It's a Density Game, with Deliveroo's Paul Wilkinson

[00:00:06] You're listening to Retail Disrupted, a podcast that explores the latest industry developments

[00:00:12] and the trends that will shape how we shop in the future.

[00:00:16] I'm your host, Natalie Berg.

[00:00:19] Hey everyone and welcome back to Retail Disrupted.

[00:00:32] I have to start out by apologizing for being MIA for so long.

[00:00:36] I spent the first half of the month in the US visiting my parents and came back and

[00:00:42] went straight into a mountain of client work and events while also trying to get the kids

[00:00:47] back onto UK time, which is never easy.

[00:00:51] So I apologize.

[00:00:53] The podcast has slipped a little bit.

[00:00:54] I always knew it was going to be a busy month, but I do like to try to get at least three

[00:01:00] episodes out every month and I have a backlog of interviews so I'm definitely not short

[00:01:06] of content.

[00:01:07] It's just the time.

[00:01:08] So yeah.

[00:01:09] Apologies for being MIA.

[00:01:11] I'm very much back.

[00:01:12] The good news is I have a ton of new content and new guests lined up for you.

[00:01:17] So just very briefly, the events that I have been busy chairing over the past couple weeks

[00:01:22] were the Richmond Retail and Ecommerce Directors Forum and also the Retail Technology Show

[00:01:28] where I chaired the sustainability and supply chain stage.

[00:01:32] As you can imagine, I had so many great conversations with a ton of retail leaders.

[00:01:39] I am going to be bringing some of those conversations to you, including my fireside chat with Jeremy

[00:01:45] Schwartz who is the ex-CEO at Pandora and Body Shop.

[00:01:50] I spoke to Jeremy live on stage at the Richmond Retail and Ecommerce Directors Forum.

[00:01:55] He had a ton of great insights and anecdotes from his time at both of those businesses

[00:02:00] as well as from his time at Sainsbury's L'Oreal and Coca-Cola.

[00:02:05] Jeremy was the brains behind Coke Zero.

[00:02:07] So we had a lot of interesting things to explore.

[00:02:10] And I'm going to be bringing that to the podcast in the coming weeks.

[00:02:13] So if you aren't already subscribed to this podcast, please do remember to subscribe

[00:02:17] so you don't miss that episode.

[00:02:19] And Retail Technology Show, I know a lot of you were there.

[00:02:23] It was great to bump into so many of you, the listeners of this podcast,

[00:02:28] old colleagues, clients, friends.

[00:02:30] It really is a great event in terms of just reconnecting with everyone.

[00:02:35] And I think there was a real buzz at the Olympia this year.

[00:02:37] So kudos to Matt Bradley, Carl Goodman and the team for putting it together so seamlessly.

[00:02:44] Now, I had a ton of great conversations there with a number of retailers,

[00:02:48] Harrods, Asta, Coop, B&Q, et cetera.

[00:02:51] We talked about everything from item level RFID to robot delivery.

[00:02:56] I mean, it was a real spectrum of retail tech insights.

[00:03:02] Now, unfortunately, those won't be resurfacing on the podcast, but I did want

[00:03:06] to share that Andrew Zenni, who is the founder of Nobody's Child, is going to

[00:03:11] join me on the show to talk about the launch of their digital product

[00:03:15] passports, which is a really, really interesting piece of work.

[00:03:19] So again, please do subscribe if you haven't already so you don't

[00:03:23] miss that conversation with Andrew.

[00:03:26] Now we're going to continue with the theme of retail tech on today's episode.

[00:03:30] And to help me do that, Deliveroo's Paul Wilkinson is joining me on the podcast.

[00:03:35] Paul is passionate about the future of retail and creating new shopping experiences.

[00:03:40] In his current role as product director for retail at Deliveroo, he's

[00:03:44] helping retailers provide quick delivery services to customers in a scalable way.

[00:03:49] In the past, he was instrumental in the creation and success of Tesco Labs.

[00:03:55] And he also built and launched advanced grocery voice shopping experiences on Alexa.

[00:04:06] Paul, welcome to the podcast.

[00:04:07] Today we are going to be talking about something I think we're both very

[00:04:11] passionate about, which is how retailers can use tech to enhance the shopping experience.

[00:04:16] We're going to talk about Deliveroo.

[00:04:18] We're going to get your thoughts on Quick Commerce more generally.

[00:04:22] And also your recent move into non-food, which I'm sure our listeners will be

[00:04:27] really curious about.

[00:04:28] But you also spent time at Amazon and Tesco Labs.

[00:04:32] So I'd also like to get your views on things like voice shopping and

[00:04:36] frictionless stores, which we will come on to later in the conversation.

[00:04:40] So we have a lot to talk about Paul.

[00:04:43] But if we start with Quick Commerce.

[00:04:46] Now, during the pandemic, we saw a lot of new disruptive brands emerge.

[00:04:52] And they emerged at a time where we didn't want to go into stores and it was

[00:04:57] really hard to get an online grocery slot.

[00:04:59] So they sort of came in and filled that gap.

[00:05:02] They promised to deliver groceries in just 10 to 15 minutes, which maybe

[00:05:07] seemed a little bit too good to be true.

[00:05:09] And since then we've seen a lot of consolidation, a lot of these brands

[00:05:13] actually disappearing.

[00:05:15] And I'm curious to know from your perspective, Paul, what do you think went

[00:05:20] wrong? Because obviously this is a really capital intensive model and clearly

[00:05:24] their funding is dried up, but what did they get wrong?

[00:05:29] Yeah, it's really interesting, isn't it?

[00:05:30] I think that, you know, I'm not sure how much they really thought about

[00:05:35] this being a really scalable solution.

[00:05:37] Like if you think it's really to let the end, right?

[00:05:39] What they were really trying to do was set up a competitive supermarket.

[00:05:43] You know, and if you went to a venture capital company and said, hey, I want

[00:05:46] to set up a new supermarket in the UK, which is the most, you know, one

[00:05:50] of the most competitive supermarket markets in the world, then most people

[00:05:56] with funding would probably think you were bonkers, wouldn't they?

[00:05:59] But if you think that like really what these companies were trying

[00:06:01] to do was set up a bunch of new convenience stores that were

[00:06:05] delivery focused, you know, you couldn't walk into them.

[00:06:08] And so they were playing like a model where you had to get real

[00:06:12] density to in order to make this work.

[00:06:14] But you're really going up against, you know, all of these established convenience

[00:06:18] store like chains and also like fashions.

[00:06:21] So, you know, you got your nieces and you're like convenience store, you know,

[00:06:25] buying models because what you're really doing here is you're having a try

[00:06:27] and compete with companies that can buy at colossal scale.

[00:06:31] Right?

[00:06:31] You're going up against Tesco and Sainsbury's and also like they said,

[00:06:34] like the wholesalers.

[00:06:36] And if you can't compete on their scale, then you can never

[00:06:38] make that business model work from, you know, when you also add in

[00:06:42] the picking and delivery costs.

[00:06:43] So I think that's kind of where they all went wrong.

[00:06:45] They all thought, right, well, here's a niche that we can serve

[00:06:47] and we can do this fast and so on.

[00:06:48] And they were absolutely thinking from the customer point of

[00:06:50] view, I think, which was, you know, they were serving a movie that was there

[00:06:53] and they got customers.

[00:06:55] But what then didn't quite think through, I don't think enough was

[00:06:58] like, what would that, what was that actual end game?

[00:07:01] Like, because really what I think they were doing was

[00:07:03] launching a supermarket and that's not really how they pitched it.

[00:07:05] And if I think if they had a picture like that, people

[00:07:08] might have been a bit less certain because I think they just naturally,

[00:07:12] you would just need to get so much volume and it's, it would be possible

[00:07:15] eventually.

[00:07:16] But like we saw, they just took them a lot of money to get there

[00:07:18] because they're competing with such an established, you know,

[00:07:22] an entrenched market.

[00:07:23] And I think on things like just basic things like product margin,

[00:07:27] you know, it's always going to be harder to compete when you're

[00:07:29] not doing the volume because you're not, you haven't got that

[00:07:31] margin to play with.

