Welcome to Retail Checks and Balances, a podcast that takes you behind the scenes of the bustling world of commerce and culinary delights to help you grow your business and win. Join us as we explore the fascinating stories, trends, and challenges that shape the retail and hospitality industry, from cozy corner cafes to sprawling shopping malls and everything in between. And now, here's your host, Kevin Spencer.

Good morning, welcome to Retail Checks and Balances. Today we have a very special guest and someone who has a great story to tell that is very close to why I am in this business of retail. We have Mr. Russ Hawkins, CEO of President and CEO of Agilence Agilence sorry, I didn't know we're having problems with that word. Establishing that organization that is focused on retail help and retail applications. Welcome to the show, Russ.

Kevin Spencer

Well, thank you, Kevin. It's a pleasure to be here. Sorry about the name, everybody stumbles a little bit. It's a contraction of the words agile and intelligence. So it's all about using data to your advantage in your operation.

Russ Hawkins

Yeah, the word agile comes from more or less project management and how that works in terms of having successful projects, which I know you have had a lot of experience with. You know, can you tell me a little bit about, you know, yourself and your journey of where you are today?

Kevin Spencer

Sure. Well, as you can tell, I'm a gray hair, so I've been around for a little while and I have a A long history of working, didn't grow up with any money, but found that the way to basically run your own business without having the capital to start it is to be in the sales business. I started out in my career in the telecom area selling telephone systems. And in the mid-90s, in the run-up to the kind of frenzy around Y2K, I was recruited out to be a sales vice president for a small startup data equipment company And about a year later, after I had changed the strategy of that company pretty significantly, I was made the CEO of that company. And so since then, I've been the CEO of three companies. The first one was data analytics as a data communication equipment. The second one was a high performance computing equipment company. And then this third one where I've been here quite a while now is in the data analytics area, specifically for retailers and restaurant chains.

Oh, fantastic. I mean, that shows volumes in terms of your experience, per se. But tell me more, what inspires you, you know, in terms of being in this industry for this long time? What keeps you going? Question over there.

Well, there's two things. I mean, I work because of the mental engagement, the stimulation that I get out of solving problems for the most part. Most of my work is about either solving problems or looking for ways to take advantage of opportunities. So that's probably number one. Many of my peers are retired, but for me, I enjoy the mental work of strategy and building companies. And so the second thing I would say is I do get a big kick out of building companies. I've been the CEO of three small companies that have grown. All three of them had less than 10 people when we started and all three of them ended up having more than 100, in some cases, more than 200 people over time. I like to use an analogy of building a wall. I like to do a little landscaping for myself and I like building walls. If you've ever built a stone wall, You know, you're taking rocks of different sizes and shapes, and you're having to kind of fit it all together to build something that is useful and beautiful. And that's the way I think about building companies, both in terms of the people acquisition, as well as developing kind of the strategy and having a vision of what you want it to look like when you're done. So that's the second part that's interesting to me, building things.

So tell me, what's the core of Agilence? I got it, right? Got it. Yeah, you got it. What was your question? What's the core of Agilence? So like, you know, in terms of, you know, what do you do as an organization?

So what we're all about is essentially wrangling data. Every business is generating a significant amount of data and it's increasing. It's increasing truly exponentially. People use the word exponential sometimes when they mean multiplicative, but in this case, it is absolutely exponential. The amount of data that is being generated by a company I heard a statistic the other day that an average company has more than three dozen applications that they're using. And every one of these applications is generating data. There's data in people's heads. And it's accelerating. And so it becomes overwhelming. You kind of end up flooding the zone with data. And it's very hard to figure out not just where the needles are, but where the haystacks are in some cases. So what we're all about is giving our customers the ability to put a significant amount of data from a lot of different sources into a single container, and then to be able to ask questions of that database in a way that's meaningful to them. We're not experts in everything, but what we do try to help customers do is to take advantage of the data that they have today and make better decisions as a result of their ability to get at it. So it's about time to data and it's about the ability to use that data to improve the business operation.

