Michael Fletcher, UK Board Advisor to Hanshow takes us through the ins and outs of electronic shelf edge labels (ESLs) and how they're revolutionizing the retail world. We tackle the importance of colleague engagement in successfully implementing ESL technology and the immense potential it holds for boosting retail productivity. Take a guided tour with us through the innovative changes ESLs have brought to store operations.
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Michael Fletcher, UK Board Advisor to Hanshow takes us through the ins and outs of electronic shelf edge labels (ESLs) and how they're revolutionizing the retail world. We tackle the importance of colleague engagement in successfully implementing ESL technology and the immense potential it holds for boosting retail productivity. Take a guided tour with us through the innovative changes ESLs have brought to store operations.
#theproductivityexperts
Register for the Produtivity Forum 2024
Follow us on Twitter @Rethinkp
Connect to Simon on LinkedIn
Follow ReThink on LinkedIn
Welcome to the Productivity Podcast. Today I'm delighted to be joined by Michael Fletcher, who has over 30 years of retail experience internationally and in the UK and is currently UK Board Advisor at Handshow. Hi, michael, hi, how are you? Yeah, I'm good. Thanks you, yeah, very good. Thanks, great to be here. Good, well, thanks for taking the time out and joining us. We'll find out a bit about you and then we'll find out about Handshow and today's topics all around electronic shelf edge labels. So, looking forward to this one, I suspect it's a forefront of lots of people's minds at the moment. So before we start, michael, tell us a bit about yourself.
Speaker 2:You're kind of 30 years in retail in the UK and abroad, yeah, no, so I've seen a long time ago now, but I joined Tesco in the 1990s, early 1990s, on their grad scheme. Probably spent was that 10, 12 years working in commercial within the UK. It was a brilliant experience. Then was lucky enough to spend some time out in Ireland and then Malaysia and then centrally Europe and a little bit more time back in Asia before coming back to run Tesco's procurement function, which is where I first came across ESLs Perhaps we'll talk about that in a minute.
Speaker 2:And then I joined the co-op 10 years ago and had a fabulous 10 years at the co-op, ended up running their wholesale business, nysa, and at the back end of last year I decided to pursue a kind of portfolio career. And one of the businesses I've ended up working with is Handshow, which has been absolutely enlightening. I mean, I would like to consider that I was pretty much abreast of what was going on in retail technology, but I think the progress that the likes of Handshow have made on the landscape is very, very different to one that I perceived pre-COVID.
Speaker 1:Excellent. So breadth of knowledge. And, from your procurement point of view, you were the guy that was beating everybody up on price right.
Speaker 2:Having fair discussions about creating value for both partners, I think, is how we'd like to describe it.
Speaker 1:Excellent. Well, it's all about perspective, but yeah, if that's the aim, then brilliant. So Handshow then tell us a bit about Handshow and what's going on there.
Speaker 2:So they're a Chinese technology company. They've been around for just over a decade. They specialize in trying to increase retail productivity. They've got some really fascinating technology around smart trolleys and AI-enabled stock control, but their core business at the moment in the UK is about trying to deploy ESLs, an interesting market in Europe. Penetration is 30-35%. In the UK it's less than 1%, with only one retailer, which is Aldi, aggressively rolling out electronic shelf-hatch labels Henshawar, their supplier. We've deployed about 100 million labels so far across Europe obviously not just with Aldi, which makes us the number one and the technology has moved on considerably.
Speaker 2:Since I took my time at Tesco, I remember doing a business case it was probably about 2010,. 2011, and the conclusion was look, these are at some stage going to be mainstream, but at the moment they are incredibly ugly. The business case is probably a two, three, four year return and we'll just wait and the technology will improve and the price will come down. That is exactly what's happened. We did a bit of a review when I was at the co-op. This was pre the pandemic and I think that the business case was again around two to three years and we felt it was still time to wait. And, as I say, when I started talking to Henshawar I didn't realise how much the technology had moved on and what Henshawar was doing, which I was particularly impressed with the thinking much more broadly than the simple business case which says, hey look, when the price changes on the shelf, we can do it through an ESL.