[00:07:32] And we know that supermarket is a low margin business anyway, right?

[00:07:36] So you're really having to squeeze there.

[00:07:38] I mean, they weren't squeezing whether they were just funding.

[00:07:41] So I think it's really, you know, actually how they talked

[00:07:44] about the dynamics and what they actually were.

[00:07:47] Maybe there was a bit of a gap there.

[00:07:49] Yeah.

[00:07:49] Yeah, I think that's, that's a really interesting point because

[00:07:52] they did do a good job of getting customers attention, right?

[00:07:56] And I think maybe the kind of lasting legacy has been that it's,

[00:08:00] I don't know, that this idea of quick commerce or rapid delivery

[00:08:03] has been sort of propelled into the mainstream now.

[00:08:06] And we've seen, you know, the likes of Deliveroo and other,

[00:08:10] you know, your other peers in the industry possibly benefit from that.

[00:08:13] So I'm curious, yeah, to get your thoughts, do you think that,

[00:08:17] you know, maybe, maybe as consumers, we don't actually

[00:08:19] need stuff delivered in 10 minutes, but, you know, maybe

[00:08:22] we'll settle on 30 minutes.

[00:08:24] And, and, you know, we've had a taste for that Uber convenience,

[00:08:27] but actually, you know, there are some sacrifices that I think

[00:08:30] could be made on both sides.

[00:08:33] Yeah, that's right.

[00:08:33] And I think it varies a little bit if you look at, you

[00:08:35] know, the history of like Deliveroo and Uber Eats and just eat

[00:08:37] has all been through food where I actually are like hot food,

[00:08:41] you know, ready food, ready to eat.

[00:08:42] Where I think the timing thing is probably potentially even more

[00:08:45] important.

[00:08:46] Certainly we see with our customers, you know, the if

[00:08:48] you don't want your pizza to arrive cold, right?

[00:08:51] And we do all sorts of clever things to like the maximum

[00:08:54] distance that we'll deliver a pizza is lower than the

[00:08:56] maximum distance that will deliver like an Indian takeaway,

[00:08:59] for example, because we know it doesn't travel as well.

[00:09:01] So there's all these sort of clever nuances that you can

[00:09:03] do. And then when it comes to groceries, I think you would

[00:09:06] kind of we're trying to solve the customer problem, right?

[00:09:07] We want them to get their groceries quickly.

[00:09:09] But customers don't seem to mind quite so much if it's like 10

[00:09:13] minutes or 12 minutes or 12 or 14 minutes or whatever.

[00:09:16] And the way that the platform works is we just provide

[00:09:19] customers with that choice, right?

[00:09:21] Ultimately, like we're a marketplace.

[00:09:22] And actually, that we have got quite a lot of partners on

[00:09:24] the platform who will deliver much faster.

[00:09:27] And then we've got some other partners that maybe have got

[00:09:29] more choice of products, but it'll take another sort of

[00:09:31] 10 or 15 minutes to get the product to you.

[00:09:33] And I think that balance is kind of where we've sort of

[00:09:35] settled, but it's where kind of partners have shuffled around

[00:09:39] a bit and their different expectations on something like

[00:09:41] a convenience store versus a supermarket mean that you've

[00:09:44] got that slightly different customer proposition.

[00:09:46] And yet we're not necessarily going to chase that 15

[00:09:48] minute mission, especially here in the UK.

[00:09:51] I think customers seem pretty comfortable getting

[00:09:53] deliveries in like 20 to 30 minutes.

[00:09:55] And actually if you looked at certainly people that are

[00:09:58] living in cities, then even while I live in the home

[00:10:03] counties, I can get a delivery pretty comfortably in 20

[00:10:06] minutes most of the time, which is pretty good.

[00:10:08] And if you think about like, if you think about

[00:10:09] historically, that's amazing, right?

[00:10:11] The fact that I can actually get that for a reasonable

[00:10:13] amount of money, it's astonishing.

[00:10:16] So yeah, I think thinking from the customer point

[00:10:18] of view, I think it's okay.

[00:10:20] But I don't think we need to like guarantee 10

[00:10:22] minutes.

[00:10:22] Actually, in India recently, there's quite a few

[00:10:25] companies where like, you know, 10 minutes is too

[00:10:27] long almost, right?

[00:10:28] It's interesting how it varies a little bit by market.

[00:10:31] But most of the markets that we're in, I think people

[00:10:32] are quite comfortable with, you know, getting groceries

[00:10:34] in half an hour.

[00:10:36] Yeah.

[00:10:36] Yeah, that's so interesting.

[00:10:38] I want to pick up on your point about retail partners,

[00:10:41] because if I go on to the Deliveroo app now,

[00:10:44] I can buy groceries from Waitrose, Co-op,

[00:10:47] Sainsbury's, Morrison's, Asda, even Zap, which

[00:10:51] I thought was interesting because, you know, they

[00:10:52] started out as a rapid grocery delivery provider.

[00:10:57] And back in October, I had George Knot, the tech

[00:11:00] editor at The Grocer, I had George on the podcast

[00:11:02] to talk about collaboration and how critical

[00:11:05] it's become in this space.

[00:11:07] Would you say that supermarkets today are

[00:11:09] generally more willing to test new things

[00:11:12] and fail fast?

[00:11:13] And also, I guess as a kind of second question

[00:11:17] here, what is it that attracts them to a

[00:11:20] platform like Deliveroo?

[00:11:23] Yeah, that's a great question.

[00:11:24] I think they are certainly during the pandemic

[00:11:28] that encourage them all to be a bit more willing

[00:11:30] to think fast and fail fast and so on.

[00:11:31] And I think, you know, in many ways we can

[00:11:33] thank that for driving on a lot of the, you

[00:11:35] know, the pace of the adoption up, you know,

[00:11:37] in the same way they saw their own online

[00:11:38] delivery services like Spike Massively.

[00:11:41] I know that's since eased off a little bit.

[00:11:43] We're still ahead of where we would have been,

[00:11:44] you know, we're not for that happening.

[00:11:47] So I think that probably did encourage them

[00:11:48] to move quickly.

[00:11:50] But they're definitely more open for

[00:11:52] collaboration these days, I would say.

[00:11:53] I mean, I spend most of my time, you know,

[00:11:56] either developing new tools and tech

[00:11:58] and platforms for our partners and then

[00:12:00] talking to them about that.

[00:12:01] And there are, I mean, there's varying

[00:12:04] different levels, even within a market

[00:12:05] of, you know, competence and keenness

[00:12:08] to, you know, adopt new ways of doing it.

[00:12:10] But I would say that on the whole,

[00:12:12] they are pretty open to that.

[00:12:14] I mean, I guess if you think about

[00:12:15] the main reason they're doing it,

[00:12:16] though, is they want to experiment

[00:12:18] with this new model, you know,

[00:12:20] they like being able to deliver stuff

[00:12:21] to customers quickly.

[00:12:23] Most partners in the UK don't have

[00:12:25] the capability to build their own fleet

[00:12:26] to do that themselves.

[00:12:27] You know, I would say probably even

[00:12:29] no partners.

[00:12:31] There's no one organisation in the UK

[00:12:33] that's big enough to do that.

[00:12:34] You know, even if you look at like,

[00:12:36] you know, certainly Tesco with Wish

[00:12:37] are kind of staying out of the

[00:12:38] marketplaces for the moment,

[00:12:40] but they're using the marketplaces

[00:12:41] delivery services, you know,

[00:12:42] they're using Stuart and Uber and so on

[00:12:45] to do the actual deliveries.

[00:12:46] They haven't built out their own fleet,

[00:12:47] right, which is what everyone kind of

[00:12:49] did with the van thing and any

[00:12:50] attempts to try and harmonise van

[00:12:53] fleets and reduce, you know,

[00:12:54] and make more efficiencies there

[00:12:55] have never really taken off.

[00:12:56] So I think having this third party

[00:12:58] fleet, I think works really nicely

[00:13:00] for them because it means you can

[00:13:01] get that customer service.