That's a fabulous analogy, Roscoe. And I think that's a lot of businesses don't have that single container to give their reporting. It's 15, as you said, 15, 16 different or even more applications that they can try to combine the data. And then when they try to do it, it doesn't really make sense because the different applications are not really talking to each other and the data might be different and it might be incorrect. I know one of your specialties is in shrink and reduction of shrink. Tell me more about your experience with that and how have you uplifted your different customers environment by dealing with the evil of shrink?

Yeah, and you notice I didn't mention shrink when I was describing what the company does. But the reality is that this company was originally founded as a company focused on reducing shrink, originally in grocery chains. So we were trying to help grocers reduce shrink. And we had a very, very different approach than we have today. At the time, we were more video oriented. So we were able to use essentially the POS data flow to review transactions. to look for areas where there were losses being created and where shrink was happening in the inventory. So shrink is an inventory statement, is an inventory term. It means that the inventory declines over time. And sometimes it's not easy to figure out what that is. In a grocery store, some shrink is expected, right? You have produce and other perishables that, you know, end up going bad or aren't suitable for sale for customers. But most of our effort has been focused on other types of shrink. And so initially, it was all about trying to identify people who were causing shrink. So this might be employees that were kind of silent partners with you and Maybe they had friends that would come in and they would be, you know, giving friends discounts that they weren't entitled to, or maybe even just giving them product, which is a thing called sweethearting. And, you know, the other thing is that there are external people that are stealing. You know, they come in and they steal from you. It's become quite organized now. There's a so-called organized retail crime. where companies, where these very, very organized criminal organizations are out there trying to essentially steal high value inventory and stuff that can easily be resold. I think that that's only part of the situation and that was our original focus. But what we've learned over time is that there's lots of other ways that shrink and loss happen. And so we tend to think of things now as total retail loss. And most of our customers start using our product for shrink. looking at the inventories and what's going out through the POS system, what's coming in from a supplier standpoint and looking for discrepancies in those things. But when you expand that to be total retail loss, you find all kinds of other things that are affecting things. Pricing policies, applying discounts incorrectly, just having ineffective promotions, having a promotion that you would expect to work a certain way and it really doesn't. Loyalty programs can be very leaky and problematic as well. matching up your labor to the revenues that you're driving. There's no point in having people there when you don't need them. And then the last area is in kind of compliance. It's very easy to create losses if you're prosecuted for not age checking or selling products to minors like alcohol or tobacco, In the pharmacy area, there's all kinds of issues around controlled substances and the obligation of the pharmacist to make sure that they're not supporting the distribution of controlled substances to people that shouldn't have it. So it's gotten very, very broad. It started with this beginning of trying to identify people that were stealing or were silent partners. And now it's really about using the whole range of data that we've got to look at the operational effectiveness of the various policies and approaches and people that are in the organization. So we've really kind of grown dramatically. We still do a lot of video-based stuff, but most of our work now is in data and data management and in making that data accessible and easy to understand for the average person. So you don't need to be a data scientist or a PhD to figure out how to use the data in the business.

I like that word you said, total retail loss, which really puts that broad thing, as you said, into one. Is that your word or is that an actual term?

I'd love to be able to claim it as mine, but it's been used quite often. And I've embraced that as you point out, a very comprehensive phrase that kind of covers a lot of things that we do.

I've never heard anybody said that, and I've been in the retail industry now almost, what, 20 years? I mean, as a young kid, I do have some grades, as you see. You do, I can see that, yeah. I just turned 50, actually, so I'm in that zone. But I feel the best time of my life. I mean, don't talk about me. What current projects that you're working on that gives you some pride in terms of where the future of Agilent goes?

