Intro (00:01):
Welcome to TEKTOK Digital Supply Chain podcast, where we will help you eliminate the noise and focus on the information and inspiration that you need to transform your business, impact, supply chain success, and enable you to replace risky inventory with valuable insights. Join your TEKTOK host, Karin Bursa, the 2020 Supply Chain Pro To Know Of The Year. With more than 25 years of supply chain and technology expertise and the scars to prove it, Karin has the heart of a teacher and has helped nearly 1,000 customers transform their businesses and tell their success stories. Join the conversation, share your insights, and learn how to harness technology innovations to drive tangible business results. Buckle up, it’s time for TEKTOK, powered by Supply Chain Now.
Karin Bursa (01:13):
Hey there, Scott. How are you today?
Scott Luton (01:17):
Fantastic, Karin. Great to be back with you here, TEKTOK version of Supply Chain Now live. How are you doing?
Karin Bursa (01:23):
I’m doing great. I want to welcome all of our supply team movers and shakers to the conversation today as well. And it’s always a thrill to be here in a livestream, where we get to actually hear from our community members and get their perspective on a number of things as well.
Scott Luton (01:40):
Absolutely. They always bring it, bring their A game, bring their Atlanta Hawks game to the stream today.
Karin Bursa (01:47):
That was quite a comeback last night. Everybody here in the Atlanta marketplace, I think, are still living off of that last couple minutes of the game coming behind. What was it, 25 points or 23 points?
Scott Luton (02:01):
Twenty-six. But who’s counting?
Karin Bursa (02:02):
Twenty-six. Okay.
Scott Luton (02:04):
You know, other than soccer, it’s good to see Atlanta teams come back or close it out. And it’s a three to two lead, so we got to win that one more game to really win the series against a really talented six years team. But, hey, I digress. You might can tell Hawks is kind of front and center for me here this morning.
Karin Bursa (02:25):
Yeah. Sports in general is always kind of front and center for you. And you are number one fan of all of our Atlanta teams, so we love that about you. But, you know, Scott, one of the things is, life seems to be returning to more normal kind of cadence, more normal engagement. I told you that I had my first out of state business trip last week. So, planes, trains, automobiles, Uber’s conference rooms packed with 15 or more people in them. And it felt strange. I mean, it had been 14, almost 15 months, since I’ve been on a business trip, which is the longest I’ve gone in 20 plus years. And it was surreal at times to be in 3D with a room full of people and just how much that kind of filled my soul. I got to tell you, it was great to see the airport was busy. My plane was packed in both directions. So, other than having to wear a mask from the time you drop your car, to get on the plane, on the plane, you know, until I got to the hotel. So, that was probably a good six-and-a-half hours with a mask on the whole time. It’s a little like Darth Vader, you know, after a while. You know, all of the TSA, everybody working at the airports, really working hard to make it a good experience for our travelers.
Scott Luton (03:46):
I love that. I love hearing that. That is definitely uplifting. We are seeing a lot of normalcy across the states. But as we always talk about, Karin, we got to get a whole globe into this post-pandemic environment so that all of our dear friends across the globe, whether it’s Srinivas in India or folks elsewhere, they can get a taste of that normalcy that you’re speaking about. Because I tell you, that is definitely a welcome sight. But today, for today’s conversation, what is the theme for today, Karin?
Karin Bursa (04:16):
Yeah. Yeah. Well, today, we are going to get a retail pulse check. So, what’s going on with retail? I think we all know that retail in general has just been hit really hard throughout the pandemic. And, of course, when retail gets hit, all of the suppliers to retail get hit in the mix. But we’re seeing some interesting things. You know, Scott, I was out doing a little Father’s Day shopping. So, reminder to our audience, Father’s Day is coming up this weekend, make sure you at least get a card or give a call to your favorite father or fathers – plural – and let them know how much you care about them. But I was out shopping, which I haven’t done a lot of in-person shopping recently, but I was shocked at how many people were shopping and the bags they were carrying. I mean, people are buying, there’s a lot of shopping going on. So, it was interesting to see that some of the stores, like apparel, outdoor sporting goods – you know, my husband is a big outdoors guy – lot of shelves not fully stocked in the stores. So, purchases are being made, but that supply chain that’s serving all these retail channels, I think, we’ve got a little catch up to do.
Scott Luton (05:25):
Agreed. Completely agree. Well, we’ve got a wonderful guest we’re going to introduce and bring into the stream here momentarily. I want to knock out a couple of program notes, say hello to a few folks. And then, Karin, we’re going to jump right in with our wonderful guests.
Karin Bursa (05:37):
Excellent.
