[Darin Detwiler] Welcome, everyone, to another episode of Spoiler Alert!. I'm Dr. Darin Detwiler, and with me is...
[Callin Godson-Green] Callin Godson-Green
[Darin Detwiler] And we're in New York City.
[Callin Godson-Green] Oh, yeah.
[Darin Detwiler] We're here for the National Retail Federation, their big show. Lots of activity going on, so many different companies represented, and Smart Sense is proud to be here. We're this huge booth. You can't see it, but We are joined today by Dave Steck. Dave Steck. And what do you do, Dave Steck?
[Dave Steck] Well, I was the Vice President of Store and Emerging Technologies at Schnuck Markets. I retired there in March, and now I'm out on my own doing consulting.
[Darin Detwiler] Excellent. I would imagine you would consult on a range of topics within the retail spec curve.
[Dave Steck] Correct.
[Darin Detwiler] I would love to talk to you today about how we could use technology to prevent wasted food. And there's so many different ways of looking at this. But before we start, just kind of clarify, there's a difference between wasted food and food waste.
[Callin Godson-Green] Absolutely.
[Darin Detwiler] What would be your take on how you differentiate those?
[Callin Godson-Green] Food waste is essential, necessary. It's things that are like byproducts of food that you're never going to eat, you know, that poison, that's a not poisonous fish that you can't eat. And then wasted food is food that could be put to a better use case, whether, it's not always ingestion either, like it can be reused, in the environment, things like that. But wasted food is food that basically goes into garbage or isn't used for its full potential. That's what I think.
[Darin Detwiler] And I think there's so many different dimensions you could look at in terms of the negative aspects of wasting food. But I would imagine that in your capacities, the idea of let's prevent it from being wasted in the 1st place is kind of a mindset you've shared.
[Dave Steck] I mean, from a grocery perspective, it's shrink is one of the biggest things that's a controllable thing from a grocery retailer is to reduce the amount of food waste you have. And so, how do you go about doing that? There's A multitude of things. When we started, actually with SmartSense years ago, it was not necessarily from the perspective of wasted food, it was from a customer experience viewpoint and making sure that we were providing the freshest food possible to the customers. But as you morph that and you get this information back, then you can start saying, okay, now let's look at these other areas of shrink. We know that our temperatures are good. We know that we're monitoring this, but why are we still pitching product? What are some of the causes for having to pitch this food? There's A multitude of reasons. It depends on which food we're talking about. If it's produce, obviously it's going to age out, right? So is the store over-ordering on product? And that's really from a grocery industry's perspective, that's probably the biggest weakness is forecast and demand. for the fresh products and produce. It's no vendor has really gotten that right over the years. Lots of people are trying, but they still haven't gotten there. When you look at like the meat department, there are things that you have kind of competing views. You have the store teams that want to have full shelves. you have corporate that wants to reduce the amount of pitch. So to reduce the amount of pitch and waste there, you can't have a full shelf. So it's a conflict of conflict of two thoughts. And that's when you get into the thoughts of production planning and say, okay, we know based off of historical information that we're going to get 10 pounds of ground chuck bought in between the hours of 8 and 10 in the morning. But then we're going to have a, and I'm just making up numbers here, then there's going to be a lull in the day. And then by 3 o'clock in the afternoon to 8 o'clock at night, there's going to be 50 pounds of ground chuck bought. Well, if you grind 60 pounds of ground chuck at 6 o'clock in the morning, by the time you get to 8 o'clock at night, the store is not going to want to put that out. Now it may convert into something else where they have to cook it, but it may just get pitched. So the idea is to get the product produced when the expectation is for the customer to be there. And then don't worry about the full shelf. It doesn't matter if you're missing something if nobody's there to buy it.
[Callin Godson-Green] That's true.
