How Personalization and Supply Chain Efficiency are Driving Retail Resurgence

You are listening to retail refind, a market scale podcast with me, Melissa Gonzalez. Hello, everyone, and welcome to another episode of retail find a market scale podcast with your host, me milicic and follow today we have Paul Burrell, senior director of consumer and commercial industry group at Fujitsu America. Paul is a Sr. Consultant within fujitsu's, America's consumer and commercial industries. Prior to joining. He held several senior management roles and store operations, and IT at Home Depot. Paul is also a consulting engineer with extensive experience and retail store design and construction. He also comes from a family retail business that owned and operate grocery, hardware and convenience stores. Paul, thank you so much for being with us today. Thanks, Melissa. Thanks for having me today. Yeah, it's great to have you just from sharing your. My mind is going into all the different conversations we could have. But I know, you know, we only have about 30 minutes. try to keep this focus, as I can. But really great background. Before we dive in further, can you tell the audience a little bit more about Fujitsu in context to your role there. And its role in retail? Absolutely so, yes, that's a great question. We that a lot. Fujitsu, of course, we're a technology company. We're founded in 1935. We're Japanese, we're Japanese company. We're headquartered out of Tokyo, and we're a global company. So really we have about 129,000 employees worldwide. Preoperative in 180 different countries and probably 40 different languages. We offer services in the public and private sector, ranging from, of course, on the private side, banking, financial services. We call it mobility. Now, it was automotive and previously transportation, manufacturing and distribution. And for us, distribution includes amines, retail, some of the services and solutions we focus on today, of course, hybrid and hybrid cloud, hybrid it, multi cloud, a lot of business applications, services, oracle, SCDP, Microsoft, Salesforce service, now major infrastructure services and probably more recently, a heavy focus on artificial intelligence. So specific to retail, you know, historically, we've been known as more of a hardware manufacturer and self-service kiosks, laptops, other supporting technologies. But we've shifted away from that within the core business. So we're much more focused now on software, artificial intelligence, and how we're going to be deploying those into retail through a number of different methods and on different platforms to kind of accelerate the value that we bring to the industry. That's exciting for sure. I would love to dive in a little bit where we're recording this during chapter 1 of NRF 2021. Can you highlight some of the digital transformation solutions that you guys are implementing to help retailers respond to the really ever changing, shifting retail dynamics and consumer behaviors that we've seen since it started last year? Yeah, sure. You know, it kind of lines up well with what's going on within VRF this year. So I guess for part one in rf, let me just talk about what we're going to highlight, because that really is going to answer the same question we're going to focus on for different parts of what we're doing today. The first and probably most impressive and newest is Fujitsu digital. Neila, that's going to be covered, I think, in tomorrow, I think Tuesday by two very distinguished colleagues, David snel, Dr. David Snelling and theri Khan, who are elite. Our our research and development programs and practice and digital nailer is a very, very tough topic to cover with non-technical crowds. A lot of people have heard about quantum computing, for example. And, you know, we're edging closer to that. But really, digital enabler allows companies to do things that are almost impossible to do with even high performance computing today. And by that, I mean problems are just too hard to solve. And that means a two wide data sets to many sets of combinations to approach solving a particular problem. So we're going to try to talk the group through that, and we'll do that in a way where we'll talk about a couple of use cases. We're going to talk specifically about what we've done with Toyota, for example, and helping them handle really optimizing parts distributions across their factories from hundreds of suppliers out to hundreds and thousands of partner distribution warehouses. So it's really about, again, getting the right part in the right location at the right time for the consumer. Now, you know, the corollary is something that we did last year, last January at. We demonstrated a very simple and similar application of the same technology for the apparel industry, and if you can imagine it, let's talk about a department store, for example, which can carry hundreds of brands. And we wanted to create a technology and it's going to kind of float into where they go with their e-commerce strategy, where you could know a lot about a consumer. Think about stitch, stitch, fix, for example, have a consumer give us a lot of information about their choices, the type of apparel, the brands they like to wear about their physical characteristics. And we can actually look at, you know, hundreds of thousands to millions of combinations of blouses and skirts, of