Scott Luton (05:37):
First, a couple of points here, so speaking of retail and speaking of big names in retail, if you’re a golfer, you certainly know PING. If you’re not a golfer, you probably know PING. Next week, we’ve got a wonderful webinar teed up, free to join us, all about supply chain transformation with PING supply chain leaders and our friends at John Galt Solutions. So, y’all join us for that. We’ve got a link to register in the show notes. And, Karin, can you hear me okay? Is my mic coming in loud and clear?
Karin Bursa (06:01):
I hear you. You sound good. And I caught that we’ve got it teed up and PING, I got that. So, no music to accompany that, but nice job.
Scott Luton (06:10):
Thank you very much. We need a little drum set in the background here.
Karin Bursa (06:14):
Something. [Inaudible].
Scott Luton (06:15):
But join us next Tuesday, I think it is, June 22nd for that event. And then, hey, we’re really excited with partnering with Lora Cecere – the one only Lora Cecere – for the Supply Chain Insights Global Summit in September 2021. Karin, as you know, we’re going to be the exclusive provider and broadcaster of the virtual version of the event. Now, you’ve got to register. I can’t say this one’s free or else Laura might come break my legs, but join us. We’ve got an outstanding speaker lineup that is building by the hour, it seems. And I think it’s going to be really a one of its kind hybrid event, both virtual and folks in-person there in Franklin, Tennessee. We’ve got a link to register for that in the show notes as well.
Scott Luton (06:58):
Okay. So, we’ve got a lovely audience here. I’m getting texts. Thanks. I give a shoutout to the one and only Greg White, who is giving me a heads up about maybe an audio issue on my end. That’s why I was checking with you, Karin, and make sure you can hear me and all my bad dad jokes. Let’s say hello to a few folks that have already joined us in the cheap seats. Srinivas from India. Great to have you back once again on a livestream. Shoby from Dubai via LinkedIn is with us here today, welcome. I look forward to your comments and take on today’s conversation. Ravi also via LinkedIn. Tom Holden from Louisville, Kentucky. And, Tom, thank you for letting us know where you’re tuned in from. Ravi and anyone else, that chimes in, hey, tell us where you’re watching from. It’s always neat to see how close the world is. It gets really small the more you dig in. Mark Preston, fellow Hawks fan, Karin. Hello from Peachtree City. And, Mark, of course, on the board with the Association for Manufacturing Excellence, doing good stuff there. Peter Bolle all night and all day is with us here today. And Gary Smith is back from New York City. Gary hope this finds you well.
Scott Luton (08:08):
Okay. We are on a tight schedule today. Our guest has a hard stop, and I’ll tell you the warm up conversation, Karin, I can tell, not only is this going to be fun, but our guest has talked about a pulse, has her fingers. She might be the pulse of retail.
Karin Bursa (08:22):
She does.
Scott Luton (08:22):
But tell us a little more who we’re going to be introducing, Karin.
Karin Bursa (08:27):
Yeah. Absolutely. So, we’re going to really focus, kind of do a retail pulse check. And our guest today is Paula Rosenblum. And Paula is the Founder and Managing Partner for RSR Research, so Retail Systems Research and they shortened it to RSR Research. I’m so excited to introduce Paula to our community. And so, this will be the first time that we’ve been able to have her as a guest here. Paula is one of the top 50 retail technology influencers. I would tell you, she’s probably one of the top ten retail technology influencers. And brings such depth to the conversation around the retail supply chain, both store operations but all the way back in working with partners to source goods and move them to market. Paula, she’s got a regular contribution that she does with Forbes as well, and has been quoted in Wall Street Journal, Washington Post, and many other publications. So, I’m super glad she’s with us here today on Supply Chain Now and on a TEKTOK livestream. And here she is. All right. Paula, your first swoosh. Welcome.
Paula Rosenblum (09:38):
Thank you. Thank you so much for having me. Hi, everybody. If I know you, nice to see you again. If I don’t know you, nice to meet you.
Scott Luton (09:45):
Awesome. Well, Paula, we got so much to talk with you about and learn from you about. But really quick, you’re in Miami where you’ve been since, I think, in the mid-2000s.
Paula Rosenblum (09:54):
I am.
Scott Luton (09:54):
Tell us one thing that you love to do when you’re not dishing on all things retail. Where do you love to spend your free time?
Paula Rosenblum (10:02):
Oh, I actually really enjoy photography. And one of the lesser known facts about Miami is, it’s one of the street art capitals of the world. So, I actually go down and I take a lot of photographs, a lot of street art. And then, when I feel in a different kind of mood, I’ll go off either to the Everglades or up to some wetlands and take photographs of wildlife. Those are kind of my favorite hobbies at the moment.