[Darin Detwiler] I would imagine there's also seasonality comes to play, right? it's this holiday season coming up. More people are, the low-hanging fruit, if you will. More people are probably going to buy a turkey around Thanksgiving, right? Or pumpkin pies or, you know, whatever it is. Maybe, you know, candy around Halloween kind of a thing. And, but then you have the after the holidays, you'll sell off, what you can, but it becomes a problem, like you're saying, with perishable foods, because you can only keep them around for so long. Right. So if we have a better understanding of the consumer patterns, I would imagine, you know, the history and the sales, that could help make that decision there. But at the same time, if we could prevent things outside of the customer impact, like for instance, We had a previous conversation talking about equipment failure. You can't keep things at a safe holding temperature, and now you're throwing out an entire refrigerator unit. That has to come in play as well in terms of what's going on behind the scenes that may be detrimental to being able to sell a product.
[Dave Steck] I think when you're talking about temperature ranges and keeping track of that, that's where SmartSense comes into play so that you know where your case is at on a particular day. And it's not the old way of doing things. The old way of doing things was I'm going to have my monitoring that's provided by the manufacturer or somebody else, and it's down on the coil and it's monitoring the temperature of the air coming out of the coil. That's not great because you get 12 feet down the row and now that temperature is something else. And if you're not monitoring at each individual door, then you don't really know what's going on in that case. And by the time you get 12 feet down, you could be out of temp, or somebody could have put an air dam in there somewhere. And now you're way under temp and you're freezing something too hard for it to be usable as well. And, you know, understanding those things is very important, as well as understanding case behavior. And Is the case having an issue that nobody can see because the Danfoss system isn't telling you about it or the CPC system isn't telling you about it? Now we're seeing a defrost cycle that's running much longer than it should. Well, why is that? And then that's when you can get people to come out and take a look and try to figure out what's going on with that case.
[Darin Detwiler] Yeah, you know, as you're saying that, I was remembering how I think around November, a grocery store by where I live, someone broke one of the glass doors where the milk is. And it was at least six weeks before they replaced it. It was like, it was just cardboard and duct tape. And as it went on, I kept seeing they had those kind of, you know, absorbent rolls and towels down there. And I kept thinking, maybe you should put the iced tea As opposed to the milk. I put the milk over there where I'm glad you're keeping the iced tea cold, but I don't trust that you're keeping the milk cold. And you know, I'm like, if I say something, well, I don't want to be, you know, thanks for telling us that we never want to run our store again. But those thoughts are in my mind in terms of is someone actually monitoring this? Because this is a significant impact on the ability to maintain the right temperature for that entire I think the question too, and I'm going to.
[Dave Steck] Interrupt you, but the question too is, the person that's supposed to be monitoring it even trained to monitor it?
[Callin Godson-Green] Yeah, if they don't understand what?
[Dave Steck] It is that they're supposed to do, and they're just supposed to go shoot a temperature. I mean, we've run into that before. I'm going to shoot a temperature, but I'll shoot the temperature on some surface that's going to give me the temperature.
[Callin Godson-Green] I've gone on the coldest part of the unit. That'll do it.
[Darin Detwiler] Well, and I don't want to name any names, but I remember dealing with a scenario we uncovered was that they knew that the regional manager was going to be coming out and they realized that they had to now Wow, what do you know? All the same handwriting, all the same ink, all the same temperature, nothing changed kind of a thing. It's like, I don't trust that data now at all. Why bother having that if it's not going to provide you with actual actionable information that could have been acted upon early?
[Callin Godson-Green] Yeah.
[Dave Steck] Well, and even if it is, let's say it is written down and it is accurate and they do it 100% of the time, who's looking at that?
[Darin Detwiler] Yeah.
[Dave Steck] It's got to get back centralized so that you have a person who's responsible for this that can see it on a dashboard and then monitor it from there and say, hey, here's an anomaly that we need to look at.
[Darin Detwiler] Well, it becomes a misplaced value statement, if you will. We have the technology that can record this and we can figure out what happened, as opposed to we have the technology that can give us some real time Heads up information, and we can now mitigate this problem forever happening, right?
[Callin Godson-Green] Better in advance.