[00:13:02] You know, there is, well,

[00:13:03] depends where you are, but there

[00:13:05] is always a rider ready almost,

[00:13:06] you know, if you use one of the

[00:13:07] big networks like ourselves or Uber

[00:13:10] and they just wouldn't be able

[00:13:11] to build that scale themselves.

[00:13:12] Like this delivery game, in fact,

[00:13:13] any grocery delivery game is a density

[00:13:15] game, right?

[00:13:16] It's about the density of picking

[00:13:17] in stores so you get efficiency

[00:13:19] and it's about the density of

[00:13:20] deliveries.

[00:13:21] And if you can't build that density

[00:13:22] by yourself, then the only way to do

[00:13:24] it is to join a platform that can

[00:13:26] give you that density.

[00:13:27] Yeah, yeah.

[00:13:28] And I want to come back to density

[00:13:30] when we talk about non food, but

[00:13:32] I do have one more question about

[00:13:33] grocery and specifically the

[00:13:35] consumer and the customer mission.

[00:13:38] So have you noticed a change

[00:13:39] in customer mission?

[00:13:42] So is it still a case

[00:13:44] of, you know, shoppers using the

[00:13:45] app for food for tonight?

[00:13:47] There's kind of crisis shopping

[00:13:48] missions or are shoppers using

[00:13:50] delivery as kind of more of a

[00:13:52] top up shop or part of their

[00:13:54] regular routine now?

[00:13:57] It's a ridiculously broad spectrum.

[00:13:59] I mean, it's a bit like saying,

[00:14:00] you know, what do people shop in

[00:14:01] Tesco for or what do people shop

[00:14:02] in Sainsbury's for?

[00:14:03] Like we get, you know, most

[00:14:05] people do come to the platform

[00:14:06] initially because it's an

[00:14:07] emergency situation, you know,

[00:14:08] they need some more nappies or

[00:14:10] is it there at a party and

[00:14:11] they're out of beer or that

[00:14:12] sort of thing.

[00:14:13] But we do see customers evolving

[00:14:15] over time and we also see like

[00:14:16] just the general population

[00:14:17] evolving over time.

[00:14:18] And we'd see much more, you know,

[00:14:20] like today we see a lot more

[00:14:21] like top of top behavior like

[00:14:22] you describe.

[00:14:24] And there's a lot of there's

[00:14:24] still a lot of opportunity in

[00:14:25] that space.

[00:14:26] But the ability to,

[00:14:29] you know, provide a wider range

[00:14:30] of products and still get it

[00:14:31] pretty reasonably, you know,

[00:14:32] pretty fast is I think

[00:14:34] very appealing for customers

[00:14:36] compared to, for example,

[00:14:37] like ordering a van delivery for

[00:14:39] next day or occasionally

[00:14:40] you might be able to get a

[00:14:41] van delivery for same day.

[00:14:42] You know, if you order before

[00:14:43] 12 o'clock on the delivery is

[00:14:45] like after six or after seven in

[00:14:46] the evening.

[00:14:47] So because that I guess

[00:14:49] the limiting that's the limiting

[00:14:50] factor on any other delivery

[00:14:52] mechanism, then, you know,

[00:14:54] we think there's a really good

[00:14:55] opportunity and we're seeing it

[00:14:56] from customers, you know, ordering

[00:14:58] a little bit more maybe food

[00:15:00] for a couple of days and so on.

[00:15:01] It varies by part of the low

[00:15:02] and it varies by, you know,

[00:15:05] whether customers have scheduled

[00:15:06] the delivery or not like even

[00:15:07] on delivery, you can schedule

[00:15:08] a delivery but only for 24 hours

[00:15:10] and only if a partner has

[00:15:11] chosen to turn it on and so

[00:15:12] on. So there's a whole

[00:15:13] lot of other things like it

[00:15:14] depends.

[00:15:15] Yeah, that's interesting.

[00:15:16] You can on some partners, yes.

[00:15:17] Yeah.

[00:15:19] But it's not a widely adopted

[00:15:20] feature. It's not what we're

[00:15:21] known for, right?

[00:15:22] We're known for what do you

[00:15:24] want? I need this, you know,

[00:15:25] pretty quickly, right?

[00:15:26] And we're good at getting that.

[00:15:28] And so there's a lot of

[00:15:29] opportunity there, but I think

[00:15:30] definitely today we are seeing

[00:15:31] already a huge bunch of

[00:15:32] missions have had.

[00:15:33] So I was in the UAE last

[00:15:34] week and at a Waitrose

[00:15:36] store in UAE, which is a

[00:15:38] franchise run by spinnies who

[00:15:39] are grossed right there,

[00:15:40] they we saw a huge order go

[00:15:42] through and it was mostly like

[00:15:43] fresh fruit and berries.

[00:15:44] Right. And it was, you know,

[00:15:46] which is a very expensive thing

[00:15:47] to buy in the Middle East.

[00:15:48] But yes, it was a huge order.

[00:15:50] It clearly wasn't just someone

[00:15:51] emergency purchasing, you know,

[00:15:53] something they needed straight

[00:15:53] away. This was like someone

[00:15:54] who was obviously not having a

[00:15:56] party for a lot of people with

[00:15:58] a lot of soft fruits.

[00:15:59] But, you know, people buy

[00:16:01] all sorts, right?

[00:16:02] Yeah, I mean, I'm just

[00:16:03] speaking from personal experience.

[00:16:05] I used to be really organized

[00:16:06] and do, you know, a big

[00:16:07] weekly online grocery shop.

[00:16:09] And then that was it done for

[00:16:10] the week. And I didn't have to

[00:16:11] think about it. Whereas now

[00:16:12] I don't know. I just feel like

[00:16:13] I'm doing I'm using apps

[00:16:15] and I'm doing more top up

[00:16:16] shopping and just thinking about

[00:16:18] all right, what are we as a family

[00:16:19] going to have for the next couple

[00:16:19] of nights? And you know,

[00:16:21] I probably should be a little bit

[00:16:22] more organized. But I just love

[00:16:24] the convenience and the

[00:16:25] accessibility that just didn't

[00:16:26] exist a few years ago.

[00:16:27] So I've definitely changed the way

[00:16:28] that I shop.

[00:16:29] And that is kind of reflective of

[00:16:30] the grocery industry overall,

[00:16:31] right? If you look at like the

[00:16:33] over the last 10 maybe even

[00:16:35] 15 years, there's been

[00:16:36] grossing convenience and there's

[00:16:37] been growth online.

[00:16:38] And, you know, where the

[00:16:40] intersectional that we're online

[00:16:41] convenience. So there's growth,

[00:16:43] right? And I think that is, you

[00:16:44] know, it's that changing consumer

[00:16:45] mindset, like you just said,

[00:16:46] people can get it and once

[00:16:48] people get used to it, you know,

[00:16:49] they order a lot.

[00:16:49] Like it's, yeah,

[00:16:51] it really is a convenient service.

[00:16:53] Yeah, yeah, definitely.

[00:16:55] Now, Paul, I want to talk about

[00:16:56] your move into non food because

[00:16:58] this for our listeners

[00:17:01] who aren't aware a few months

[00:17:02] ago, you announced this pretty

[00:17:03] major strategic shift that

[00:17:05] delivery would start offering

[00:17:06] non food products with the launch

[00:17:08] of delivery shopping.

[00:17:10] And this covers a wide range of

[00:17:12] categories like pharmacy, DIY,

[00:17:15] homeware, toys and pet care.

[00:17:17] And it's probably worth

[00:17:19] reminding our listeners as well

[00:17:21] that you already had an existing

[00:17:22] relationship with W.H.

[00:17:24] Smith and Boots. But this feels

[00:17:25] like a very different thing.

[00:17:27] So Paul, can you talk us through

[00:17:30] the rationale for this move?

[00:17:32] And was it a case of just kind

[00:17:34] of noticing that shoppers were

[00:17:35] searching for these items and

[00:17:36] not finding them?

[00:17:37] Or was this maybe always part

[00:17:39] of the plan?