Scott Luton (10:28):
Love it. Well, we’re going to be looking for some tips about Miami. We’re talking pre-show. Greg and I and some of the gang will be down in Miami with our friends from OMNIA partners in September. And we’re going to call you with some questions and some insider tips because we understand Miami looks a lot different than our last time in the city quite some time ago.
Paula Rosenblum (10:47):
It does. It’s all grown up now, as they say.
Scott Luton (10:53):
All right. So, Karin, where are we going to start the conversation with Paula today?
Karin Bursa (10:58):
Well, I’m going to kind of start at the beginning. So, Paula, retail has been in the midst of a huge transformation for three or four years now, and then the pandemic hit, right? So, now, we’ve been through a good 15 months of retail under this global impact of a pandemic. And I know that you participated in a recent event, the CXO Summit that is put together by our good friend, Cathy Hotka. And so, you’re fresh off that. And the opportunity to meet with a lot of your friends and meet some new friends as well would love it if you could give us just your pulse on what’s going on, what the priorities are from that event.
Paula Rosenblum (11:43):
Sure. The mood was very upbeat. It was totally enjoyable for me to actually connect and talk to retailers in a comfortable environment. Normally, when I go to physical conferences, I tend to be cloistered over by a table. And I actually networked more on the virtual conference than I do in general conferences. I mean, there was obviously the sense of mind’s blown, you know, look, what’s just happened. I spent a fair amount of time talking about the workforce and what’s the future of work from home versus work at the office and mutual advantages. It was a lot of CIOs, a lot of CISOs, marketing folks. It was a good group of people and we really quite enjoyed ourselves.
Scott Luton (12:33):
Wonderful. Well, you know, retail is fascinating. It was fascinating before the pandemic and it certainly is even more intriguing now. Part of the silver lining here is all the innovation is taking place and how it’s also accelerated digital transformation. And in many cases, it has improved the customer experience. You see a lot of organizations getting much more serious about that and acting on that. But any other takeaways. It sounds like it was a great event you were at. Any other key takeaways before we move on?
Paula Rosenblum (13:01):
I mean, there’s no doubt – and this is thematic, both at the CXO Summit and in everything else – that COVID was the great accelerant. And so, trends that were nascent before the pandemic erupted really quickly and really kind of dramatically. And so, all of a sudden buy online and pickup at curb became a thing. Grocery home delivery, which was something grocers, I think, were paying a lot of lip service to but not really keen to do, exploded. That was the biggest thing was the accelerant. And the next phase is to catch up technologically. Because with some exceptions, like, for example, Walmart and Target had spent a couple of years preparing for this. Others really just kind of went for it. Did whatever they could, either they offloaded it to Instacart or one of the other major delivery companies. But that was really the big thing that we talked about. We built a supply chain that was built for efficiency and, all of a sudden, it required agility, and that was a challenge.
Scott Luton (14:18):
All right. So, Karin, one of the things we’ve talked about a lot here at Supply Chain Now and on TEKTOK has been returns and reverse logistics and that side, which, as we all know, can really eat away at those margins for any organization. So, fortunately, we’re seeing a lot of emphasis placed on those specific skillsets that reverse logistics and returns optimization require, including with our friends over at the Reverse Logistics Association. I think we’ve got our next livestream teed up with them in July with the group at Cisco, with a C. Looking forward to that. But, Paula, a question for you. You know, what are you seeing in this space? What are you seeing around priorities for reverse logistics? And when it comes to new emerging trends related to that area, what would be some of your thoughts there?
Paula Rosenblum (15:06):
One thing that is important to know and remember is that, particularly for apparel, when you don’t have a fitting room, returns basically replace the fitting room. So, if you think about when you go shopping, the number of items you bring into the fitting room versus the number you actually take home with you, extrapolate that out to buying something and taking delivery at home. And so, in that universe, a return rate of 25 percent is considered superb. And that’s expensive. That eats away at margin, for sure. It eats away at labor. And believe it or not, this is not new.
Paula Rosenblum (15:44):
I mean, way back in prehistoric times, I designed a return management system – I did – for a catalog retailer. I really did. It was Chadwicks in Boston. I don’t even know if they still exist anymore. And it wasn’t simple. It was complicated because you had to decide the disposition on the product when it came in. You knew it was going to be a big number, you had to decide on the disposition, you had to keep track of it on and on and on and on. Now, we’ve taken that and we’ve said, “Well, you can return it anywhere because it’s an omnichannel tenant”. So, there’s two problems that happen. One is that it eats away at margin. And the other thing is that it really distorts your available inventory. Because is it really back? Is it saleable? There’s really a lot of issues that have come along. And then, you know, with all respect to my friends who do fitting systems, et cetera, et cetera, it’s not going away because, again, think about going to the fitting room and think about how many things you actually take home from the fitting room.