trousers and shirts and shoes and accessories and really give a consumer highly curated version for themselves. Now, Stitch Fix does that today. What we're doing is scaling it out. So if you look at how many brands they traverse today, think about actually traversing everything available in the garment industry and fashion and apparel. So the answer is to digital. Anila does things that only supercomputing can do today that aren't available to the public, to the Commerce industry. We can do that today on conventional technology that we've designed and through some very sophisticated mathematical methods. We can deliver that today to retailers and we're offering that to quite a few today. And by the way, the interest is growing even that we've done the original demo use cases and test use cases for the technology. Now we're getting phone calls from very, very big brands, from home improvement to apparel to grocery, and we're talking to their innovation and their teams. And it's picking up traction very quickly. So that's probably one of the leading solutions. We'll talk about to appeal to others will provide updates on will be Fujitsu digital marketplace, our digital commerce solution. We used to call those pos. We don't do that anymore. So we're adding capabilities to that platform. For example, we're seeing a lot of retailers that want to do things like, for example, they want to have a cafe services and apparel stores, health and beauty concessions store in a store. So we're trying to build the platforms in a way using microservices that make that easier to do on a converged platform. Third, we'll talk about fujitsu's gorlovka platform. That's that's really our inventory management warehouse management Order Management technology suite. It's not well known in retail, but there are some big retail brands that actually use it today. And unfortunately, we're under really tight end with them. So they're using this really to its modular in design. It's built on Salesforce, which means it's a code application platform, very, very fast to innovate, very, very fast to deploy new business capabilities in days, not weeks and months. So we're going to really be highlighting that. And trying to grow the visibility of that product in the marketplace. And then last, also on the Salesforce theme, we'll talk about what we're doing with the ISI groups and how they're using the Salesforce platform and, for example, their new consumer goods cloud. We've been able to take what Salesforce has built on the cloud platform already and customized some of the applications and provide those accelerators. So they're almost like standalone. And we have a team that's developed a pretty much ground up babis in-store fulfillment piece for the application. So it's really slick. It's really fast. It can be heavily customized by retailer. And we can do everything from managing orders to tracking work activities, sending alerts to store management teams and communicating to the consumers. So it's almost available to any size and scale retailer. So those are really the big four that we want to get out the word out today and for NRF this week, that's fantastic. That's a great lesson for you. Hit upon. So many things that we could dig into. So we'll see how far we get. But, you know, definitely not only seems like you're taking a human centric approach. Right and just really helping retail operators, brands and retailers be more agile, to really cater to a myriad of customer needs and preferences and flexible fulfillment and shipping options. So there's a lot going on here. I love it when it comes to what you talked about, what's your global platform. And the digital marketplace? And, you know, really this integration of the services that we're seeing, tell us kind of how you help in that aspect also with supply chain visibility, because in order to really deliver upon this, that's so key. It's really critical right now. Yeah you know, the watchwords have been in the industry into invisibility and, you know, coming out of retailing tell you exactly how hard that actually is to execute. Yeah, the challenge that we have is the great part about global Wendie. Talk a little bit about it, Isabel, explain it, it began life as a man in MRP remanufacturing resource platform. And we used it at Fujitsu because we manufacture technology, we make phones, laptops, servers, everything, and have done so for many, many years. So we've selected Gloria to be our platform. Years and years ago, and we liked it. So much. We bought the company. And in 2008 we moved it over to a Salesforce and basically reconstructed it on Salesforce for the very reasons why Salesforce is so popular today. Now, what really the value in that is that we saw is that we as a manufacturer, we were using it to look all the way up our own supply chain to our raw material manufacturers through all the inbound assets and materials we needed to construct our technologies and now through the distribution networks that we have internally and through our partners. So the good news is we got really good at that. We got we did it for decades and decades. And so our IP is really what we know about how that needs to work. What we built into the technology. And now we're scaling it out, the retailers really is really twofold, just the agility and flexibility that you get out of sales, out of the Salesforce