth. And now how, how that's invested
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  depends on, on, on, on, on every single situation.
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  But, but broadly, you know, everything can be more efficient
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  and particularly in in the online space, there's huge
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  efficiency still to be had. Yeah.
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  And, and reinvesting at least some of this into your growth is
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  for sure the right thing to do. My worry is that if you don't go
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  after the growth, someone else will take it because it is a
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  highly, highly competitive market.
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  What's your opinion on fulfilment?
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  I just I'm just curious on your opinion in what what's better?
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  Do I allow picking from store or should I be looking as a as a
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  retail organisation building more of my dark stores or or my
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  fulfilment sensors? There is a place for all of
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  those things. The beauty of a dark story is
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  that they are close to the customers.
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  So having short lead times, same day or even faster is usually
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  only enabled at scale across the whole country.
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  If you utilise your stores, you have got other great benefits.
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  I mean the people already there, the inventory is already there.
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  But as you say, it's about how to use that and effectively so
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  you know that with labour cost, particularly labour
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  availability, you get the most out of that store.
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  Having the right tools to do that job, having the right
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  solutions can and will make your stores a great way to fulfil.
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  However, in larger urban areas and in big cities, having, you
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  know, perhaps a, you know, a stand alone facility, perhaps
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  even automated facility can absolutely make sense just
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  because of the sheer volume. Eventually you can overload a
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  store, I guess too much volume coming out of it.
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  Eventually you might end up not having enough labour to keep
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  picking manually from store. And then in those selected
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  cases, in those select locations, automating that
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  journey I think is absolutely the right thing to do.
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  However, you'll have to have enough volume to do it.
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  So for for a handful of orders. Usually the balance does not
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  stack up in order to to invest into the capital outlay you'll
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  need for some of these these solutions, you'll need a big
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  enough problem to to solve. Until then, a manual operation,
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  I think is the right thing to do, particularly when you talk
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  immediacy, right. So when you talk now, right, 30
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  minutes, 20 minutes utilising, you know, the smaller stores
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  which you know many retailers have got many of very, very
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  dispersed across the countries and and cities gives great
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  fulfilment points to deliver, you know, pick an order in 10
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  minutes, deliver it in 10 minutes, something which as you
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  know, a standalone single facility in a larger city could
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  never do. They're great for saying next
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  day volume in the vicinity. They are not great for
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  immediacy. That's why there's a place for
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  all of it. There is there has to be a
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  balance. For most retailers, having a
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  very, very efficient and in store operations step, changing
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  that is a good way forward into the growth until you're very
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  sure of your volumes and then you can start automating into
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  more centralised other facilities if needed.
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  Well, one of the things I've been super impressed by Tesco's
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  compared to, you know, I won't name the US sells food, but main
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  food is not its main business. It's a big box retailer.
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  Is the fact that out of stock at Tesco seems to be managed so
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  well, right? You're, you're fulfilling, I
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  don't know, like 1.3 million weekly orders online.
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  But when you go into store, yes, there there's always a there was
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  always that product that that may be out of stock.
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  I'm just curious in terms of Transcends, because you said
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  it's about the data, how much, how deep do you go into that
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  like in terms of shelf edge availability, is that like
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  another system you're, you are all about the logistics about
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  the, the, the products? Yeah, where does it start and
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  stop and the data outcomes? I'm a, I'm a great believer that
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  every, you know, system you have, let's say, to pick the
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  items. Yeah, has to be 100% embedded
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  into the store environment into into these operations.
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  So if your operational clock is not aligned right and you'll
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  start picking because before you've replenished, you know,
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  these are very easily avoidable, all guards.
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  So what we typically do is not only provide a software
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  solution, but to embed this solution into the stores in a
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  very, you know, purposeful way. So an, an operating clock is, is
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  one of them, right? Training for the colleagues is
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  another. And obviously then providing the
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  right data as a, as another very, very helpful tool to, to
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  make the store better. What we see is that stores with
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  an online operation usually are better performing stores as a
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  whole because they get better information from your online
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  customer, right. If an in store customer doesn't
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  find a certain product, they might not tell you about it.
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  Your online customer will. And as you get this information
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  because your picker can't pick the item, it is on to you.
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  How you manage that will provide all of this information and
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  ultimately the in store customer will have a better customer
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  experience, installs with an online inspiration because you
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  provide the store manager and the local team with more data.
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  How do you utilise that? What you make out of it and all
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  of that comes with it. Any you know the greatest
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  software in the world is never as good as it could be unless
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  you embedded properly into the environment, and that's where
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  all of these things come to line.
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  So then do you maybe I should have we should have qualified
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  this early on the conversation. So it's transcend then you're
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  looking at the strategy as well as like, you know, best practise
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  as well as technology, right? It's not just pureplay
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  technology then is that is that is that I understand that
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  correctly? That is right.
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  We can help with strategic thinking in this space and and
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  can consult retailers on on their journey and you know how
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  they want to develop over time. That includes 510 year plans.
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  That's going to be an investment plan that you know, that can be
• 15:16
  bought packs. That can be all the things you
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  need to consider as you embark on this journey.