[00:17:40] I guess it's probably the mix

[00:17:41] of all the above, right?

[00:17:42] You know, we've actually

[00:17:44] the first launch of grocery was

[00:17:45] actually about three or four

[00:17:46] months before the pandemic.

[00:17:48] You know, co-op, I think with

[00:17:48] the first partner on the

[00:17:49] platform where it was like,

[00:17:51] look, we've got this fleet

[00:17:53] of riders and that can deliver

[00:17:54] stuff really quickly.

[00:17:55] What else can we use it for?

[00:17:56] Right? Because every additional

[00:17:57] order, you know, like I said,

[00:17:58] it's a density game.

[00:17:59] Every additional order helps,

[00:18:00] right? So grocery obviously

[00:18:02] has gone very well for us.

[00:18:03] We've now got pretty much all

[00:18:04] the major grosses in most

[00:18:06] of the markets that we're in

[00:18:07] on the platform.

[00:18:08] And that's building a good

[00:18:10] amount of density in some

[00:18:11] markets, especially like the UK.

[00:18:12] It's very popular and is now a

[00:18:14] sizable proportion of the

[00:18:15] platform. I think if you look

[00:18:16] at, well, we haven't published

[00:18:17] this year's results yet.

[00:18:18] So if you look at last year's

[00:18:19] results, it's like 9 percent of

[00:18:20] the total volume of delivery

[00:18:22] was now groceries.

[00:18:23] So the idea is that, you

[00:18:25] know, because of a mix of,

[00:18:26] like you say, customer

[00:18:27] signals, you know, we've

[00:18:28] spoke to customers like, oh,

[00:18:29] we'd be really good if I could

[00:18:30] also get this.

[00:18:32] You know, we definitely look

[00:18:32] at things like search data on

[00:18:33] the platform as well, you

[00:18:34] know, what's what's a dead

[00:18:35] end search?

[00:18:37] And, you know, just knowing

[00:18:39] generally that if we get more

[00:18:41] density in the network, that's a

[00:18:42] really good thing.

[00:18:43] Then that kind of the next

[00:18:45] straightforward like expansion

[00:18:47] for us seem to be, well,

[00:18:49] why do we just stop at the

[00:18:50] grocery stores?

[00:18:51] Why don't we bring the whole

[00:18:52] high street to the customer?

[00:18:53] And I think that's, you know,

[00:18:54] the really interesting

[00:18:55] opportunity that we've gone

[00:18:57] for predominantly in the UK

[00:18:59] and the UAE today.

[00:19:00] And those are the two markets

[00:19:01] where we've been focusing

[00:19:02] at that for.

[00:19:03] But, you know, as it will

[00:19:05] come to more markets in the

[00:19:06] future, too, right?

[00:19:06] It's definitely a big strategic

[00:19:07] change for us. We've got, I

[00:19:09] think we said back in October,

[00:19:11] we did an investor's event

[00:19:13] and we published like our three

[00:19:15] plan, you know, to turn this

[00:19:16] into a really sizable

[00:19:17] business, you know, pretty

[00:19:18] similar to what the size of

[00:19:19] the grocery business is today.

[00:19:22] So it's exciting, right?

[00:19:23] So a whole bunch of new

[00:19:23] partners, a whole bunch of new

[00:19:25] use cases. It's a mix,

[00:19:27] you know, like you mentioned

[00:19:28] some of the different

[00:19:29] kinds of partners we've got.

[00:19:30] But some of it's like emergency

[00:19:32] purchases.

[00:19:33] And some of it is slightly

[00:19:34] more considered purchases, you

[00:19:35] know, we did a big push into

[00:19:36] gifting before Christmas.

[00:19:38] You get this nice little like

[00:19:39] animation of a gift unwrapping

[00:19:41] when you send it to somebody

[00:19:42] else.

[00:19:44] So there's all sorts of

[00:19:45] possibility for expansion.

[00:19:47] Obviously things like screw

[00:19:48] fix are less likely to be

[00:19:49] gifted, but, you know, excited

[00:19:51] to have a big part of that on

[00:19:52] the platform.

[00:19:53] I think my husband would very

[00:19:54] much appreciate anything from

[00:19:55] screw fix for Christmas.

[00:19:57] There's maybe some exception.

[00:20:01] I've been there.

[00:20:02] I've been renovating my own

[00:20:03] house in the last year

[00:20:05] since I moved into it.

[00:20:06] And I don't have so screw fix

[00:20:08] have their own rapid service,

[00:20:09] which is fulfilled by Stuart

[00:20:11] and really frustratingly it

[00:20:12] doesn't exist in my area

[00:20:14] because I would have spent a

[00:20:15] fortune on that because they

[00:20:16] know having to interrupt the

[00:20:17] job halfway through and leave

[00:20:19] to drive, you know, drive 15

[00:20:21] minutes to go to screw fix,

[00:20:22] pick up, you know, that pack

[00:20:23] of screws or literally whatever

[00:20:24] it is you need a bit more

[00:20:25] of and drive back like is

[00:20:27] so, you know, you could have

[00:20:28] spent that half an hour

[00:20:29] actually working.

[00:20:30] And I mean, if you imagine

[00:20:31] what professional builders and

[00:20:32] stuff must do.

[00:20:33] Yeah, so I mean, you can see

[00:20:35] that screw fix rapid is obviously

[00:20:36] a successful proposition by

[00:20:37] itself. But we'll be able to

[00:20:38] bring that to far more

[00:20:40] customers and I think that's

[00:20:41] really exciting.

[00:20:42] Yeah, yeah, that's really

[00:20:43] interesting. I could really see

[00:20:44] the use case and things like

[00:20:45] DIY and electricals for

[00:20:47] exactly the reason you laid

[00:20:48] out. And I just

[00:20:50] bring in a little stat here.

[00:20:51] I saw that screw fit there

[00:20:53] screw fix stores are within

[00:20:55] 20 minutes of 95 percent

[00:20:57] of the UK population.

[00:20:59] And I guess you could interpret

[00:21:00] that, you know, in

[00:21:02] one of two ways because you could

[00:21:03] argue, oh, there's screw fix,

[00:21:05] you know, close enough.

[00:21:06] Why would we need rapid delivery?

[00:21:08] But actually, I would interpret

[00:21:09] it the way that you've just laid

[00:21:10] out that actually, you know, you

[00:21:11] don't want to be interrupted

[00:21:12] when you're in the middle of a

[00:21:13] DIY job.

[00:21:14] And that density, I guess,

[00:21:16] enables you to kind

[00:21:18] of deliver those products

[00:21:20] in a in a more kind of

[00:21:21] financially sustainable way.

[00:21:22] So I think that's super

[00:21:24] interesting.

[00:21:24] That's right. And I mean,

[00:21:26] we need the store

[00:21:28] network in order to be able to

[00:21:30] deliver it to a large amount

[00:21:30] of the population, right?

[00:21:31] Because we're not doing long

[00:21:32] distance deliveries, you know,

[00:21:33] we're doing deliveries of a few

[00:21:35] kilometers delivery, which means

[00:21:37] that if you've got that

[00:21:38] density or you've got a store

[00:21:39] nearby that can get it, you

[00:21:40] know, because we've got a huge

[00:21:41] number of independence on the

[00:21:42] platform too.

[00:21:43] It's all about just connecting

[00:21:44] those two people together.

[00:21:45] Like we're not going to, if

[00:21:47] you're a brand that has a couple

[00:21:48] of warehouses that cover the

[00:21:49] whole country, that's not

[00:21:51] really a case that we can get

[00:21:52] involved in.

[00:21:53] But if you've got a few shops

[00:21:54] around the place, which a lot

[00:21:55] of companies do, then

[00:21:57] is really interesting.

[00:21:58] Now you have this machine

[00:22:00] learning based search and

[00:22:01] discovery functionality, which

[00:22:04] allows delivery shopping

[00:22:06] users to browse for a gifting

[00:22:08] occasion in the app.

[00:22:09] So for example, you know,

[00:22:10] searching for someone's

[00:22:11] birthday.