platform itself. But really, it's our know. So there are two things that I can kind of harp on, and that is today when we were making when retailers make commitments to consumers for online orders, for example, you probably have heard this before, right? They look at their supply chain, though they may only have limited visibility to into certain warehouses for certain types of products. You know, you never really know what you're on hand. Accuracy is in your stores, for example, when they're playing a huge role in the fulfillment process today. And then your inbound inventory from all of your manufacturers and distributors. And they can be hundreds, if not thousands of those. You don't always have really a really good idea of what is where. So a lot of people will make commit to buy or commit to deliver to consumers based on ascencion manship notices. And they're not always right. And then they don't look at other things today, which are really important now, like what's coming back in your front door right through the returns reverse supply chain. So we've already built the technology that can handle all that on one platform. And many companies today may have an inventory management system from one company, an Order Management System from another. And so forth. And that's hard to integrate and it's hard to get the visibility. You really need to see everything and have high confidence that you've got a grip on what you can commit to a consumer and making it harder for fulfillment channels. You know, they're not just the front door of the store anymore or even a DFC, a fulfillment center. You've got orders coming in from and out through Amazon and other marketplaces or other third parties. So it's extraordinarily complex. And what we've done is we initially started with building the algorithms that could help predictive analytics, that could help manage that. And we're moving into AI now. So we're taking advantage of what Einstein's delivered in tablet or delivery. They're going to be they are being renamed. But we're taking advantage of those technologies through the Salesforce platform to really put a lot more precision around how this is all working. And people sometimes forget you got these orders or by the hundreds of thousands, and millions at certain times of the year. They're all in flight and they're all real time. So, you know, I always think about companies that they may get back 10% of their seasonal sales coming back in the door and returns. And that's probably a good round number right now. It could be higher with the pandemic and what it's done to how consumers have shopped. And of that portion of that, of course, is going to go back into inventory and the rest may go through other channels to be distributed to other elsewise otherwise. So you got to be able to know what's coming back. You got to be you've got to know whether or not you can offer that those assets and products to other consumers. And again, you know, it's all what's happening to us. All right. Now, you've got to put a lot more technology and focus in on artificial intelligence is helping drive that on how you manage the supply chain. And you look at it completely differently. So that's our focus right now. No, absolutely, and it's interesting, there's so much conversation. I was having last year about AI models kind of having to be rewritten or the date, right, because we couldn't rely on historical data. So much change. So quickly. So it's really interesting to see what the forward thinking insights will be. What will you know, what some of these predictive analytics will show as we continue to see all these changing behaviors from a store design perspective, we've always worked on thinking through what's the customer journey in order to create effective environments. But now we're really having to cross the customer journey with the packaged journey, because it's the accuracy and precision and efficiency of the packaged journey that makes the customer experience successful these days. More so than ever. Exactly, so to keep forward in identifying how to position supply chains to be more dynamic right in this flexible and flexible and post pandemic world, do you think we're prepared to handle disasters? What does that look like? What does that mean for in-store and warehouse inventories? Yeah, you know, excellent question. This one keeps me up at night. And I would say agility has got to be the key. So, you know, a couple of four examples cost. Obviously, nobody was prepared, prepared to shoulder the cost of the fulfillment, for example. So with that in mind, let's look at grocery without naming any particular analyst. Most of them agree that just the cost of fulfilling from stores, for example, it pushes a lot of categories of products, groceries, probably the worst hit to negative margin on every curbside order they fill. So big companies have been working on driving the cost of operation down as fast as possible. And technology's played a huge role in that, especially mobility. So, you know, I look at accuracy also being just as important, especially in grocery. So, you know that the labor component was something that the consumer fulfilled, right? They shopped the store. They came in, they picked the items and went to checkout. So that cost all shifted right back onto the shoulder of the retailers. And again in grocery, we all know