Karin Bursa (16:48):
Yeah. Yeah. And I’m with you. And, you know, I’m all about ease. And, like many others, have done a lot of online shopping over the last 15 months or more. And I got to tell you that the ability to do returns in a simple and easy way is part of my decision process today. Absolutely. In fact, I just ordered some cushions for the patio furniture. Out of, like, eight cushions, one was not what I expected. And the hassle of returning that one cushion, I probably won’t buy from that retailer again. That’s the way I feel.
Paula Rosenblum (17:23):
I believe you. I’ve gotten into squabbles with vendors who wanted me to return 36 inch tabletops that came in ship. And I’m, “No. I’m not doing that. Sorry.”
Scott Luton (17:36):
Really quick, I want to recognize a couple of folks and, Karin, we’ll continue with talking returns, I think. Gary Smith says, “COVID got retailers off their keisters.” Agreed. Let’s see here. Marisa – welcome, Marisa. Marisa is tuned in via LinkedIn from Trinidad and Tobago. Welcome. Welcome. Rhonda, great to have you here. She said she’s a little bit late because she was on a call talking men’s health. Hey, we appreciate that. It’s good that folks are thinking of men’s health these days. It’s wonderful. And let’s see here, Peter says he’s going to be cruising roof down, wind in the air, and thankful for all that life —
Karin Bursa (18:09):
He’s got the top down.
Scott Luton (18:11):
Yes. And I’m so jealous. He’s got a convertible, Paula, and lives up in Canada. And he always puts that convertible sports car in our face. So, we’re all jealous around here.
Paula Rosenblum (18:22):
I have one too. It’s just this is the time of the year the top goes up.
Karin Bursa (18:26):
I was going to say it’s probably getting too hot now in Miami for the top to be down. Paula, on TEKTOK, so, you know, one of the things that we focus on in this particular podcast is digital, digital impact, digital supply chain. And you and the team at RSR have done some really interesting research in 2020 in the midst of COVID around artificial intelligence and enablement, specifically for the retail supply chain. So, I would love it if you could share just a couple of examples with us, some aha moments, if you will, from that benchmark report.
Karin Bursa (19:04):
And by the way, I know they’re going to ask, Scott, but Paula is allowing us to make that available. So, that’ll be in the show notes and everybody can download that. So, I really recommend you take a look because there’s lots of information in there that might help you in putting together your next steps. But, Paula, when you look at that research – and I know you’re living it every day – give us some insights around how artificial intelligence, how digitization is helping retailers make this transformation. I love your phrase about COVID has been the great accelerant.
Paula Rosenblum (19:40):
It has. It really has. I mean, to the surprise of no one, actually, we found that the import supply chain was more disruptive and it continues to be. And by the way, the sporting goods shortfalls have been going on since the middle of a pandemic because some people picked up the COVID-19 pounds and others actually took the opportunity to get really, really healthy.
Scott Luton (20:07):
I’m working on reverse logistics of those COVID-19 pounds. Any tips there, Paula, would be great.
Paula Rosenblum (20:14):
So, what we found is that, those who are buying consumer brands want to be able to monitor the supply chain and make adjustments in real time. Those who are vertically integrated need more flexible sourcing strategies, which is something Karin will tell you I’ve been, you know, singing about for a very long time. And omnichannel selling just hasn’t been as profitable as one would expect. And, again, a lot of it has to do with the return rate and the amount of handling that happens. I don’t think we realize how much work the customer actually does in a store versus a store employee.
Karin Bursa (20:53):
Interesting. I mean, that’s an interesting comment, how much the customer does, how much work the customer is doing.
Paula Rosenblum (20:59):
It’s a thing. I mean, there’s been a lot of talk lately around Amazon Go and cashierless check out. And there are a few of us, Cathy included and I, who both say, “You know, I didn’t sign up to be a grocery worker. When I go to a grocery store, there’s somebody to do stuff for me.” And forgetting about the shrink implications, et cetera, et cetera, it’s awkward. You know, it’s challenging. So, that was a big takeaway. And we can see that NAI enabled supply chain create some real opportunities, particularly for inventory visibility, for evaluating the state of a supply chain route at any point in time, or a supply chain network, and creating an opportunity to do something different.