Well, we've got some really exciting things going on. The first thing that I would comment on is our our global reach now. We made an acquisition earlier this year. Prior to that acquisition, we had pretty much operated only in the United States and Canada. And now we acquired a company that's based in the UK and that has operations all over Europe and the Middle East and the Nordics and in South Africa and in Australia, New Zealand, and Hong Kong. So probably the most exciting thing that's going on in my world right now is embracing the capabilities of this new company that is part of our company now. and looking for ways to bring our products through their channels and to reach more customers on a global basis, as well as to better serve our US-based customers that are global in nature. Many of them have operations around the world. And now we have an ability to better support them. So that's probably the biggest thing. A couple of other areas that we're excited about right now, we're seeing lots of changes in the RFID business, the radio frequency identification business. You know, these used to be these big clunky tags that, you know, had to be removed. Now the technology is getting so that it can be put right into a label in a shirt. And that label can have electronically Tons of information about that item, not just the style and size and color, but also where it has been everywhere through the distribution, from the manufacturer, through the warehousing, out through distributors, to the retail, from the back room out to the front room. So there's a huge amount of data happening around RFID and it's becoming more and more discrete at individual product levels. And we're very excited about our ability to take that data and help customers make that accessible to them and help customers make decisions based on the immediacy of that information. And then, of course, the other thing that's affecting everybody in the world at this point is AI. and how AI is impacting things. So there's all kinds of exciting stuff going on. And I didn't mention that, I talked about building things, but I get excited by technology and about how to exploit and take advantage of technology for the benefit of my customers and for my company as well.

Yeah, we got to stay abreast of any new technology that's out there that's built to help our customers.

Yeah. Otherwise you'll be dead because somebody else, if you don't do it, somebody else will.

We can't get accustomed to just doing the same thing every day. You gotta, you gotta evolve with change, which is constant as we all learn. Right. Um, in terms of your operations, are you just direct sales or you have partners that you work with?

We do have some partners. We've struggled a little bit with distribution channels and with partners. So the majority of our business is, in fact, direct sales. So I have a sales team in the U.S. and now one in California. Europe. This company that we acquired, though, had done a better job, frankly, of working with partners. And so they have a number of partners in Asia and in South Africa. And interestingly, in Italy, they have a company that is focused on Italy, And so we're learning a lot from them and their experiences. What we have had in terms of partnerships is we've had a number of relationships with other companies. in our industry as well as individual service providers. That would be executive search individuals, executive search companies who keep track of people moving into leadership positions in asset protection and loss prevention and operational effectiveness. And then some of the others are consultants that we have referral relationships with. And so we're learning a lot from our new acquisition. We're getting better at this over time. And we're starting to generate some new customer relationships through channels and through partners. But it's still 90% or so direct.

Okay, that's great. I mean, at the end of the day, you know, everybody wants to make sure that they deliver successful projects, right? So whatever works will work. Yes. One of the things I want to ask is how How does modern data analytics and reporting technologies drive customer engagement and sales? Just to put you on the spot there.

Yeah, so I mentioned briefly, the first thing that comes to mind is that I mentioned briefly about loyalty programs and about promotions. So I know who doesn't like a promotion, right? Who doesn't like an opportunity to buy a product that that you're interested in and get a good deal. Everybody wants a good deal. We just had Thanksgiving and Black Friday and Cyber Monday and seems like the days keep expanding. But the problem with a lot of promotions and a lot of, you know, programs like loyalty programs is that historically it's taken a long time to understand whether you're getting the value out of those promotions that you expected. You can look at what you're actually selling. You may be able to get some information about how many units you're selling, but you don't really know whether you're getting the intent of what you were trying to do. You certainly want to delight your customers. And you may find that even though the promotion may look like it's successful on paper, that it didn't really achieve the goals that you had set for your own company, and that you've missed an opportunity to delight a customer in a different way with a different product or a different type of solution. So I think getting the immediacy of that data is important. Second thing I'll talk about is, and we see this in e-com, It's much less prevalent in bricks and mortar. Who hasn't had the experience of going on Amazon or some other website and saying, getting a message that says, well, customers who bought this also bought this and this and this, right? You don't see a lot of that in bricks and mortar retail, unless you've got really good salespeople, really good employees there who are suggesting things. And so this idea of expanding the basket, expanding the ticket that customers are buying, you can benefit by having real time data in your hands and the ability to suggest relevant additional products that might go well with things that customers are selecting. So again, it's a means of leveraging the data that you've got based on your experience with all the other customers to make recommendations to existing customers. And then secondly, the other part of it is making sure that your employees are equipped to do it. So one of the things that we do as a kind of standard operating procedure is help our customers understand which of their salespeople, which of their employees that are in the store, the frontline employees, which of them are successful in engaging with customers and which of them are successful in suggesting other products and how often do they do it and how how what's the impact of their efforts there in terms of basket size or ticket size. And, you know, I think it's in the best interest of the company to have happy employees, too. And so it's kind of a self-fulfilling, you know, virtuous circle here, that virtuous cycle where You give the employees the ability to be better consultants to the customers, customers to get better advice about what goes with what, and to do it at a discount with an effective promotion, right? So it all kind of comes together. So that's kind of the things that immediately comes to mind.