[00:22:13] And I thought this was

[00:22:14] interesting because then

[00:22:14] you're presented with a

[00:22:16] curated list of options.

[00:22:17] And I'd love to hear a little

[00:22:19] bit more about this and where

[00:22:20] maybe you see this going

[00:22:22] because I mean, I personally

[00:22:23] found this interesting because

[00:22:24] earlier this year at the

[00:22:26] Consumer Electronics Show,

[00:22:28] Walmart in the US unveiled

[00:22:30] a very similar search

[00:22:32] experience.

[00:22:33] Again, where shoppers can

[00:22:34] search by specific use cases

[00:22:35] rather than individual products.

[00:22:37] And it's this move from

[00:22:39] scroll searching to goal

[00:22:41] searching.

[00:22:42] And I absolutely cannot take

[00:22:43] credit for that phrase.

[00:22:45] But I love it.

[00:22:46] And I think that just sums

[00:22:47] it up. So what do you

[00:22:48] think about this and how,

[00:22:50] I guess, more broadly, do

[00:22:51] you see AI helping to

[00:22:53] improve the customer

[00:22:54] experience?

[00:22:55] There's a lot of areas

[00:22:56] where we are investing

[00:22:58] partly driven by retail

[00:22:59] and grocery and just the way

[00:23:00] that people use search

[00:23:01] differently to have the user

[00:23:01] on restaurants as well.

[00:23:02] Right. So it's a huge

[00:23:03] investment for us because

[00:23:04] restaurant customers generally

[00:23:06] do scroll searching.

[00:23:07] They want to just browse

[00:23:08] and be inspired or, you know,

[00:23:09] they pick the one that they

[00:23:10] always order.

[00:23:11] Like I think I remember a stat

[00:23:12] from a few years ago that like

[00:23:14] 80 percent of dominoes

[00:23:15] orders are just the same as

[00:23:16] the customer ordered the exact

[00:23:17] same last time.

[00:23:17] You know, people don't change.

[00:23:18] Right.

[00:23:19] But that so people have

[00:23:21] habits and but search

[00:23:24] and I guess grocery

[00:23:25] to some extent because you

[00:23:26] might be looking for like that

[00:23:27] niche thing.

[00:23:28] Preserved lemons is usually

[00:23:29] the thing that I use is like,

[00:23:31] you know, you're not going to

[00:23:33] browse for that because you

[00:23:33] don't necessarily know which

[00:23:34] category it's in.

[00:23:35] And but also this ability to

[00:23:37] just browse for like a specific

[00:23:38] thing like gifts.

[00:23:39] So we've got all these tiles

[00:23:40] on the top of the app now.

[00:23:41] And if you tap on those,

[00:23:43] then you get a curated

[00:23:45] selection and the curation is

[00:23:47] a mix at the moment of

[00:23:47] manual and machine learning

[00:23:49] based.

[00:23:49] But we've invested a lot

[00:23:51] in like the underlying

[00:23:52] catalog of delivery that kind

[00:23:54] of has all these metadata

[00:23:55] and all these tags and

[00:23:56] things so you can then

[00:23:58] automatically generate these

[00:23:59] experiences for people.

[00:24:01] And you can also obviously take

[00:24:02] their personal preferences and

[00:24:03] their order history and stuff

[00:24:04] into account as well when

[00:24:06] you're like ranking those.

[00:24:07] So there's a lot of excitement

[00:24:09] exciting stuff there.

[00:24:10] And when you talk about like

[00:24:11] the AI stuff, we haven't

[00:24:12] really explored this too much

[00:24:14] publicly in the grocery space

[00:24:16] yet.

[00:24:16] But actually there's an

[00:24:18] experiment going on at the

[00:24:18] moment with about 50,000

[00:24:19] of our top customers in

[00:24:20] London on the restaurant side

[00:24:22] where they can like ask

[00:24:23] delivery, you know, so they

[00:24:25] can say, hey, I want

[00:24:26] something that's healthy and

[00:24:27] Asian but not too spicy

[00:24:29] and doesn't have any dairy in

[00:24:30] it, for example.

[00:24:31] And using like a open AI

[00:24:33] API is we can we now

[00:24:35] going to deliver them some

[00:24:36] like responses to that question

[00:24:37] that says, oh, well, why don't

[00:24:38] you try these things?

[00:24:39] And that can be either

[00:24:40] menus or individual partners

[00:24:42] to recommend that stuff.

[00:24:43] So that experiment is going on.

[00:24:45] And I think we're

[00:24:46] we're pretty good at adopting

[00:24:47] new tech and that sort of

[00:24:48] thing.

[00:24:48] Like we all have access

[00:24:49] internally to

[00:24:51] it's called ROO GPT,

[00:24:52] but it's basically just like

[00:24:54] an internal version of chat

[00:24:55] GPT that means that

[00:24:57] all of the data and stuff,

[00:24:58] you know, is all in house

[00:24:59] and this sort of thing.

[00:25:00] So we've been quite good at

[00:25:01] adopting that and the tooling

[00:25:03] and giving those tools to our

[00:25:04] own teams and to some of our

[00:25:06] customers to test out as well.

[00:25:07] So it's exciting.

[00:25:09] I think, you know, I guess

[00:25:11] a lot of hype, obviously

[00:25:12] in retail, right?

[00:25:12] And I can talk about that by

[00:25:13] itself for hours, but actually

[00:25:15] using, you know, really

[00:25:17] the cutting edge of AI

[00:25:18] and not just doing like linear

[00:25:20] regression or, you know,

[00:25:21] basically statistical techniques

[00:25:23] to try and improve your

[00:25:23] forecasting, which kind of

[00:25:24] everybody does or

[00:25:26] well, not everyone does

[00:25:27] what everyone should.

[00:25:28] And some people have been

[00:25:28] doing it for a long, long time.

[00:25:30] That still often gets called AI.

[00:25:32] But if you look at like,

[00:25:33] you know, Tesco and Sainsbury

[00:25:34] have been doing sales based

[00:25:35] ordering since the 90s

[00:25:36] using those techniques

[00:25:37] and some retailers haven't even

[00:25:39] joined that bandwagon yet

[00:25:40] and even some big national

[00:25:41] grossers only really joined,

[00:25:43] you know, doing things

[00:25:43] that way a few years ago as well.

[00:25:45] So like I said,

[00:25:46] you know, right back at the start,

[00:25:47] there's we still see a really

[00:25:49] big spectrum of capability

[00:25:52] in the retail partners

[00:25:53] and that obviously impacts

[00:25:55] how, you know, how quick they are

[00:25:56] to adopt new things and so on.

[00:25:58] Yeah, I mean, I think it is really

[00:25:59] exciting. It's an exciting time

[00:26:01] to be in retail and

[00:26:03] with AI, yeah, you're absolutely

[00:26:05] right. You know, you do have to

[00:26:06] separate the hype from the reality.

[00:26:08] But I think that it really

[00:26:10] kind of exciting aspect of AI

[00:26:12] is that it is solving genuine

[00:26:13] pain points. It is genuinely

[00:26:15] going to make the customer

[00:26:16] experience better. And, you

[00:26:18] know, that's something that all

[00:26:18] retailers should be

[00:26:19] should really be aiming for.

[00:26:20] So I mentioned at the start

[00:26:23] that you also worked on

[00:26:24] Alexa shopping during your time

[00:26:26] at Amazon. And I know you have

[00:26:28] some opinions on frictionless

[00:26:30] stores as well.

[00:26:32] So maybe Paul, if we start with

[00:26:33] voice shopping, in my opinion,

[00:26:36] this hasn't taken off in the way

[00:26:37] that some people predicted that

[00:26:39] it would. So what are

[00:26:41] your thoughts on voice

[00:26:42] commerce today?

[00:26:44] Yeah, I agree. It hasn't taken

[00:26:45] off in the way that, you know,

[00:26:46] even though I say that I thought

[00:26:47] right, I think, you know,

[00:26:49] we did some early days

[00:26:50] experiments at Tesco when I was

[00:26:51] in the lab's team there,

[00:26:53] predominantly on Google, but we

[00:26:54] also had this integration

[00:26:55] through if this and that, which

[00:26:56] lets you put stuff in your

[00:26:57] basket through Alexa as well.