[Darin Detwiler] Yeah. Well, again, if you could prevent, you can't prevent everything. But if you don't try, you'll never prevent some of these things from happening. And let's, you know, it's not just about the sale that doesn't happen, but what about the brand reputation?
[Callin Godson-Green] Yeah. Let's hear it.
[Darin Detwiler] Right? You know, do you want to go to your local store and you're like, they always have this problem with their milk or with their rotisserie chicken or with their produce, or, wow, these people really care about it. They, they're proactive. How much do you think that is talked about in terms of the bigger picture? Reputation that is.
[Dave Steck] Oh, internally, it actually is talked about quite a bit because any retailer knows that customer retention is key.
[Callin Godson-Green] Yeah.
[Dave Steck] Because cost of customer acquisition is huge. And once you lose a customer, you lose them for a while and it's very, very difficult to get them back. So there's a lot of focus on having freshness, but does that translate down into the store into execution? Because corporate can say one thing, the people trying to execute on it may have a different opinion.
[Callin Godson-Green] Yeah.
[Dave Steck] I wrote a dissertation the other day because I was bored, but no, it was taking my 40 years of IT operations experience and kind of overlaying what I learned from an operations viewpoint onto how grocery operations could be better. And where the crux of it is, and I won't get into the whole thing, was that you want to reduce the number of snowflakes in your environment. And the snowflakes are the variables. And the more snowflakes you have, the more difficult it is to manage and control that. And I'm not calling people snowflakes, but they are snowflakes. Each individual is their own snowflake. So I'm going to execute differently than you. You're going to execute differently than me. But when I put automation in place, now I gain this consistency. I remove variables. And the more variables you can remove from any math equation, the less complicated it is. And I think that's where, as you look at automation, that's what you need to be looking at is, okay, how am I improving myself as an operator by automating some of this? It's not about eliminating people's jobs. It's about enriching their job so they can do something else because nobody likes to do the laser gun and shoot it, shoot it at the cases. They're just not going to, they're not going to enjoy doing it. So we use the term automate the hate. They hate doing it, so automate it. Let them do something else.
[Callin Godson-Green] That's brilliant.
[Dave Steck] So once you get that consistency, then your ability to review and see what's going on is much better as well, because you'll be able to say, okay, now I can really make sense of this data.
[Callin Godson-Green] You talked a lot, I suppose, about in-store operations and waste in terms of, refrigeration loss and things. But what about in your experience, like, is there technology or ways coming that can help mitigate the waste that's before the store? So say known waste or maybe even falling under sort of VASAP, like, you know, you're meant to get 100 grams of chicken in, but it's actually 95 or 90, like waste that's planned by someone else outside of the stores. Do you think that with all the evolving technology there's ways that paper waste can be mitigated as well.
[Dave Steck] Explain that a little bit more.
[Callin Godson-Green] So as in almost not necessarily food fraud, but what would you call it? Like Yeah, exactly. So you think you're paying for 100 chicken breasts, but actually when the box is unpacked, it's 68 or 98 or something slight, you know, that sort of waste that then falls to you guys because at the end of the day, if you're looking simply at, oh, we sold 18 So then we must have thrown away 82, that sort of thing that maybe is falling. Is it falling to the retailers? Like do you absorb that yourselves or do you account for that kind of along the way?
[Dave Steck] So you'll get some of that through the receiving process to know if you're being shorted. I think the big thing is when you get into primals, if you're doing your own grinds, your own meat cutting, is to understand we expect the primals that you're providing to us to have 90% usable product on it, the rest is 10% that goes wherever, whether it's waste or becomes sold is, you know, something for people to make soup out of or whatever. And there are measures, there are technologies in place that says, I am getting this much out of my primals, that you can go back to your provider and say that primal is not meeting our standards. I'm not an expert on that, but I do know that does, that is in place.
[Darin Detwiler] I want to come back. You were talking about the cost of customer acquisition. In your current capacity as a consultant, you know, maybe you're working with people with far less experience in the industry than you have. If someone said, I can't be focusing on preventing wasted food right now. Food waste is here on my list. I have to be focusing on customer acquisition. Do you often find yourself saying they're not necessarily mutually exclusive?