Paula Rosenblum (21:48):
One thing I will say – and this is not from the report, this is from my experience – the domestic supply chain issues that happened earlier in the pandemic, in my view, were inexcusable. I think they were predominantly caused by the fear of the bullwhip effect that it was going to end really quickly, like a hurricane or a blizzard or one of those one-off events within three or four days, and they fill it back up again. And there wasn’t a manufacturer in the world who wanted to get stuck with high cube, low margin items, like toilet paper on the shelves. So, there were thousands of reasons given mostly blaming consumers for why there was none, and that they were hoarding, and there was a run on them, et cetera, et cetera. But, in fact, I do believe – and no one has called me out and said, “No. You’re wrong. It’s not true.” – that it was all about the manufacturers choosing not to ramp up for quite some time.
Paula Rosenblum (22:44):
And when they did, they did the oddest thing. Because, I mean, to me – and I hate to keep talking about toilet paper. There’s something odd about it – but it’s really a prime case study. Because the first place I was able to get toilet paper of any consequence was Walmart. And what was odd to me is, now, you’ve started producing it again, why are you producing it in 36 packs? I would never buy 36 rolls at one pass. You know, so there were so many mistakes made in so much fear that there was going to be things stuck on there up the supply chain shelves that, I think, there’s a lesson to be learned there, but I’m not clear what it should be because you couldn’t have forecast what happened. It was such a singularity.
Scott Luton (23:37):
Well, I think one of the lessons learned is, if you think your sector or your company is a bit insulated and special, hey, if it can impact toilet paper to the degree it did, it can change and disruption can impact anybody. So, don’t feel safe. So, you’re talking, Paula, about earlier in your career – and before we talk about some organizational changes from the report – I want to share this from Gary Smith. He says he started his supply chain career in catalog returns at JCPenney, where he had a 30 percent return rate, which was common then. And it’s still the rate for e-commerce now. “The more things change -” he says “- the more they stay the same.” Quick comment there, Paula.
Paula Rosenblum (24:15):
Well, it’s exactly what I said before, it’s absence of a fitting room. It’s really simple as that, is that, a return becomes a proxy for a fitting room. Unfortunately, it’s more expensive because you’ve got to reverse, you’ve got to pay the credit card fee on both sides, you’ve got to process the product which is no longer – and there’s only so much that can go wrong with it in a fitting room. There’s a lot more that can go wrong with it if it’s been traveling. So, it’s never going away, from my perspective. I agree completely.
Scott Luton (24:44):
That’s right. So, let’s talk about some organizational changes, any observations there related to the report?
Paula Rosenblum (24:49):
To the report? No. The report was really all about just using AI to help track demand, to help track where product is moving, where it’s getting stuck. Particularly, if you use it in combination with location analytics, you start to find out where problems are coming from and how they’re affecting the route of both customers, and employees, and products to the store or to wherever they’re going. So, that was really important, I think, to understand.
Karin Bursa (25:19):
So, Paula, when you speak to that, one of the areas that AI was applied earlier, probably before pandemic, was around demand and looking at multichannel operations. So, I’m curious if there are any insights from the research that indicate better channel alignment, especially given that the last 15 months have probably seen a tremendous shift into direct to consumer for many of the retailers as well. Will they get the signals for a return to the store? What’s your thought? Do you think the AI is going to adopt to those near term signals pretty quickly or what’s your feel?
Paula Rosenblum (26:04):
Honestly, no. I think that just as 2020 was a singularity, 2021 is a singularity. I don’t think there’s any doubt we’re going to have a killer back to school season. I don’t think there’s any doubt we’re going to have a strong holiday season. I don’t think there’s any doubt there’s going to be more people in stores. But do I think that’s going to stick? I don’t. One example I use, for better or worse, is, going back to restaurants. As we talked about earlier, I’ve been fully vaccinated since Valentine’s Day was when the end of the second week after my second shot. And so, I started going to restaurants, eating outside or inside, or whichever I was feeling safe doing. And at some point, I got sick of it and I started eating at home again. So, I think that’s what we’re going to see is this pent up demand, “I want to go out. I want to be at someplace.”
Paula Rosenblum (26:54):
I was down in Bayside, which is a tourist area in Miami, and it was packed. And it was like, “Well, I want to go for a boat ride around the bay. I want to take a look.” And I was like, “Well, I’m not doing that again.” So, if they try [inaudible] it was so crowded. And so, the point being is that, it’s going to be very hard to forecast 2021, beyond saying it’s going to be killer, assuming that the product here because, from my perspective, the supply chain is still very, very broken. I have friends who live out in LA who tell me they see the ships floating around offshore on that tour. Interestingly enough, that I took out at Bayside, we passed the Port of Miami, and there were very few container ships there because they’re not picking the alternative routes. But the ones that were there, you would think in this environment, they’d be working 24/7. They weren’t. It was a Saturday or a Sunday. And the container ship was sitting there completely stuck, chockablock full, not moving. So, we have still a broken supply chain.