Speaker 2:Actually they're thinking about every single time a customer interacts with a product at the shelf and every single time a colleague interacts with the product at the shelf. And when you start to build those use cases in, actually you get to I think you can get to an in-year payback. Now the one thing that each individual business has is their own set of agreements with colleagues on shifts, and that doesn't include the cost of change. And when businesses go into ESLs, they do have to think about the impact on colleagues, because the truth is you do have to move your shift patterns around, because that piece of work that's done every day on price or on stock control or on RTC actually doesn't need to happen anymore. And I see a lot of businesses not making the changes to the shift patterns and then wondering why the business case doesn't stack up. So it is a it's a technology journey, but it's also a colleague engagement journey as well, and I think all retailers have to think of those in parallel if they're going to be successful.
Speaker 1:Yeah, interesting. I mean we've touched on electronic shelf edge labels, on a few of the podcasts and similar things, more than just price changes, which is the historic view I think of you. Know I could take this workload out. Yes, there's a cost for the technology and to implement and to run, but I chunk this cost of labor out. I can be a bit more dynamic in pricing. That's the business case. It stacks up for me over X years or Y years or it doesn't. In terms of this end-to-end store operation piece. What were the things that surprised you when you came back in with Handshake to look at the world of electronic shelf edge labels?
Speaker 2:The first was just how far the technology had moved on. When I first looked at it you had blackouts of gray and very limited functionality with what you could do on the screen, and then relatively few dimensions in which to choose from, and it meant that areas like health and beauty were always really difficult to do. And then typically you'd go around the store and you'd see a lot of cracked screens and ESLs on the shop floor. If you take the modern ESL, you've now got six-color functionality, pretty much unlimited templates. As I said earlier, the work Handshake did on Halloween. A lot of marketers say, oh, I don't like ESLs, they don't work for customers. Take a look at the Handshake Gallery at Halloween and I think every single marketer would fall in love with it. And then you think about how you could develop that through Christmas, through all the seasonal events, through barbecue etc. Etc. It is a brilliant way of communicating to customers. Battery life now can be up to 15 years. The screenstone crack, the technology. The hardest bit is fixing them to the shelf edge, but that now has been solved. And then, but more fundamentally, it's about thinking differently about how you use them.
Speaker 2:So the bits that have impressed me about Handshake is the first one around sort of stock control routines. Every single store will have a version of a daily gap scan, but you encourage the colleagues to scan a gap and they know there isn't product in the back room but that still produces the report that then they go through and then they do the various routines that each retailer has. Actually, esls can be really, really smart and prioritise the areas that you scan and when you scan them. And then I think the most impressive one that I saw is around reduced to clear where, as opposed to going back to the shelf multiple times a day, and you see lots of retailers moving from perhaps four visits to the shelf to three, even down to two, to try and save the labour. And you can see they're doing the business case, which is let me trade off labour with waste. Now, we don't want food waste. I understand why they make the trade off, but really it's not a trade-off we as an industry should be doing, but actually the labour is just too expensive to keep going back to the shelf edge. And then you start thinking well, hang on a minute, if all I'm doing is reducing the price, why don't I reduce the price through the ESL?
Speaker 2:Now, if you take that to its nth degree, in theory, once you've done the first visit to the shelf edge, actually in practical terms, you can revisit that shelf a hundred times because every single time you know that the idea. You can do it manually to a set of rules which is go 10%, 20%, 30%, 40%, 50%, 60% off, or you can do it. A lot of retailers now have the capability to look at live rates of sale. They understand the elasticity of the product and they can change the rate the price reduces right the way throughout the day. You know, if it continues to rain and all the barbecue products not going to sell, then you have to go more aggressively. But if the sun comes out, perhaps you don't need to reduce as aggressively as you originally thought. And again, as I said, lots of retailers have the functionalities to do that, not just on a national basis but on a store specific basis. And once you start doing areas like stock control and reduced to clear, as I say, I think you pretty quickly get to it in your payback.
Speaker 1:And that dynamic kind of pricing has been prevalent in Europe for a while, hasn't it? Certainly? Kind of petrol stations in, I think, portugal and Spain you get the price petrol goes up in peak and then down and then back up in peak the other way on the motorway.
Speaker 2:Yes, look, absolutely. I've seen a couple of retailers in the UK who have very seasonal stores and very seasonal around the weekend, and I've seen them run a price file on a Monday to Thursday and then a different price file on Friday, saturday, sunday and almost there their local customers understand this and sort of take the benefit early on in the week and perhaps don't shop for the weekend and the sort of the tourist pay a little bit more. So you know that model can be deployed but and that there's always been the capability to do that, but that's probably a slight reluctance by a lot of retailers to do it. But now you know we have member pricing, so why wouldn't we have weekend pricing in seasonal stores?