And I think that's important, how you put that, the people need to be in front of this, because a lot of people think that, oh, we're just implementing customer loyalty in our system. You get a dollar at that point for every dollar you spend or whatever it is. They think that's enough. But I like the fact that you said the employees have to drive this and the employees have to to the front end cashers or wherever it needs to really position the loyalty to make people get that warm feeling because warm feeling is what drives loyalty.

That's what works is getting that warm feeling. The other thing that comes to mind is having the right product in the right place at the right time. Right. So, you know, having out of stocks is not a good thing. Right now, I'm trying to buy a pair of shoes for my wife for Christmas, and I can't find them anywhere. You know, I'm like, well, there are these things I'm going to use, I'm going to use chat GPT or copilot to go to see if they see if they can find it for me that this I want a particular pair of shoes in a particular color and size. And I just can't find them find it anywhere. But But having that right product in the right place at the right time is critical today. We learned a lot during the pandemic with stores essentially becoming distribution centers. If you look at, for example, Walmart today, every one of their 4,500 stores is now basically a warehouse where they can ship product from. And so you never have an out-of-stock situation. customers can have a high degree of reliability that what they're looking for will be where they're at. And that is tightly related to inventory management and back to the whole shrink thing. It's all kind of interwoven together. And it makes sense to be able to keep your thumb on the data so that you understand what's happening.

Um, that's, that's amazing. And it is bringing me to my other point and then telling that shoe story kind of, um, sparked another question in the sense of, you know, um, going online, you know, specifically to, to supermarkets or even in general retail, how does, you know, everybody should have an online store once you're in retail in terms of impacting your, your profit margins. You think that's a valid statement for me to make?

Absolutely, you have to, absolutely. Not only that, it's now coming, it's now starting to be that you have to have an ability to sell through social media. That's one of the fastest growing areas in retail is, you know, the so-called influencers of the world and their ability to promote individual products and even individual brands. So I think that if you have a retail operation, you must have an online presence and that minimum is an e-com site.

Oh, that's fantastic. Because, you know, and one of the challenges that I would say we've had with implementing online store is that, you know, you get, you place an order and then it's out of stock. And there's, you know, you talk about different systems and, and interfacing and, you know, and inventories. I mean, you have to make sure inventory is up to factor and, you know, you don't want your, Any of your, I would say, I mean, top 50 items ever going out of stock that's compared to your revenue, right? So if the top 50 contributes, let's say 70% of your revenues per day, then you want to make sure that those items. Can you speak to that and how important that is in terms of being online and making sure that you have the stock available and what solutions you can recommend based on that?