that margins are low, 2% on average. So it didn't it doesn't take much labor effort put into filling a 20 item order or higher for that margin to go completely away and going negative. So, again, we focused on technologies that can help support that. Some of the bigger retailers did it on their own and will use parts and pieces. But I would say the bulk of, let's just say the mid tiers that they need help. And so I think that that's where companies like Fujitsu are really going to add a lot of value in the marketplace where we can improve the mobility. We could talk about micro fulfillment centers, for example, for example, which are becoming more and more popular and being tested by big and small chains and even nano fulfillment centers where you take those commodity items and can actually automate the fulfillment process to drive cost down. And I would say you mentioned packaging in certain segments. We know that safety, of course, is now key. And, you know, I'm dumbfounded sometimes by how many items are not being returned at the request of Amazon or at the request of the original manufacturer. So safe packaging of items. What do you do with a returned item that was in the hands of a consumer? That may be a concern. That's dropped. That's driven up cost packaging cost itself. So long story short, I mean, where they focus today. And whether those are going to be the challenges, how do we drive the cost out? And again, agility, automation will be, I think, the linchpin that will make the difference between those succeed and those who fail. No, absolutely. I mean, we talk about agility and of course, not every industry or sector within retail is the same, but that's top of mind. A lot of conversations we're having as we're relooking at store design is how we make these environments as agile and modular as possible. So they can flex as needed throughout key times of the year. For example, apparel, where the store may be overloaded with focus pickups versus, you know, thinking of how much items front of house capacity per square foot. How do I solve for the needs of Bacow and fulfillment throughout the year? So it's a lot to think through for sure with all these technology integration. I think one of the silver linings is all the learnings that we can garner. And I think that there's so much more concerted effort within brands and retailers to understand that data and take actionable steps based on that. But I think it also helps the ability to deliver upon personalization and really being able to map out customer journeys and offerings to satisfy what different consumers are looking for. Can you talk a little bit about some of those learnings, maybe a brand or retailer that you've worked with. That's really been able to lean into this and improve their customer experiences? You know, it's another great question. So I would say this way. Last year and the preceding years, I talked about the cafe approach. And we know that showrooming has it was growing in popularity prior to the pandemic. So a lot of the technologies that we focused on, for example, magic mirrors, wearable techs, things of that nature, even client telling those were telling apsos are all designed for, you know, face to face. Associate to consumer engagement, and of course, that shift is now online, so some of the same technologies that we were working on, they do have a corollary online. And I think that the question now becomes, you know, funny, these conversations always kind of gravitate towards apparel, but they're much, much broader. How how do you reinvent the store in the virtual world to your point? And so in my mind, you know, stores have always said, well, that's the reason we call them stores, is where you stored stuff, right? It really was an environment, became an environment, very engaging. And now we're going to I think we're going right back to the beginning. The engagement, the excitement is going to have to happen online. Of course, a lot of noise around TikTok right now, a lot of noise around platforms that are know, they're loved by consumers. You know, I came out of the home improvement industry. We used to produce this gigantic book back in the day, which became CDS, which became a website on how to do anything you wanted to do in your home. It's all out there on YouTube, right? It actually is something that particular company. And Lowe's and others go right to YouTube right for to learn how to do it. And, of course, their advertising, their products on those platforms. So it's no how and brand that I think, makes a big difference. The other part is social and environmental stewardship. Huge, huge, huge, huge right now. And it's not that they haven't been there before, it's just not worth paying attention. And I think some generational shifts in consumer expectations are helping drive that, which I think is fantastic. So you've got to mix those all together. And I talked about digital and iller. You know, we start thinking about how you apply that kind of technology. When we talk about, you know, environmental and social stewardship. And if that's a parameter or consumer cares about and we'll drive their decision. And it will affect how much they spend and how long they'll wait for the product, then you have to have a technology that can deal with that level of complexity. And then the other part of this is I'll argue that prior