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  As much as we provide, you know, software solutions, hardware
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  solutions for micro fulfilment, right, and all these things
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  along the whole and all of that underpinned, where is
• 15:34
  operational consulting. We'll train the people, we'll be
• 15:39
  with you install, we hold the hand along the whole journey.
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  It is not just software by any means.
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  Tesco's has done such a fantastic job globally and you
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  know, is a beacon that people look to, especially in these
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  areas. What's that one metric for you
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  that's a sign of success? As you know, maybe looking back
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  in your old supply chain, what was the one thing that you
• 16:00
  always try to achieve? Is this speed of delivery?
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  Is it is it a data point that people haven't thought about?
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  I'm just curious. Customer action CSAT stores What
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  is the sort of. Measures cumulatively, it's the
• 16:13
  customer focus, right? You, you have to have a, you
• 16:17
  know, and whether you measure an NPS, whether it a seat, whatever
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  number you're looking at, the customer satisfaction will be
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  what the, the most telling outcome of it or now there are
• 16:28
  many leading and lagging indicators and all these things.
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  But alternatively, if your customers like what you do day
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  in day out, your business will grow.
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  And starting there with, you know, with a customer in mind,
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  working backwards through the proposition into the execution,
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  you know, every single day if the customer is happy, you can
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  manage the cost along the process, you have the right
• 16:51
  tools to do the job, the growth will come.
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  What I'm curious about is a vision of the future over the
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  next five years with robotics. With so much different positive
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  technologies and solutions coming into the retail space,
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  what's your vision of the future if you were to paint it rather
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  than not? Not where will would be, but
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  what what the possibilities? What do you think?
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  We, we spoke at the beginning over supporting the individuals,
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  the humans in this process. And I think that is already
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  something we do quite well by supporting with the right
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  decision making so that the execution day-to-day can be so
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  much more streamlined, standardised and so much easier
• 17:34
  for the people along the supply chain.
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  And I think the tools will be more and more capable to level
• 17:41
  up the decision making and supporting individuals.
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  The people will never go away, but having a better foundation
• 17:51
  for making, you know, decisions. And eventually, you know, the,
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  the degree of strategicness of those decisions will increase as
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  we get into a world where the tools can be ever more capable
• 18:05
  of making larger decisions. So that it isn't just a yes or
• 18:10
  no, this or that question, but a, a more broader approach on,
• 18:14
  on, on strategic. Now that might be 5-10 years
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  out, but I genuinely think the decisions AI will able to help
• 18:21
  us with will get a a bigger and more useful.
• 18:25
  I also do believe humans will still be there.
• 18:29
  And yeah, human in the. Loop, the word that I learnt
• 18:32
  that I love. I never knew that phrase human
• 18:35
  in the. Loop OK.
• 18:37
  So, Oliver, one of the things that obviously has been on my
• 18:40
  mind as we've been talking is about my data as a grocer.
• 18:44
  That's my business, right? I live and die by the data my
• 18:48
  business is creating. And you know, whether it's in
• 18:53
  Europe and USI don't think Tesco's will will be a direct,
• 18:55
  maybe some sort of some places in Europe you may be a direct,
• 18:58
  but what's your approach to data?
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  How do you protect me as a retailer and my my data as a
• 19:04
  retailer? So, so it is really, really
• 19:07
  important to us that data and all degree of information is
• 19:11
  absolutely safe. It is 100% kept away from Tesco.
• 19:15
  We are a separate legal entity, separate systems.
• 19:18
  We will provide you with your own computing cloud instance.
• 19:21
  So your data is hosted separately, not shared with
• 19:25
  anyone else. So no other retailer can can get
• 19:28
  access to those to this. And you know, we'll, we'll take
• 19:31
  take great care of your data for sure.
• 19:34
  So then any of the efficiencies, any of the learnings that I'm
• 19:36
  getting from my data remain mine.
• 19:39
  Absolutely. They remain yours and we keep
• 19:42
  developing the solution and and any improvements we'll do, we'll
• 19:46
  share with you as we go along. But your data is yours and is
• 19:49
  not being shared with any other retailer.
• 19:51
  Fantastic. Thank you so much for that.
• 19:54
  But where? Where can I find out more about
• 19:56
  you guys? So you can look at
• 19:58
  transcendretailsolutions.com where you find more information
• 20:02
  about us. You're very welcome to come and
• 20:05
  visit us in the UK and have a look at our solutions.
• 20:08
  Get in touch, we'll talk more about how you can see what we
• 20:11
  are doing. You can also come and see us at
• 20:13
  the NRF. We will have a booth and we
• 20:17
  bring a bit of a demonstration with us so.
• 20:19
  Yeah, see the booth at NRF. Sorry.
• 20:21
  I don't remember to booth and and we can show you our
• 20:24
  solutions there and we'll have a, you know, a live
• 20:28
  demonstration going. So yeah, do come and visit would
• 20:30
  be great. OK, well, I'll, I'll, I'll
• 20:32
  definitely come and pop by and say hi, Oliver.
• 20:34
  Thank you so much. Good.
• 20:35
  Good luck and all the best for 2025.
• 20:38
  Thank you very much. Thanks for having me.