Sure. Now, of course, it depends a little bit on what size of your operation is, right? If you're a small operator with one store or maybe only a few stores, then it again comes back down to the data and to your historical experience and to being able to understand what's worked in the past, what products have moved in the past, during which times of year. Obviously, we're in the selling season right now. But you really have to have a good grasp of history. And so therefore, you've got to get really good record keeping. And again, it's another area where data analytics can help you. With our customers, we We suggest that they have an ability to look back at least five years, to look back by individual product detail, you know, so that they know, you know, sizes and styles and the types of products that are needed. So it's absolutely critical to have an understanding of what your history is so that you can plan for the future. Obviously, another thing we've seen in the last few years is lots of supply chain disruptions, boats getting caught in the Suez Canal. boats not being able to be unloaded during the pandemic out in Long Beach, California. And so making sure that you understand what you need and making sure that you can get into the supply chain in time for it to be on hand when you want to sell it. is absolutely critical. Now, if you're a larger operation, it gets more complex because not only do you have all of the issues that I just talked about in terms of supply chain, now you've got your own distribution problems, right? You've got, let's say you've got a hundred stores. Some customers, my biggest customer has 16,000 stores.

So they've got an exponential problem.

in terms of making stuff go. And in fact, some of those companies end up destroying tons of inventory, because it never got out of the distribution center. So yeah, in time to make it to the shelf, right? So if it's seasonal goods, You've got to get it there in time to be sold in that season, whether it's Christmas or Thanksgiving or Valentine's Day, whatever it might be, Easter. Every one of these things has the risk of ending up with stranded inventory after the fact. And so you've really got to understand not only what the supply chain is going to be require, but also how your own distribution is working and whether it's working effectively. We have one customer that literally wastes several hundred million dollars a year because they have material that somebody didn't move into the stores in time to take advantage of the seasonal aspect of what they wanted to do, or it's dated material, the material that has an expiration date that doesn't get out into the store in time Most people aren't going to buy, let's say, a food product with an expiration date that's only a month from now. You want to buy something that's going to have four or five months at least, depending upon what kind of food it is. But if it shows up in the store with only two weeks left to the expiration date, you've lost at multiple levels. You've lost because no one's going to buy it. and you're going to have to dispose of it. And you've wasted all of this time and human energy and people time getting it there, only for it to be too late. So knowing what you need, when you need it, based on your customers and what their demand is, making sure you get it through the supply chain in time to get there. And that supply chain has two aspects. It's the third parties you're requiring that you're dependent on, and then it's your own organization and how it operates. So all of these things can be improved. by data analytics and by understanding what's actually happening in your business down to very granular levels. And that's why if you can ask very specific questions of a broad database, you can solve these problems. And I'm not a merchandiser. I'm not a marketer. I'm not a financial person necessarily. I'm not an operations person. But when you have a a multi-store operation, you've got people who have those responsibilities and they know what questions to ask. What we try to do is to give them the ability to get the information that they've already experienced to help make those decisions better.

Oh, fantastic. Russ, your experience and your passion speaks volumes to how this information is so significant to all you know just talking about Christmas I mean you know like I had a discussion that I want to ask you in terms of you know like Christmas can fall on different days that mean the sales can be different based on the day right a lot of people don't realize that they would think that Going after Christmas, it should always be like Christmas Eve should have the same sales as, but if Christmas is on a Monday or Christmas is on a Friday, it's different. Absolutely. How do you explain that to customers in the sense of understanding how consumer behavior is different when it comes to that?

Well, if you've been in business for a long time and you've been doing data analytics for a long time, if you've been doing it for at least seven years, then you have data for each of those days of the week. Look at this year. This year, we have a very short Christmas season, right? Thanksgiving was very late. So we really only got less than four weeks in between the two, which is traditionally the buying season versus normally it is five weeks, five and a half weeks that you might have. One of the things that you have to be able to do is to be able to have a variable calendar, to be able to ask data, ask for the data that you're trying to analyze and make sure that you've got the right dates. Not so much the right dates, but the right reference point, right? You need to be able to compare it to a like-for-like scenario. So if Christmas is on a Monday, then I want to be able to compare it to other Christmases that are on Mondays or other holidays that are on Mondays, right? So some things are going to stay the same regardless of what day of the week it is. But there are definitely things that you can notice. First thing is just noticing it, right? Being aware of it. And being that thoughtful and that granular about the way you're thinking about your business. And then if you can have a reference point against a prior experience, then that's great. Now, of course, it takes some time to develop those kinds of reference points. So it's not necessarily good for everyone. But one of the things that we do for our customers is that we want to make sure we're comparing the exact period, not necessarily the exact date on the calendar, right? I mean, Christmas is a little unique because it's on the same day, the same number of day every year. But Thanksgiving moves around, right? It's on different days and different years. And a lot of other holidays, most other holidays are like that. Well, Fourth of July and Christmas fall on the same day every year. Labor Day changes. There's lots of retail issues around Labor Day, Mother's Day. Valentine's Day, well, I guess Valentine's Day is always the 14th as well. So there's another one. So there's three of them there. But all the other ones, they move around. And so being able to make sure that you're getting the data from the relevant reference period is another important part of what you need to do.

