Co-op's Technology Director on Grocery Retail Transformation

[00:00:06] You're listening to Retail Disrupted, a podcast that explores the latest industry developments and the trends that will shape how we shop in the future. I'm your host, Natalie Berg.

[00:00:18] Hello and welcome back to Retail Disrupted. On today's episode, I'm speaking to Ian Cox, Head of SAP Platforms at The Co-op. Ian, welcome to the podcast. We are in New York City today, nearing the end of the marathon that is the NRF Big Show.

[00:00:44] So I'd love to get your perspective as a retailer. What have you found interesting over the past few days? Was there anything that stood out for you? Yeah, thank you for having me. To be honest, I came here with quite an open mind, fully expecting to see quite a lot on AI because I see that in a lot of the conferences I go to. And it hasn't disappointed from that perspective.

[00:01:10] But to be honest, a bit more specific on AI because AI has been a topic that has been around for a few years now. But we've really got into a bit more of the specificity of that. I've seen some really interesting things that are relevant to us as a grocery retailer that would help from a kind of using AI for pricing and promotions and how that can work in our shops. And so from that perspective, that's probably my biggest takeaway.

[00:01:40] But then just the chance to network. I mean, really, the opportunities you get here to meet people you work with or have worked with or may work with. It's just amazing. You can't go far, can you, without bumping into somebody that you know. It's great for them. It's tremendous. Yeah, it really is. Great. Yeah, and I agree. I think there's been, understandably, a lot of talk about AI and how it can both improve efficiencies for retailers but also elevate the customer experience.

[00:02:08] I think it's both of those levers there. Exactly. And I was at another, just so to interrupt there, there was another talk I went to where there was one of the gentlemen presenting made a good point around AI in terms of it not necessarily being a threat to people's jobs. I think some people think about that. It could be a threat, but it's more of a complement. And AI can do the things that maybe retailers can't find the staff necessarily to do or don't have the bandwidth to do.

[00:02:36] So it's understanding that AI can actually complement and work with you as opposed to being a threat to, you know, people's roles. Yeah. And so that reminds me of something I heard over the past few days, which is that AI isn't coming for your job. Who's coming for your job is people who work with AI, people who understand AI and are using AI. Those are the people that are going to come for your job. So, you know, you need to be embracing it. You can't hide from it. Ian, what keeps you up at night?

[00:03:02] What are the big challenges that either you at the co-op in your current role or maybe more generally the wider grocery sector, what are the challenges that you're facing today? I'd say it's a good question. I think from a tech perspective in my role, because it's in my role, I look after predominantly all of our ERP systems and that support our kind of trading supply chain, commercial finance areas.

[00:03:30] The biggest challenge, I'd say, is kind of, I don't know, it's some of the transformation programs that we're doing at the moment and obviously landing those in a way that is, you know, is cost efficient and isn't disruptive to service. You know, service availability is paramount to us as a kind of convenience retailer. We have had experience in the past of transformation programs being disruptive to some of that.

[00:03:59] And that, you know, as a convenience retailer, if you have any kind of impact to availability in stores or waste levels going up or things like that, that has a, you know, you don't get those customers back when they go into a convenience shop for something they desperately need and it's not on the shelf. You don't get them back. So just keeping on top of that. And we've got some big initiatives on the go at the moment. So that is probably what I'm worried most about and just staying in front of it.

[00:04:27] And to be honest, we've done a great job in the last couple of years of getting in front of all that and staying, you know, keeping our systems as stable as they possibly can be and keeping these transformations on track and delivering them in a way that, you know, realises that benefit to the business. I'd say wider than that from a business perspective. It's just, it's obviously it's a competitive market. Margins are tight.

[00:04:54] Trends outside of our kind of control around supply chain, things that can impact how we move goods around and into our shops on time. You know, that's always a challenge. And, yeah, so look, you know, hence my answer before about AI, looking at ways in which we can remain competitive and ahead of our, you know, of our rivals really. And looking for ways to get new people into the shops.

[00:05:21] Our membership numbers are growing. So looking at ways in which we can attract new members and keep it going that way. Yeah. Yeah. So that margin for error, though, is pretty small, isn't it? That you've got to, you know, do all this behind the scenes, but you can't, you know, you can't, there can't be any mistakes from a customer. Absolutely. And it's exactly right. And I'd say it's even that margin for error is probably even narrower in our sector than maybe other industries. You know, it really is tight.

[00:05:50] So now we're buying a lot more groceries online than we used to in the past, but stores still, and I think they always will play a vital role when it comes to grocery retail. How has the shift to digital impacted co-op and your role? Yeah, it's definitely something that we are really, really focused on as a key, I'd say, a key initiative of ours at the moment.

[00:06:16] So you're right, shops for convenience retailing have traditionally been our, and they still will be our bread and butter. You know, we've got two and a half thousand of them, and they're in really key areas of, well, they're all around the country and in key kind of, you know, suburban areas and serving people close to their homes and equally in city centers, et cetera. But what we're seeing is that, so for a convenience retailer online is, it's got to be quick.