Scott Luton (28:05):
Yeah. No kidding. And for long there’s going to be a yellow navy out there on the west coast, much like, if y’all remember several decades ago, in the ’60s and ’70s, ships got stuck in the Suez Canal because of the conflicts that were going on there, and stuck, like, for years. And they even developed an HOA, a local council, as part of the ships that were stuck in Suez Canal with all the ships staying in the west coast ports, as long as they are. Who knows? We might see a local election there for deciding port issues.
Scott Luton (28:39):
But I want to share a couple of quick comments here. We’ve got some good ones.
it starts with, A.A. loves your analogy, Paula, about the bullwhip effect, ending as quickly as the hurricane. He loves the concept and the analogy.
Paula Rosenblum (28:52):
Thank you.
Scott Luton (28:52):
Kedar or Kedar – if I got that wrong, my apologies – “Great insight, Paula. A 30 percent return rate is a proxy for the fitting room. It’s never going away.” Excellent point. Great call out there, Kedar. Thanks for joining us here today. And, Peter, it’s a long comment here, and I’m not going to cover Paula up there. But he’s talking about how you’re right on point. Evidently he went on a rant on a separate livestream and it looks like you’ve given him some new ammunition, Paula,which is good. It’s dangerous with Peter Bolle. All right. So, Karin, where do we want to go next with Paula?
Karin Bursa (29:25):
I want to talk a little bit, you mentioned very briefly, Paula, in the CXO event, that workforce was part of that discussion, right? And workforce also is part of the discussion around technology. But, also, we’re seeing hesitation of some workers, skilled and unskilled workers, returning to work, if you will. What kind of impact do you think that’s going to have on the retail sector? You know, some of the store workers, what’s your thought?
Paula Rosenblum (29:57):
Well, let’s put the store workers over here for a second and let’s start with the home office. There’s no doubt that the nature of work is not going to ever be the way it was, and that’s actually going to drive profitability for retailers. What came out at the CXO Summit – actually, I’m sorry, I didn’t write more about it because now everyone’s picked up on the concept, which is that, there’s going to be a lot of people who’ve decided, “Hey, this is pretty cool. I can live where I want. I don’t have to be stuck in a little box. And I can get my work done. And the only thing I’m missing is that I can’t turn to the guy standing next to me or sitting next to me and say, ‘Hey, how do I do that?'”
Paula Rosenblum (30:41):
So, I think that the nature of work has changed forever. And there’s going to be three kinds – this is for home office workers. There’s going to be the, “I’m just working from home. The commute time is a waste of productivity and energy.” There’s lot of, “I’ll go in a couple of days a week so that I don’t go crazy just being here with my kids and checking up with, you know, anything new that’s happening.” And then, finally, “I can’t be here anymore. I want to go back to work.” And I think we’re going to see a combination and retailers are going to be happy to oblige.
Paula Rosenblum (31:09):
With regard to the stores, I think Walmart has really set the tone. And part of that is good and part of it is not so good. The good part is that they’ve absolutely acknowledged and recognized their employees, and given them bonuses, and raised their money. Recognized that their frontline employees, which was, I think hard for them to swallow. On the flip side, the store profit model is what it is. You can’t change it. It’s built on a set of assumptions. You know, here’s the profit side, here’s the revenue side, here’s the expense side. And payroll expense is already the second highest expense after real estate that you could have.
Paula Rosenblum (31:50):
So, the challenge becomes how do I keep stores profitable, right? And so, Walmart’s trying to self-checkout because they have absolutely been better to their employees. Everything I was reading on social media today is saying that’s not being met by a warm response at all. I’m not going to spend a lot of time talking about the cashierless checkout technology. I don’t believe in it. And that’s as much of that. It will not scale. They will not pay. It will not happen. That’s all I’m going to say about that today. Unless, you can call me on it.
Karin Bursa (32:27):
Tell me how you feel. Tell me how you feel about that.
Paula Rosenblum (32:30):
Like I said, I didn’t sign up to be a grocery worker. I think I said that before we started.
Karin Bursa (32:36):
And I certainly don’t want to wait in line to do my own self-checkout.
Scott Luton (32:40):
Well, you just got to watch out for the folks that bring a buggy full of 2,000 items and 800 coupons, you’ll be there for hours. So, don’t get behind those folks. But if I can go back to the workforce, where Karin started the questioning. I was scrolling across LinkedIn, I can’t remember who was speaking to this. But, you know, with diversity, equity, and inclusion initiatives really rising to the forefront in terms of priority, one other element, I think, that this writer was talking to is, we’ve got to factor in our remote workers in making sure that they’re well-represented, and included, and feel like they’re part of the organization. And that’s just one more wrinkle when it comes to leadership and managing workforces effectively. Any commentary there, Paula?