And even as you said, you know, I think Black Friday overlaps from the end of Thanksgiving into Christmas shopping, right? You would agree with that, right? Absolutely. And the power of even Friday, it's a U.S. holiday. It's now going into different parts of the world because everybody's doing Black Friday sales now, even in the Caribbean where I'm from. People are doing Black Friday sales. And it just shows that, you know, that brand of Black Friday being the best bargains ever in the entire year promotes that.

Absolutely. In fact, Black Friday is now a month long in some places.

You're right. You're right. Because it's starting to see us even online now. They don't need people to rush to the store anymore. People just picking up those deals. You're right. You're absolutely right.

Now, you know why it's called Black Friday, right?

No, I don't.

Because historically, when it was all bricks and mortar, when everybody had a building, this is before e-com and all that, companies would basically be losing money all year. Retailers would be losing money all year. This is mostly specialty retail, not so much grocers. Grocers are a different thing. But it was on Black Friday, the sales were so great on Black Friday that that was the day that they went from being in the red to being in the black. So from losing money to making money, that was the day that companies became profitable for the year. That's why they call it, I'm in the black, Black Friday.

Thank you for that lesson. I'm going to switch gears a bit and ask about you personally. Sure. Tell me about your family and tell me about your hobbies and interests from a personal perspective.

So I have four children. They're all adults. They're all, like I say, they're off the payroll.

I like that. They're all off the payroll.

So that's what's great. I have one grandchild that within another two weeks here, I'll have my second grandchild coming along. So that's exciting for me. And we live in the Northeast. I live in Massachusetts, and three of my four kids live in Massachusetts and one lives in New York. I'm a lousy golfer, but I do like to play golf on occasion. I see your title is tied on there.

I just started like 10 months ago, so. Oh, did you? Good.

Well, it's a great game. It's all about, you know, golf is about it's a game of inches and it's the five inches between between this year and that year. It's everything that going on in your head. It's great. So I've been playing golf a long time and I'm not getting any better. Let's put it that way. I don't play enough, to be honest. I wish I had the opportunity to play more. I really only play once a week. But I do like that. And I do a lot of reading, you know, reading, people don't read anymore. I read on my phone, of course, and I read online. But I also read a lot of books. I've been reading the, actually, I've read the biographies of the American president starting from George Washington. And I'm now up to Bill Clinton. So reading biographies, I get a lot out of them. I enjoy reading about successful business people and how they built their companies. And I learn a lot from that kind of stuff.

Fabulous. I don't know if you have anything else to share with us, Russ, at this point in time.

Only that, you know, I just want to leave everybody with the view that, you know, facts are our friends. And you can you've got a lot more data at your at your fingertips than you really realize. And that if you're smart, what you'll do is you'll leverage that data to make better decisions every day.

So leave it there. I mean, I really enjoyed this session with you, Rosk. And I think this would help a lot of our customers.

And I would love to have more dialogue with you or anybody in terms of... Well, if you or any of your customers have an interest in learning more about us, you can reach us at AgilentInc.com. And I'm R. Hawkins, H-A-W-K-I-N-S at AgilentInc.com. Feel free to drop me an email and I'll be happy to chat with you.

Fabulous. Don't worry. Your email will be bouncing soon. Yeah. All right. Very good. Thank you so much.

Thank you, Kevin.

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