[00:26:59] And the like when we did

[00:27:02] like customer research and stuff,

[00:27:04] the convenience of it, you know,

[00:27:05] if you can get a customer to

[00:27:07] start adding stuff to their

[00:27:08] basket or their shopping list

[00:27:09] or whatever by voice, the

[00:27:10] convenience is amazing. And I

[00:27:12] still really believe that to

[00:27:13] this day. And I still use

[00:27:14] Alexa shopping lists like as

[00:27:16] my primary shopping list

[00:27:17] because the ability like,

[00:27:19] you know, certainly because I

[00:27:19] used to work at Alexa, but

[00:27:20] also even before that, I have

[00:27:22] Alexa in most rooms of my

[00:27:23] house, right? And Google

[00:27:24] actually for Google Assistant.

[00:27:26] So the ability to add stuff to

[00:27:28] your shopping list anyway,

[00:27:30] without touching anything or

[00:27:31] doing anything, you know, is

[00:27:32] brilliant. And I, you know,

[00:27:35] personally, I'm a big advocate

[00:27:36] of that, but they're

[00:27:37] converging to a basket and

[00:27:39] actually, you know, buying

[00:27:40] stuff is not that

[00:27:43] straightforward, right? If you

[00:27:44] want to buy it on Amazon, then

[00:27:45] yes, you can convert that to

[00:27:46] an Amazon basket or a whole

[00:27:47] foods basket or I guess a

[00:27:49] Morrison's basket in the UK.

[00:27:51] And that all works quite

[00:27:52] nicely. But let's be honest,

[00:27:54] most of the population dump by

[00:27:55] their groceries through Amazon,

[00:27:56] right? That's just the matter

[00:27:58] of things and doesn't even

[00:28:00] the US is the same.

[00:28:02] Exactly. So but a lot of people

[00:28:04] do use the shopping list features,

[00:28:05] right? And actually the most

[00:28:06] common names for the shopping

[00:28:07] list are things like other

[00:28:08] retailers like Tesco or Walmart

[00:28:10] or Costco in the US in

[00:28:11] particular. So the

[00:28:14] the ability to have that

[00:28:16] shopping list and use it to

[00:28:17] build a basket somewhere else I

[00:28:18] think is really handy.

[00:28:20] I used to use the Tesco,

[00:28:22] you know, scale quite a lot that

[00:28:23] joined the two together.

[00:28:25] A card had one as well, but

[00:28:26] they've all stopped doing it

[00:28:27] because I think their customer

[00:28:28] adoption has been terrible

[00:28:29] because discovery on voice is

[00:28:30] really hard, you know, telling

[00:28:32] people that they can do these

[00:28:34] new things is really hard.

[00:28:35] And people don't like it when

[00:28:36] if Alexa or Google suggests

[00:28:38] that, oh, hey, did you know

[00:28:39] you can also do this? People

[00:28:40] interrupt and say no, stop,

[00:28:41] go away. Even if it's something

[00:28:43] that might actually be useful

[00:28:44] for them. So I think it's

[00:28:45] a really tough one.

[00:28:47] And from previous like customer

[00:28:48] cities again, like even from

[00:28:49] before I was actually at Amazon

[00:28:52] and from some of the data that I

[00:28:53] know when I was there, if you

[00:28:54] can get people to start using

[00:28:55] it, then they love it.

[00:28:57] But getting people to start

[00:28:59] using it is phenomenally

[00:29:00] difficult because that discovery

[00:29:01] piece is just really hard.

[00:29:02] You know, it's not like they

[00:29:03] have the app on their home

[00:29:04] screen that they see all the

[00:29:05] time. So yeah, I'm not quite

[00:29:07] sure where the future of is.

[00:29:09] I love the fact that, you know,

[00:29:10] you have this ambient

[00:29:11] intelligence that just you can

[00:29:13] ask questions and it can do

[00:29:14] things like you're shopping for

[00:29:15] you. But at the same time,

[00:29:18] and the mass adoption of that

[00:29:19] is difficult, even though

[00:29:21] actually, you know, so many

[00:29:22] households have an Alexa in

[00:29:23] them. You know, and everyone

[00:29:25] uses them for the same things

[00:29:26] like, you know, like music, you

[00:29:27] know, is really common.

[00:29:28] Everyone knows that Alexa

[00:29:29] does music, even like household

[00:29:31] timers and other things like

[00:29:32] everyone knows that Alexa

[00:29:34] does that and uses that all

[00:29:35] the time. But getting people

[00:29:37] to understand all the

[00:29:38] different things Alexa does

[00:29:39] is really hard. So I'm still

[00:29:41] kind of bullish about the

[00:29:43] the overall utility of it

[00:29:45] because I think it's I just

[00:29:46] think it's a really easy way

[00:29:47] to shop. And I think that,

[00:29:50] you know, once Alexa or

[00:29:52] whatever voice assistant knows

[00:29:54] what you mean by milk, right?

[00:29:55] Does it, you know, for me,

[00:29:57] it's like four bites of semi

[00:29:58] skimmed. Once it knows that,

[00:29:59] then that just makes your

[00:30:00] shopping journey so much easier.

[00:30:03] And I think we still haven't

[00:30:04] really solved the problem.

[00:30:06] Yeah, I mean, that's that's

[00:30:07] a really good point because

[00:30:08] especially when you think

[00:30:09] grocery shopping is habitual,

[00:30:11] right? And it is a chore

[00:30:12] for many of us. So if you can

[00:30:13] take some of the, you know,

[00:30:15] the heavy lifting away, then

[00:30:16] that is, you know, that's

[00:30:17] got to be a win. Most people

[00:30:18] buy the same hundred grocery

[00:30:19] items again and again and again.

[00:30:20] Like it's not, you know,

[00:30:23] most people cook the same

[00:30:24] online dishes again and again.

[00:30:26] Like people are creatures of

[00:30:27] habit, right? And we should

[00:30:28] be able to solve that. But

[00:30:30] actually, if you go on any

[00:30:31] of the major grosses today

[00:30:32] to try and build a basket,

[00:30:34] then there's not an easy way

[00:30:36] of generating your whole

[00:30:37] basket. Yes, you've got your

[00:30:38] favorites or your usuals or,

[00:30:39] you know, a car door will

[00:30:41] have a stab at building a

[00:30:41] basket for you. But then

[00:30:44] it's not regular enough to be

[00:30:45] really predictable.

[00:30:47] And it's not irregular

[00:30:48] enough to put the whole

[00:30:49] onus on the customer.

[00:30:51] So there needs to be, I think,

[00:30:52] a better way of building a

[00:30:53] shopping basket because it's a

[00:30:54] bit tedious. You know, you said

[00:30:55] you did a big shop online

[00:30:57] once a week. You know, so many

[00:30:58] people do a big shop online

[00:30:59] once a week. I normally do a

[00:30:59] big shop online once a week.

[00:31:01] But you still is basically

[00:31:03] just scrolling through a

[00:31:04] listing clicking on things.

[00:31:05] It's not it's not

[00:31:05] inspirational. And it's not

[00:31:08] fast, you know.

[00:31:10] But so I think there is still

[00:31:12] room in this space for

[00:31:13] someone to create something

[00:31:14] that's amazing. But I'm not

[00:31:16] quite sure what the UI looks

[00:31:18] like or the voice out, you

[00:31:19] know, the Vui or GUI or

[00:31:21] whatever. I don't quite know

[00:31:22] how that looks. But I feel

[00:31:24] like there's still an

[00:31:24] opportunity there for someone

[00:31:25] to make something amazing.

[00:31:27] Yeah. Yeah. Interesting.

[00:31:29] We'll have to check back in

[00:31:30] in a year or two and see

[00:31:31] see where we are.

[00:31:33] We've been longer than that.

[00:31:34] I think that's the thing

[00:31:35] that, you know, it's been

[00:31:35] talked about for so long, but

[00:31:36] it's not got there. It's

[00:31:37] a bit like the friction of

[00:31:38] stores thing, which I know

[00:31:39] you want to ask about too.