Speaker 2:The same kind of logic applies and an RTC is something that you can do every single day. Well, we know that we've got waste every single day. What's you know? We're an industry probably with 120 billion pounds, with a turnover something like that. I'm guessing waste on average in the industry is running up somewhere around 2%, something like that. You know you've got two billion pounds with a food waste. That's absolutely crazy. And why wouldn't you use an ESL to intelligently reduce that price and try and get as much good food as we possibly can into consumer's houses.
Speaker 1:And we kind of for the time of recording, just come out of Black Friday. So those flash sale opportunities or Cyber Monday opportunities to drive revenue based on turnover last week or excess stock or competitor activity must give a big advantage as well with the flexibility.
Speaker 2:Yeah, absolutely. So you know, seasonal is a big thing. Now what I've seen when you, when you go into stores and you try and clear, you'll have a big piece of point of sale that says sort of at least 20% off everything, price charged, a till, but actually a lot of customers don't want to try and work out 20% of what that price is and I think is that good value, is it not good value? Actually, what an ESL in aims you to do is actually list the price for every single product. You know and you can then be more aggressive on some and others, whereas you know you're saying at least 20% off, but some are 75% off. But you can't really get that message across. On ESL you can be very, very specific and say, look, you know, let's clear this product. This is really really good value, rather than kind of the generic stuff that you that you often see in retailers.
Speaker 2:So yeah, I think there's a big business case about clearing through seasonal stock much more effectively and, as you say, just just running flash sales. So you know, if you are overstocked on barbecue and the weather isn't great, hey, just do 20% off all barbecue products. It's not quite as simple as just pressing a button. But it's not far off and suddenly you've executed a 20% of barbecue promotion. You know, by the time you tried to do that with paper. Well, you just wouldn't get around to it. You wouldn't have the colleagues in store to print out the labels and put them out. Put them out, you know, add a touch of a button and then the next morning the price goes back up and there must be a big piece around integrity of pricing as well.
Speaker 1:So if you're a national or even multinational chain, the the reality is if you're using paper labels, they'll always be some that are missed because they're in dual locations or there's not enough resource to put them out. So that that price integrity must be a big benefit not only for their consumer but also for the company, because they're doing less markdowns at Tills where there's a query about price.
Speaker 2:Yeah, absolutely so. You know, I know through the inflation that we've had, you'll have a lot of businesses that haven't been able to get the inflation that was necessary away as quickly as they would have liked because perhaps they're limited to 200 price changes per store per day. I'm clearly a sales. You can do it all in one go, both up and down. And now you see, with most of the sales is this kind of positive confirmation. So you get an exception report back that says the confirms that this price is now live in this store.
Speaker 2:And let's say you have got an ESL that's been damaged. It will actually go and tell the store manager that arm, for whatever reason, on this particular product the price hasn't Gone up and therefore you risk trading illegally. So again, it enables store managers to lead their store much more effectively because they they can absolutely guarantee that the price changes have gone through and in the odd case where it doesn't happen, they're given an action, this right key. I need to go and fix that. So incredibly important to give customers confidence about that. The price on the shelf edge is actually the price they're going to be charged at the till.
Speaker 1:Yeah, nothing, nothing more frustrating is there and then trying to get that remedy didn't? Things like VAT changes. So I remember when we last changed and there were people trying to reprice stores overnight and you know inherently that leads to to error and you know back to some of the the previous part of the conversation. So things like that must be a lot more future proof.
Speaker 2:Yeah, absolutely, absolutely future proof. Again, you know I can think of my time in retail in BWS. You know when big duty changes happened or bad changes happen, typically, you try it. You probably change over three or four days just because of the sheer volume of shelf edge labels that you need to change and the colleagues that you've got a payable to do it. You know you can. You can execute the change, as with the speed it takes to upload the new price file, you know it makes absolute sense.