[00:06:44] Because if you shop at a co-op because you want something pretty quick and you don't want to necessarily book a delivery slot for next week or in two days, you want it in one hour or two hours. And so what we're really looking at is what we call quick commerce and, you know, partnering and looking at ways to work with teams that will help us get those goods out to our customers very, very quickly.

[00:07:13] And you're doing a lot in this space, aren't you? Because I interviewed one of your colleagues, Grace Wilkinson, who's the head of online last mile and customer service. Oh, yes, Grace. Yeah, yeah. It was at this retail technology show last year, and she was talking about your robots and Milton Keynes and all the interesting stuff you're doing around that. And I think when it comes to digital innovation, co-op is definitely one of the leaders.

[00:07:35] And I just wonder if there's something specific about your culture that enables you to take those risks, to innovate, to test and learn, fail fast. I mean, you know, certainly a lot of themes that have been kind of come up a lot, you know, over the past few days. And I recently had the technology directors at Ann Summers and Primark on the podcast. And, yeah, and they both stress the importance of culture in relation to digital transformation.

[00:08:03] I just wonder what you make of this. How important is this at co-op? It's a great question. And it's one I, you know, I've reflected on a couple of times in the kind of four years I've been at the co-op. I've noticed that, you're right, the culture is, we have a culture of we trust our teams. We have a very high quality set of business and technology teams. And we trust them to do the right thing.

[00:08:31] And we trust them to, we empower them to do the right thing. And, you know, we're not necessarily reliant on third parties or partners all the time to come and sell us something. You know, we will innovate ourselves. And we are very, very good at that. We will rely on our partners where we need to. But with that kind of in-house intelligence, if you like, and because we need to react fast to some of those market conditions I talked about,

[00:08:56] it just gives us the, I'd say, freedom to just get on and do it. And like you say, there's no better way of understanding what works by getting it out there in front of customers as quickly as possible. And I think the fact that we've got those teams who can just do it without us having to contract with somebody as a third party, it allows us to do that. And it's, yeah. Yeah. And that collaboration piece is really important, isn't it?

[00:09:22] Because with so much change in the sector and lots of experimentation, and especially, you know, you touched on quick commerce and this kind of proliferation of choice that we as consumers have today. And, you know, whether we want to shop, you know, directly from a retailer or do we, is it going to be through Uber Eats or Deliveroo? And there's just, there's just a lot of choice today. So I guess figuring out, you know, the right partners for your business and, you know, ensuring that you're delivering that experience to the customer. That's exactly right.

[00:09:51] And we're not, we're not kind of precious, if you like, about who we partner with. We will, obviously, we will partner with the right partners, the right for us culturally and commercially and who fit our values. And there are lots of partners out there who do fit our values, but we are very, very aware of that. And, but equally, we're not kind of wedded to one or two partners. We are happy to work with the best that's out there for us. Yeah. Yeah. That's interesting.

[00:10:19] Now, Coop migrated its legacy ECC system to the cloud with SAP. Some of our listeners will be very tech savvy, but many won't. So in layman's terms, Ian, can you explain the rationale for doing this and what it means for the business? Absolutely. So we, in a brief summary, we went through a big transformation of our retail businesses several years ago,

[00:10:40] which moved all of our kind of legacy ordering estate and supply chain and trading estate onto an SAP based, well, ECC SAP based ERP system. And that was quite a long, relatively painful in some parts journey, like a lot of ERP transformations are. That eventually got us to a point where we were running off SAP, but it was a slightly bumpy ride.

[00:11:08] We worked through those challenges to get closer to SAP and help and use their kind of, use their assistance really to help us stabilize what we bought from them and implemented. And we got to a really good, a good spot with them on that. It took us a, you know, a bit longer than we would have hoped, but we were in a really, really good spot where systems were doing what we wanted them to do. The benefits were being realized and we were starting to kind of build our in-house capability around it.

[00:11:38] Now, the move to cloud with SAP started as a result of those, that work that we did collaboratively together. So we got a lot closer to each other, their offering around RISE and the cloud became something that we were seriously considering as part of those conversations. But we always said it would need it to be right for the co-op first and then did it make kind of commercial sense for us to do that? Long story short, it did make commercial sense.

[00:12:05] And we were at a stage where we had a relatively immature in-house team around SAP. So we felt that if we took advantage of their capability, because they do a lot of the technical support around this, and we could focus on the things that I talked about earlier in terms of building out those business-facing initiatives, it would bring the best of both worlds. So that's why we did it.

[00:12:31] But we also did it in a way to protect service that I talked about earlier. That's paramount, keeping our customers happy. So we did it over a kind of 12-month period, just took what we had and almost lifted and shifted it into the cloud rather than doing any big transformation at the same time, because we felt that would be too risky. So that was the approach we took, and it was very, very successful. And it's allowed us to kind of build out from there. Ian, I have a ton more questions for you, but I'm conscious of your time.

[00:12:59] It's always a crazy few days here at NRF, and I know you have a meeting to jet off to. So thank you very much for your time. It's been great having you on the show. You're welcome, Natalie. Thank you for having me. Thank you for listening to Retail Disrupted. If you enjoyed this episode and would like to support the podcast, please leave a rating or review or share it with others. It really makes a difference.