Paula Rosenblum (33:29):
No. That came out of the CXO Summit and it’s come out in other conversations I’ve had, is, how do you infuse the culture of the company in these workers that you may never take. My buddy over at Vitamin Shoppe, Andrew Laudato, is already hiring people from completely other states. And there’s a whole bunch of reasons why he’s doing that. One of them is that, his home office is in Paramus New Jersey, which isn’t a cheap place to be. The cost of living in other places in the country is cheaper. Finding data scientists or particular specialists is really a challenge, and so if you can go get them from anywhere and let them stay where they want to be, all the better for you. The challenge is how do you inculcate these people with values. And I think if you look at the trade-off between flying people in a few times a year versus building office space, maintaining the office space, cleaning the office space, it still works out to a plus.
Karin Bursa (34:26):
Yeah. Yeah. Let me ask about – you mentioned – data scientists and I think that’s really important. So, just to kind of draw together some of the workforce conversation, but also this conversation about retail and leveraging artificial intelligence. You know, a data scientist or a team of data scientists can be a very expensive investment, especially if they don’t have a lot of focus. And sometimes they get bored also, they want to solve new problems each and every day versus solving a problem and really, maybe, honing it for repeatability over time. What are you seeing or how is that influencing, maybe, the selection of technology that’s going to incorporate, some of that artificial intelligence? Or do you see retailers as investing in their own teams of data scientists?
Paula Rosenblum (35:17):
It really depends on the size of the retailer. My understanding is that Target is paying 350 grand for a data scientist these days. Others are absolutely depending on their vendors, you know, their tech vendors, and they expect to get more easily consumable data and information. You know, you shouldn’t need to have men in white coats taking care of it or the data scientist. It should be user-friendly with a visual intuitive frontend. That’s what I see kind of happening. But there are those who are trying to get a big – you know, the mega retailers are absolutely trying to get a leg up. But 350 grand sounds like a lot in retail, I’ll tell you what, they can make more than that in financial services, and that’s the core problem.
Karin Bursa (36:04):
Yeah. Yeah. And I hear that in a lot of different supply chain disciplines as well, that once those teams get some good results from the time investment and talent investment, it’s hard to keep that data science team engaged because they get pulled away for other opportunities in other industries as well.
Paula Rosenblum (36:27):
Yeah. And that’s real. And retailers can’t compete on a dollar basis. It’s absolutely on the vendors. There’s no doubt in my mind that it’s on the vendors to create easily consumable analytics.
Scott Luton (36:38):
Paula, we’re going to have to have you back for part two. There’s so much that we want to talk with you about, and then we’re kind of approaching your hard stop.
Paula Rosenblum (36:44):
I’m here.
Scott Luton (36:46):
I want to share a couple of quick comments. Luz Maria is with us via LinkedIn. Appreciate that feedback. And she is from Peru, so welcome. Thanks for tuning in from Peru. Maria is tuned in from Philippines, welcome. Thanks for being here part of the conversation. And a couple folks are commenting, that cashierless checkout line, I think, has got everybody’s attention here. Gary says, “Maybe retailers should offer a discount for self-checkout.” I like that. And Rhonda says, “We got to pack our patience for self-checkout.” Amen to that. One quick question from Rhonda, she’s talking about how open and available commercial spaces are being reutilized as distribution centers, return centers, fulfillment centers, you name it. Any comments there, Paula, on what you’re seeing?
Paula Rosenblum (37:30):
I don’t see a big future for dark stores, if that’s what the question was meant to be. First of all, you know, commercial real estate costs X amount per square foot and distribution center square foot costs X divided by four – I’m sorry – industrial real estate costs X divided by four. So, that’s one reason I don’t see it happening. What I do see happening is, retailers, again, focusing on – and Home Depot has already done this, I believe – starting to open more local distribution centers so that they can respond more quickly to needs and clusters of stores. I mean, Walmart has been an advantage because stores are so bloody big that they can pull from anywhere once they’re in a place. But others have to think about where am I going to store. It’s kind of like when I used to be in the shoe business, we used to store shoes in the Midwest in November because we knew it was going to snow somewhere, and we wanted to have boots available for that [inaudible].
Karin Bursa (38:36):
Yeah. Yeah. Absolutely. I do think that the retail layout of a lot of stores is going to change. So, whether it’s because of self-checkout or, you know, trying to create some destination brands, or some reasons to actually come into the store and shop is bringing a little bit of entertainment into some retail formats as well. So, I do think we’ll see some continued transition, Rhonda, in those areas. Absolutely.