Speaker 2:And then you know, in periods of deflation, you know how many times of actually we talk about customers getting charged too much. But you know we'll all remember times as well where you need bought a product and thought, well, that's cheap. Then it wasn't the shelf edge label and that's because colleagues in the shop haven't had a chance to sort of put the product that put the new prices out. So I'm you know it is about telling customers the right price and it is about executing inflation. But then it's also a great opportunity to tell them when you know when there's a great deal for them. And again, that sometimes doesn't happen and I've been in shops where you know you prioritize, quite rightly, the movement of prices up in order to make sure that you trade legally, but you then haven't taken advantage of the prices that you've reduced and the customer doesn't know and get the benefit at the still still, but they're probably not aware that they've had that benefit. So you know it names you to do the job properly. Now it has to be seen in the wider context.
Speaker 2:I think what I like about working with handshift is that they they're thinking much more broadly than this is about an ESL. They're talking thinking about a digitally enabled store and actually how you can make the customer experience a lot better and how you can make the colleague experience a lot better. Esls are at the forefront of that digital technology. But you know we've all seen the camera technology that the likes of Amazon have deployed. You know that is going to come over time and be more and more accessible and I think retailers Need to you know, constantly be having conversations with the likes of handshift about. You know what's available now and, as I say, you know I spent 30 years 30 years in retail and relatively close to the shop floor and my perceptions about what technology was out there to improve productivity and what's actually out there and what businesses are doing in Europe more so than the UK. I was really really pleasantly surprised and hence taking up the role and having a great time doing it.
Speaker 1:Excellent and in that kind of digitally enabled world we've we've clearly got things like picking to, picking to light or picking orders, which helps the colleague journey. But will we get to a kind of point where Almost customers can pick and pay at the shelf edge? Do you think?
Speaker 2:Yeah, well, I mean, you know we've got smart trolleys. Now handshift got a smart trolley, which means that you know, as you place the product in the trolley it registers the sale and if you take it out of the trolley it deregisters the sale. Now I think one of the things customers don't like about the camera technology is you don't actually know what you've been charged for. You just walk in with your basket and you put the product in the basket and you think, okay, what now? Whereas this actually has a screen on the trolley that tells you that you've been charged two pounds for that particular product. I think it gives you a lot more confidence.
Speaker 2:You know it's you've got to take customers on a journey with technology. There's a group of customers that'll always be massive early adopters and there's a group of customers who probably want to be taken more gently. You know it's interesting that Boots are taking out their self-service scanners, aren't they? You know that's probably a subject that for a whole new podcast. But you kind of wonder, you know, would there be a better way to take customers on that journey, those Boots customers on that journey? Because for some customers it's just the way that they shop and they want to shop and they don't want to interact with retail colleagues and for others, you know, sometimes it is it's their only interaction of the day.
Speaker 1:Yeah, and we were discussing this last week. It's interesting, I mean, they're leaving it in their two largest stores, which kind of tells a story, and while everybody else is opening up choice to some degree, they're reducing it. So I think, as long as they invest in their till-manning and make sure they've got the right till-manning to be peak, if they're just creating cues, then maybe there's something they'll revisit. But you know, time will tell, won't it?
Speaker 2:Yeah, it's a really interesting point of service difference for them. Look, we all know that labor is becoming more expensive. The kind of labor you want is becoming increasingly scarce. We are in the middle of a cost of living crisis and customers are looking for value, and one of the ways that they're able to deliver value is by increasing the productivity of colleagues in a way that is engaging for them Rather than used to be preferred to me at the time, being nasty to suppliers and getting better prices. You know you have to look at your entire P&L and you have to look right the way through. Okay, where can we shave a little bit? Where can we shave a little bit? And you know that's where you add the value, and the accumulation of that enables you to improve your proposition, and improving your proposition at the moment is going to be largely around trying to become more price competitive.
Speaker 1:Absolutely so. If people want to find out more about what Hancho do, Michael, where's the best place for them to get in touch?
Speaker 2:Uh, they jump on the website. They've got a website, wwwhanchouk. That's got some contact details. Or find me a note on LinkedIn and I will connect them up with the right people.
Speaker 1:Brilliant, so we'll put the link to the website in your LinkedIn profile on the show notes so people can find you easily Fascinating to chat the subject. I'm really interested in that whole retail technology, and seeing more and more of the electronic shelfage labels always makes me smile, and then hopefully we'll see a lot more in the future. So thanks once again, michael, and we'll catch up soon. Pleasure, thank you.