to the pandemic and maybe back a few years earlier, we were still classifying most consumers. Right you got put in the bucket. Yes and I would say that's still important today, but it just doesn't cut it anymore. So the question is, how intimate will consumers allow a retailer to become with them? And I think that, you know, forget generations, forget, you know, geography, anything, demographics. I think people want that level of connectivity, especially now. And we'll see what happens after the pandemic. So, you know, they do want that level of understanding from a single or a set of retailers that know precisely what they would be interested in buying and the artificial intelligence that back to them, which says most likely you're going to buy these products. So let's not waste your time, was focused on what you tell us you want and what we think you want and what we think you're ready to buy right now. So that's going to be completely different. And that's going to be the heavier shift in where the technology, retail technology world is shifting focus towards artificial intelligence and getting a lot more precision around that. I mean, I think also the opportunity is as consumers have become so much more digitally integrated. Right think how many people use QR codes and contactless payments and order ahead and focus like. In the physical movement, you have an opportunity to be connected in such a different way than you would have, say, in 2019 where? Right there in my hand, you have an opportunity to hook me in to something in a very personal way. I'm going to pick up my curves or my focus order. But, you know, maybe what I ordered, what I've done in the past, maybe, you know, what store, what's in the store inventory. Maybe your recommendations are, hey, while you're there, you can also get x, y and z. What do you think some of those opportunities are in the years ahead? Yeah, and again, I think this artificial tell it, you're not going to know without that component being in place, I see it as being know, there's an educational component to what you just mentioned. Right? sometimes when you introduce new products to a consumer that they didn't know existed. And we didn't know that they might be interested in it, that's where the intelligence. I'm talking about, I think, will really amplify a lot of sales opportunities for retailers and beyond that will be long term, meaning they'll bond more effectively with their consumer base. And hopefully that relationship will continue far into the future. So I would say that, you know, when I look at it, the social aspects, the environmental aspects are going to be important. level of intimacy with the consumer are going to be important. And companies, I think, will embrace that and get their technology stacks prepared for that. Then their marketing, advertising and operations will also need the same level of support. We forget those groups quite often. And without all of them working together, none of it works anyway. So I think that's the level of complexity, we're looking at. Right so hopefully that answered the question. No, I mean, exactly. I think that. So many groups worked in silos before and that might be a second silver lining is all the barriers that have been broken down. Right if we think of some of the most successful in the industry, it's because their digital team and their physical retail team and their marketing and merchandising teams, they're working together and figuring out how do we improve the customer journey across all segments. Yeah, let me add on, because you kind of hit something is near and dear to my heart. In my retail career, I was fortunate to get to work across many different parts of the business. And construction and store planning store operations, IT and it was almost funny because I would be on one gemcitabine one silo on one side of the fence. And I would always be curious as to why the other side didn't get it or communicating or didn't know where they wanted to go and what I went to the other side. I suddenly learned that, you know, the exact same was opposite when you were talking to the other group. So what's cool today? What I like about what's happened is I've worked in retail in a period when, you know, the technology groups wanted the business to clearly define everything they wanted for a new program or a new operational model or marketing scheme or whatever. And they wanted, you know, a very lengthy document that described every little facet. So they could go build it. And we all know that that's diminished substantially over the past years with agile, of course. Right we now can work collectively as teams. We're pushing artificial intelligence experts and data engineers into those same groups. So and they're learning. That's the cool part is, you know, they're learning things that they didn't know about how retail operates, operations, marketing, operate. But when we work in those pods together, you know, I think you get through ideation to implementations dramatically faster. But the key is if you're smart and you get on local platforms, again, it's not a six month development cycle. Right it's not weeks and weeks. And akua lab, it's not another three to four months out. And pilot, you can go from idea to implementation. And just in weeks, of course, you still got the test. You improved the concept in the store on the