[00:31:40] So one of these things like

[00:31:41] there was a an I'll be on

[00:31:42] I think RFID advert from

[00:31:44] about 1999 2000, where

[00:31:46] the guy walks around the store

[00:31:47] shoplifting, you know, it

[00:31:48] looks like he's shoplifting.

[00:31:49] He's putting supermarket

[00:31:51] goods into his inside pocket

[00:31:53] in this massive trench coat.

[00:31:54] Then he walks out through

[00:31:55] like an airport metal

[00:31:56] detector and picks up his

[00:31:57] receipt and he's like,

[00:31:58] ding done. You know, and so

[00:32:00] that concept of picking

[00:32:01] stuff up and leaving and

[00:32:03] they're all paying

[00:32:03] automatically has been

[00:32:04] around for, you know, now

[00:32:06] probably 25 years at least.

[00:32:08] But we're still not at the

[00:32:09] point where it's mass

[00:32:10] adopted, which is also

[00:32:12] fascinating as well.

[00:32:12] Right. It's very similar to

[00:32:13] the voice thing. It's an

[00:32:14] amazing experience. I think

[00:32:15] everyone agrees that or

[00:32:17] most people would. Yes, some

[00:32:18] people want to talk to somebody

[00:32:19] at the checkout and so on and

[00:32:20] so on. But if you went to,

[00:32:21] you know, round the corner

[00:32:23] here, you've got the

[00:32:23] Bishop's Gate Tesco store,

[00:32:24] which is really busy, queues

[00:32:26] out the door at lunch time.

[00:32:27] Most people in that store

[00:32:28] would be quite happy when

[00:32:29] they're buying the meal deal

[00:32:30] at lunchtime to go in, pick

[00:32:31] up the stuff and leave.

[00:32:32] Right. But we're not quite

[00:32:34] at that place where every

[00:32:35] store has that we're not

[00:32:36] even at the place where

[00:32:37] hundreds of stores have

[00:32:37] that we're kind of at

[00:32:38] the place where like 20

[00:32:40] stores have that, which

[00:32:41] you know, has its whole

[00:32:43] on issues and reasons.

[00:32:44] But I still feel like it's

[00:32:45] another one of those things

[00:32:47] that the problem with

[00:32:47] solving is real, both for

[00:32:49] customers and for the retailer.

[00:32:51] But we just haven't got

[00:32:53] that tipping point of

[00:32:54] adoption because of their

[00:32:55] complexity or the awareness

[00:32:56] or the cost, I guess, in

[00:32:58] this case as well.

[00:32:59] So yeah, it's fascinating,

[00:33:01] but it's not a new problem.

[00:33:02] I always remember, so I

[00:33:04] keep on going on.

[00:33:06] Remember Tesco used to have

[00:33:07] the shopping list of like

[00:33:08] customer expectations back

[00:33:10] in probably about when I

[00:33:11] started at Tesco, so

[00:33:12] sort of 2010.

[00:33:13] And it was like, I can

[00:33:14] get what I want. The

[00:33:15] Isles are free. I don't

[00:33:16] have to queue.

[00:33:18] I'm sure there was another

[00:33:18] couple. But those things,

[00:33:20] those challenges in retail

[00:33:21] have never gone away.

[00:33:23] They're timeless, right?

[00:33:24] They don't, it doesn't matter

[00:33:25] how you're buying, whether

[00:33:27] it's online or in store,

[00:33:28] you don't want to have to

[00:33:29] join a queue, you know, look

[00:33:29] at people buying

[00:33:30] Glastonbury tickets or

[00:33:31] whatever for the online

[00:33:32] example. Like, you know,

[00:33:34] you want to get the

[00:33:34] products you want so

[00:33:35] availability has always been

[00:33:36] really important. And if you

[00:33:37] go into any retailer now

[00:33:39] in the country, there'll be

[00:33:40] gaps on the shelf, right?

[00:33:41] Because no one can quite

[00:33:42] fix availability completely.

[00:33:44] It's hard.

[00:33:45] The Isles are free.

[00:33:46] You know, that's just about

[00:33:47] staff and keeping it

[00:33:48] the place tidy and so as well.

[00:33:49] Again, a constant sort of

[00:33:51] battle is the wrong word,

[00:33:52] but like, you know, effort

[00:33:53] required to do that.

[00:33:54] So those problems, you know,

[00:33:55] they're kind of

[00:33:56] they're forever problems.

[00:33:58] And everyone's always

[00:33:59] trying to get better at them.

[00:34:00] And I think, you know,

[00:34:01] some of the things like

[00:34:03] Just Walk Out Tech

[00:34:04] is a really good way of

[00:34:05] solving, you know, a

[00:34:06] significant chunk of that

[00:34:07] problem. But it's still

[00:34:08] a hard, they're hard

[00:34:09] problems to solve, right?

[00:34:10] And they're not going to

[00:34:12] disappear overnight, even

[00:34:13] if you throw all the

[00:34:14] money in the world at them,

[00:34:15] as some people have tried.

[00:34:17] Well, what do you think is

[00:34:18] the biggest barrier?

[00:34:19] Because you talked about

[00:34:20] how expensive the technology

[00:34:22] is. You talked about how, you

[00:34:23] know, consumer adoption

[00:34:25] still isn't great if you

[00:34:25] don't have enough stores

[00:34:27] actually offering this.

[00:34:28] At the same time, I think

[00:34:29] from a customer experience

[00:34:30] perspective, for me,

[00:34:32] I just feel like there's a

[00:34:33] fine line between seamless

[00:34:34] and soulless.

[00:34:35] And I think some of these

[00:34:36] stores are probably guilty

[00:34:37] of, you know, taking

[00:34:39] to, you know, they're just

[00:34:40] they're cold and a bit

[00:34:41] too far on the soul.

[00:34:42] They've gone too far on

[00:34:43] the soulless side.

[00:34:44] Yeah. And and also

[00:34:46] interesting to note that

[00:34:47] you've got supermarkets like

[00:34:48] booths stripping out

[00:34:50] self-checkouts altogether.

[00:34:51] So they're going, you know, in

[00:34:53] the completely opposite

[00:34:54] direction.

[00:34:55] So I don't know if there's a

[00:34:56] lot of moving parts, but I

[00:34:58] agree with you. I still feel

[00:34:59] like this is a perennial

[00:35:00] problem and whoever cracks

[00:35:01] this, you know, that's

[00:35:03] that's going to solve a

[00:35:04] really big piece of the

[00:35:06] grocery puzzle.

[00:35:06] And it does feel like

[00:35:07] there's appetite. It does

[00:35:08] feel like there's to your

[00:35:09] point earlier about

[00:35:11] supermarkets being more

[00:35:12] willing to experiment and fail

[00:35:13] fast and try new things.

[00:35:15] It does feel like there's a lot

[00:35:16] of experimentation happening.

[00:35:17] And also, maybe it's just a case

[00:35:19] of, you know, this kind

[00:35:20] of experience, you know, being

[00:35:23] limited to those really

[00:35:24] time sensitive shopping

[00:35:26] missions. You mentioned, you

[00:35:27] know, office workers on their

[00:35:28] lunch break or, you know,

[00:35:30] hospitals, stadiums.

[00:35:31] We're seeing a lot airports.

[00:35:32] We're seeing a lot of that

[00:35:33] with the Amazons collaborating

[00:35:35] with those types of

[00:35:36] destinations. So I don't know.

[00:35:38] I feel like, yeah, I

[00:35:39] personally feel like checkout

[00:35:40] free has a has a

[00:35:43] pulse and it's going to, you

[00:35:44] know, continue to evolve.

[00:35:46] But there are still barriers.

[00:35:48] So I don't know. Do you think

[00:35:49] Paul, if we come back here in

[00:35:51] 10 years time 2034, do you

[00:35:52] think checkout free shopping

[00:35:54] will be the norm?