Scott Luton (39:04):
See, Karin, you know, there’s impulse buys. We’ve all been in the checkout line and picked up a couple items at the end, especially if you’ve got kids. We know now that you got the pickup at the curbside, like Paula mentioned way back when, we’re going to see shelves set right up by the car so you could make those impulse buys as they’re loading your pre-order groceries in the car. It’s right around the corner, undoubtedly.
Scott Luton (39:27):
Okay. So, Karin, I’ve got 12:40, and as supply chain practitioners, we are on time and we’re going to protect Paula’s time. But as we start to wind down, what are a couple of final things we want to ask Paula about, Karin?
Karin Bursa (39:41):
Well, two things. First, Paula, I think you’re going to be refreshing this AI enabled research.
Paula Rosenblum (39:48):
We are.
Karin Bursa (39:49):
Tell us about that. And can our community get engaged in the research or contribute to the research?
Paula Rosenblum (39:57):
Absolutely. It is our hope that any retailer that’s on this call, the survey will be out probably in a week or two and I’ll publish the link on LinkedIn. You can follow me or connect with me either way, I don’t mind. I’m easy to find. And I will publish the survey link and you’re more than welcome. And it’s pretty close to the same format as last year, same questions as last year. So, we’ll be able to do a lot of mid-pandemic and post-pandemic research. We did that with the workforce, pre-pandemic and mid-pandemic. So, now, we’re going to go with supply chain mid and after. The only big concern I have is that, again, the supply chain is still broken. And I don’t have a clue why kayaks are still twice what they are supposed to cost. No, it’s true.
Scott Luton (40:48):
I know. I know.
Karin Bursa (40:50):
Don’t get me started on the kayak thing. You know, toilet paper and kayak are two hot buttons for me right now.
Scott Luton (40:57):
Don’t get us started. And rental cars in some markets, I’m hearing about, it’s the size of a mortgage to rent a car for a couple of days because of the lack of availability. All right. So, Karin, we’ll make sure folks know how to connect with Paula. And, Paula, I love how you say you’re easy to connect with, easy to find, where would you direct people to so they can connect and compare notes with you?
Paula Rosenblum (41:17):
Either LinkedIn or Twitter. I do have a Facebook account, but that’s a total personal thing and you have to be into my universe to be there, and you probably won’t like it. As opposed to, there’s RSR, which is my company, we have an account on Twitter. Thank you, Gary. That’s very kind. There’s my personal account on both Twitter and LinkedIn. I think they’re both called RSR Analyst, so you can get things from my whole company, which I think would be really important. And, again, my name is my name and you just Google me. I don’t think there’s too many of me. So, if you just search on me, you’ll find me.
Karin Bursa (41:56):
You are —
Paula Rosenblum (41:57):
No. I meant, name-wise. I didn’t mean, like, being —
Karin Bursa (42:02):
But we’ll put Paula’s LinkedIn link in the show notes also, if that helps any of our listeners, just to connect with her and start following some of the research that RSR is doing around, not just retail, but the supply chain that feeds retail as well. So, Paula, what I would ask of you – I know we’ve just got a couple of minutes left before we swoosh you out so you can get onto your next commitment – what final piece of advice do you have for our audience today?
Paula Rosenblum (42:30):
You know, it’s funny, because for years I’ve been telling retailers, avoid gut-feel when it comes to deciding how much to buy and what to buy. And I’ve switched around the other way, forecasts are not going to be terribly useful.
Karin Bursa (42:43):
Wait. Do you see the shock on my face? What? Tell me again?
Paula Rosenblum (42:47):
Well, it’s true. I mean, certainly, if you’re involved in allocation, whatever you buy, allocate a small amount as you can until you see where things are taking off. I think if you’re buying groceries – I mean, if you’re in the grocery business, expect that you’ll get a downturn, but don’t assume that that’ll stick. I’ll say it again, the last thing is, this year is as much of a singularity as last year was, just a happier one because fewer people are dying, obviously. Next year, we’ll probably start getting back to normal by the spring, I would think. And that’s when forecasts will start becoming very profound.
Karin Bursa (43:26):
Relevant again. Okay. Very good. So, you guys heard it here first, spring, next year – Paula called it just now – back to normal or back to a more predictable performance. Let’s put it that way. So, great, Paula. Hey, thanks for being with us today and just sharing some of your insights. We will definitely invite you back for part two of this conversation.
Scott Luton (43:48):
That’s right.
Paula Rosenblum (43:48):
This has been wonderful. Thanks for having me.
Scott Luton (43:50):
Thanks, Paula. Thanks so much.
Paula Rosenblum (43:53):
Bye-bye. Have a good day.