store floor or distribution or supply chain. Are you still going to prove it out? But that cycle accelerated. So the good thing about how I think agile development methods, ilocos, application platforms and artificial intelligence, when you cluster those three together from a technology standpoint, the retailers, you're setting yourself up for success. And when you blend the teams, as I've described, I think that that's essential. And get out of the silos, get into pot and supply base mentality, and then you begin creating collectively. And if we actually do the same thing. We have a digital transformation practice. And we call it co-creation. So some customers just can't they can't do that. They don't have the discipline or they don't have the resources to do that. And we do. So we can work side by side with them. We can do it for them, or we can work as an embedded component within their teams. That's fantastic. Yeah, I mean, that's definitely a powerful trifecta that you mentioned. And it's so exciting to see this agility come forward. There's so many conversations, I think, that people had in the past that needed to be perfectly thought through. And we had to reinvent the entire department store, for example, in order to move forward. And I think people are becoming a lot more open to this agile approach of, you know, let's tackle this portion of it. Let's learn. Let's constantly, like, learn, iterate, modify and understanding along the way. We'll continue to see improvements. So I think that that's moved a lot forward in the past 12 months as well. Thank you so much for joining us today. There's a lot that you're sharing throughout and. Some I'm thankful that I have the opportunity to talk to you one on one about it, I think that, you know, we're still in early innings as we're seeing this technological innovation really, really come to the forefront here. And, you know, there's a lot a lot of retail that's just going to become better because of all of this. Absolutely and I think really kind of meet the customer in a way that we've never been that before. So we're watching closely on this. And then I guess I'll ask you one last question before we go. I mean, what's the big thing? What do you see five years from now? Where are we going? Wow, I wish I got that question. You know, now, you woke me up at night trying to come up with the idea to get this one right. You know, I talk you mentioned human centricity, and that's kind of how we move into the technology industries across all the industries. We serve. You know, I don't ever say that. You know, I have peers in the industry that say, hey, I need you guys to automate everything. Right it's just it's too complex. It's costing me too much money. I'm not I can't turn fast enough. And I think if you look at what we're doing with mobility and transportation, for example, with EVS, heavy, heavy, heavy embedding of technology, I worry about the workforce. I worry about employment, what people will do. And that's a worry. We've had when we started talking about automation in the industrial and the manufacturing sector. But what we found out is that those jobs are there. We're just filling up the people calling in employee associates that work in those industries. And I think that's good. I think that's collectively good for society. It's going to be collectively good for retail. So I think we have to get ready five years from now. Let's just say, you know, today, if we're 20% automated, 15, 20% automated, I say that in five years, we will be 30, 35 percent, maybe, maybe more in some sectors. And I think it's going to be collectively good. I want to get people out of jobs that are drudgery, they're boring and get them into a position where they can produce more income and have a better quality of life and enjoy what they do. And learn as they're working. So I would say that that's where I see the industry needing to focus more in the next five years. And the technologies, you know, we talk about artificial intelligence and today, a lot of AI makes a prediction and gives that to humans. And, you know, the age old adage is, I'm terrified when we connect things like artificial intelligence to the working systems. I take the safeties off of the day. I make all the decisions. We may be closer to that in five years. And I would argue that some of the people I know in the industry will say we're ready for that today. Well, unless you have 100% assurance and what I read renders what we call, you know, can you trust the I have or are you comfortable and confident? I don't think we're quite there yet. Five years from now, we probably will be. And I think that's going to drive the level of automation up a good, you know, 20 to 30 percentage points. No, absolutely. I think that makes a lot of sense. And as we lean into this automation and the learnings and we talk about the people that are working in these environments, I think it just gives an opportunity to just heighten the value add that they can deliver an in-store environment. Well, Thanks again for sharing that with us, everybody. This was Paul the Earl senior director of consumer and commercial industries group at Fujitsu America. Really appreciate the time you took with us today and continuing to watch what you guys are bringing to the industry and in the year ahead. Thank you, Melissa. It was my pleasure. Thank you so much.