[00:35:56] I think in high density stores,

[00:35:58] yes. So I absolutely think in

[00:35:59] the city of London, like where

[00:36:00] I'm sat now, all of the

[00:36:03] places where you can go by

[00:36:04] lunch, I think they will be

[00:36:06] a huge shift in that.

[00:36:07] So if you go for 10 years

[00:36:08] towards that, yeah, because

[00:36:09] that's where the that's

[00:36:10] really where the business case

[00:36:11] is for a lot of this

[00:36:12] stuff, right? Or it's like, you

[00:36:13] know, if you think about how

[00:36:14] much store space you have to

[00:36:15] give over the checkouts even,

[00:36:17] right? Where you could have

[00:36:18] product out that's selling.

[00:36:20] Like that's huge opportunity

[00:36:21] just by itself, right?

[00:36:22] And then you've also got, you

[00:36:23] know, better stock on top of

[00:36:25] that. You've got a better

[00:36:25] customer experience. You've got

[00:36:26] no queuing. You've got all

[00:36:27] these other things you can

[00:36:28] layer in then, you know,

[00:36:29] there's super dense stores

[00:36:31] in, you know, in central

[00:36:32] London or the center of very

[00:36:33] large cities. I think that

[00:36:35] is definitely where the

[00:36:35] opportunity is. It's also,

[00:36:37] though, I guess where the

[00:36:38] opportunity was slowed down

[00:36:39] the most again because of

[00:36:40] the pandemic, right? It's

[00:36:41] funny how it just keeps on

[00:36:42] coming back into everything.

[00:36:43] But, you know, those are the

[00:36:45] stores that had nobody in them

[00:36:46] for two years and only really

[00:36:48] now picking up back to like

[00:36:50] where they were in the

[00:36:51] before times. So, you know,

[00:36:52] like my train this morning

[00:36:53] was packed like the busiest

[00:36:55] I've ever seen it since

[00:36:56] pre pandemic when that

[00:36:58] used to be normal, you know?

[00:36:59] So I think that is definitely

[00:37:01] partly to blame for like

[00:37:02] the adoption curve and the

[00:37:03] sort of the state we're

[00:37:05] seeing it, but still cost

[00:37:06] is a big thing, right?

[00:37:07] Because, and especially, I

[00:37:09] guess if you're Amazon or

[00:37:10] if you're anyone that's

[00:37:10] opening new stores, then

[00:37:12] including the cost of the

[00:37:14] cameras and stuff in the

[00:37:14] bill of materials for opening

[00:37:15] a store is much less of a

[00:37:17] thing than going back to a

[00:37:18] store and saying, right,

[00:37:19] we're going to refurbish

[00:37:19] this store. And actually my

[00:37:21] building materials for

[00:37:21] refurbishing is bigger than

[00:37:23] it would have been if I

[00:37:24] was building one from scratch.

[00:37:25] And, you know, we talked

[00:37:26] earlier about new entries into

[00:37:27] the grocery market just not

[00:37:28] really a thing. So it's,

[00:37:31] you know, apart from Amazon

[00:37:32] in the last couple of years

[00:37:33] opening about 20 stores in

[00:37:35] the London, broadly in the

[00:37:36] London area, then no one is

[00:37:38] really opening new grocery

[00:37:39] stores, which means it's hard

[00:37:40] to then include that camera and

[00:37:42] the tech and stuff in your

[00:37:43] initial bill of materials and

[00:37:44] in your initial return on

[00:37:45] investment. So the refurbishment

[00:37:47] model is hard as well. And you

[00:37:49] don't want to close these

[00:37:50] stores because these stores

[00:37:50] are doing big, you know, big

[00:37:52] transaction numbers during

[00:37:53] the week. So it's a really

[00:37:55] fine balance in the cost as

[00:37:57] well. And even just the cost

[00:37:58] of the hardware and the cost

[00:37:59] of installing all the wires

[00:38:00] and stuff, right? It's not

[00:38:01] trivial, even though, you

[00:38:02] know, I think Amazon

[00:38:03] publicly said that they've

[00:38:05] basically reduced the cost of

[00:38:07] the hardware to about 2% of

[00:38:08] what it was when they first

[00:38:09] opened the first Amazon Gold

[00:38:11] Store in Seattle. So they've

[00:38:12] made huge inroads, you know, and

[00:38:13] the consumerization of

[00:38:14] technology has all helped

[00:38:15] towards that and so on. But the

[00:38:18] cost is still, you know, it's

[00:38:19] expensive. Like it's more

[00:38:20] expensive than putting in a

[00:38:21] small bank of checkouts. Like

[00:38:23] so it is, you know, it

[00:38:25] becomes a really tricky job to

[00:38:28] figure out, well, how are you

[00:38:29] going to pay for it as a

[00:38:29] retailer, right? Because

[00:38:31] retailers don't tend to have

[00:38:32] huge amounts of capital to

[00:38:33] deploy. And also then, you

[00:38:36] know, what's the return on

[00:38:37] investment? Does it meet your

[00:38:38] bar? Like, you know, a lot of

[00:38:40] retailers have really high

[00:38:41] bars for the return on

[00:38:43] investment time for any

[00:38:44] particular, you know, project

[00:38:46] and they prioritize

[00:38:46] ruthlessly according to that

[00:38:48] for the best return on

[00:38:49] investment is what you do,

[00:38:49] right? But actually, so that

[00:38:52] may mean that ruthlessly

[00:38:53] like anything that delivers

[00:38:54] like a two or three year

[00:38:55] return for a lot of retailers

[00:38:57] just won't work, right? You're

[00:38:58] never going to get to that

[00:38:59] part of the list. So it has

[00:39:01] to keep on getting that sort

[00:39:02] of more efficient, cheaper,

[00:39:04] you know, and I think the

[00:39:05] technology will do it

[00:39:06] because you get, you know,

[00:39:07] fewer cameras, you know, fewer

[00:39:09] sensors on the shelves like

[00:39:10] most of these just walk out

[00:39:12] stores still have still got

[00:39:13] like weight sensors on every

[00:39:14] single shelf, right? And that's

[00:39:16] just not feasible. Like I, you

[00:39:18] know, go back to another Tesco

[00:39:19] number just because that's

[00:39:20] why I know the best but

[00:39:21] Tesco used to have about 5000

[00:39:22] miles of aisle in the UK.

[00:39:26] And even if you cover all of

[00:39:27] the the shelves in Tesco in

[00:39:29] one layer of office paper,

[00:39:31] there's like 8000 tons of

[00:39:32] paper or something silly. It's

[00:39:34] like 12 jumbo jets, which

[00:39:36] is like, you know, so you can't

[00:39:39] ever cover all the sheet, all

[00:39:40] of the shelves in a layer of

[00:39:41] paper because it will be a

[00:39:42] ridiculous thing to do. So

[00:39:43] covering them in a sensor is

[00:39:44] even more ridiculous, right?

[00:39:46] So this just shows how

[00:39:47] unscalable anything that

[00:39:48] requires anything every

[00:39:50] single shelf, even, you know,

[00:39:52] it's a bit like electronic

[00:39:52] shelf edge labels, right? Give

[00:39:54] it so many examples. The

[00:39:55] reason they've not taken

[00:39:56] off is just because the

[00:39:57] return investment just isn't

[00:39:59] really there and you've got

[00:40:00] you need so many of them

[00:40:01] and they're so expensive that

[00:40:02] it becomes a significant part

[00:40:04] of your capital. So it's

[00:40:05] almost like in some of these

[00:40:06] ways, these things are not

[00:40:07] tech discussions. They're

[00:40:08] finance discussions. It's, you

[00:40:10] know, it has to have the right

[00:40:11] business case, the right

[00:40:12] hurdle rate. Otherwise, you're

[00:40:13] never going to actually

[00:40:14] invest in these things

[00:40:15] because they're just too

[00:40:16] expensive, regardless of the

[00:40:18] amazing benefits they might

[00:40:19] bring you.

[00:40:24] Thank you for listening to

[00:40:25] Retail Disrupted. If you

[00:40:27] enjoyed this episode and

[00:40:28] would like to support the

[00:40:29] podcast, please leave a

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