[Dave Steck] Yeah.
[Darin Detwiler] What, how do you communicate that?
[Dave Steck] Well, fortunately, I don't have to, but.
[Darin Detwiler] If you had to.
[Callin Godson-Green] Or if you're advising someone how to.
[Dave Steck] I mean, it's the store experience. is has to be viewed in its entirety. It can't be this segment and that segment and that segment. If you're wanting to attract and retain customers, you have to execute well, period. So that is part of your acquisition cost is making sure that you're constantly executing well in the store.
[Darin Detwiler] Yeah, I never really thought about the idea of the cost of customer acquisition. You know, I just go to the same grocery store all the time.
[Dave Steck] But if your shopping experience declines at that grocery store because the product isn't as fresh as you want it or they don't have it in stock, then you're going to say, okay, let me try someplace else. Now, if you're going to someplace else that is executing well, you're probably going to stick there and you won't go back.
[Darin Detwiler] Yeah, you know, yeah. I have to admit, have you ever gone to like a really downtown grocery store? And it's like, it's so condensed and compact. You're like, I don't like this. It's a different, I don't know.
[Callin Godson-Green] It's not a real grocery store in my opinion.
[Darin Detwiler] Yeah, it's like it's.
[Callin Godson-Green] You can't get a cart around in a problem.
[Darin Detwiler] Yeah, you can't even get the cart around kind of thing. But you're frustrated. It's not just because things are different places because it's so confining or whatever. I know that it's like, I don't like that experience. I'm going to go where I like this. I like how they do their produce or I like their customer service. And there's just a lot of variables. There's probably like.
[Callin Godson-Green] Rollovers as well, people that go into the big mega stores. They're like, this is too much. I don't need to let me get like a little condensed one in downtown. I grab everything in 5 minutes and I'm out. There's too many tourists. Exactly.
[Darin Detwiler] There's too many options.
[Callin Godson-Green] I need store brand only. Let's go.
[Darin Detwiler] But I think that the common thread, whether it's the small downtown or the large, you know, retailer or, you know, too few, too large choices, no one wants to have that breakdown in trust. Not only about the brand, but the brands that are being sold by that brand.
[Dave Steck] Right.
[Callin Godson-Green] Is there a formula typically that businesses put on like customer loss or, yeah, I suppose customer loss solely for products not being available versus like, you know, damage, reputation or those sort of things. Like I walk into a store, I can't get something. The weight of that compared to, I don't know, a poor experience, I guess.
[Dave Steck] So there are measures. where I came from, yes, definitely. We used Net Promoter Score. And it was based off of survey responses that when the customers left and they had the receipt, obviously you're not going to get everybody to respond to that. And normally it's the people that are negative that want to tell you something, but you still get positive, right? And there are specific measures on what are we interested in? Product availability, product freshness, checkout experience, and all that. They're all grafted on themselves, and then you get your NPS. And any business is going to want to have, you know, goals for what that NPS is and make sure that they're still ratcheting that up on a month-by-month basis. So.
[Darin Detwiler] It's interesting to realize just when you take a systems approach, there's so much more than, you know, than appears on the surface in terms of looking at these things. But I think that from your experience, understanding your description in terms of the bigger system approach and how everything is connected, if you're looking at product loss, it is the economic, it is the perhaps the moral, you don't want to have people going without food, it is the choice, you don't want to make people a lot being able to find their choice, but also the idea of that customer knife might not come back. Incredible. Incredible. Well, thank you very much for joining us today. You know, I love having these conversations because I know there's other people that have similar insights, but also they have questions that we just don't talk about enough. And thank you for sharing with us today.
[Callin Godson-Green] Thank you. Thanks, Dave.
[Darin Detwiler] Thank you.
[Callin Godson-Green] Thanks.
[Darin Detwiler] All right, from Spoiler Alert!, thank you very much.
