Podcast: Suppliers who fuel innovation and drive the industry forward, Part 2

Bob Tullio: And that investor said, hey, this AI thing is applicable to more than one space, obviously. And that's certainly proven to be the case. So, when did you actually launch Panoptyc?

Mac Bolak: 2019, early 2019.

Bob Tullio: Any particular obstacle you had to overcome in the process of getting this to market?

Mac Bolak: I think operators just want to see a really good ROI, and that takes time. It takes time to prove the ROI and prove the technology and overcome the skeptics.

For us, once we proved that ROI and got really good case studies around bringing down the theft more than we cost by a significant margin, we were able to overcome that obstacle from on the business side.

Bob Tullio: Bridger Keally is a believer in what Panoptyc is doing.

Bridger Keally: There's really two main features, two main components of what we have.

One is the theft detection. So that's the software that looks for a variety of suspicious behaviors that takes place in markets. And once suspicious behavior occurs, we have a team that goes in and validates those incidents and compiles them into a report that we send the operator so they can communicate issues to their clients easily and in a succinct way. That's the core feature of Panoptyc is.

Bob Tullio: Looking at red flags.

Bridger Keally: Yes, and then the full service, these are validated. We had a team go through and make sure that these were actual instances of theft.

And then we also have the camera systems, the remote viewing, and that's another piece that a lot of operators don't have right now. Being able to check in on their markets for a variety of different reasons. A lot of times clients will reach out and ask, hey, can you take a look at this market? It looks like it needs to be serviced or there's some issue, and being able to pull it up remotely and not having to send somebody out there to a market that might be 45 minutes away just to realize that it was a false alarm. That ends up saving operators a lot of time.

Bob Tullio: Kevin Galaida of Theft Detective is another player in the micro market theft mitigation space.

Kevin Galaida: Right from the start when we first developed Theft Detective, we realized that just setting aside suspicious activity was a big part of it, but there's a lot of activity that still has to be gone through by a human being.

And that's where we came up with the concept of a risk score. Basically, every event that we set aside for the users to view in Theft Detective, it's assigned a risk score based on the type of behavior that we see in that event. Things like the dollar amount of the transaction, the type of alert that it was, the length of the transaction, the amount of screens that are displayed, in what order, things like that. We've always looked at that information to calculate that risk score.

The future of Theft Detective and I think a lot of other software applications out there would be to automate that even further. Use AI to identify patterns that maybe aren't necessarily recognizable to a casual user.

Bob Tullio: Steve Orlando of Fixturelite is a former operator now focused on micro market design and fixtures.

Steve Orlando: We had to decide which sandbox we were going to play in. Were we going to be an operator or a supplier?

The local operators loved our micro markets, but they were afraid to tell us where that micro market was going to be placed since we were also a competitor.

Bob Tullio: So, what turned the tide?

A large customer reached out and said, we want you to build markets for us that have the same features that we see on your markets. And at that point we said, okay, this is now a viable business. This could be big. And we sold the vending company.

Bob Tullio: And the rest is history?

Steve Orlando: I wish it was that simple. It has been a wild ride as every new business tends to be, especially in a new industry.

Bob Tullio: That said, you've managed to achieve 400% growth in one year. That's remarkable. What do you attribute that to?

Steve Orlando: Well, let me say this. I think for all of us in the industry, these are the glory days for micro markets. People are coming back to the workplace. Decision makers are realizing the importance of having an exceptional break room space. And as we've always said, we need to create a place to refresh, recharge, and collaborate.

Bob Tullio: Are you still out there selling the importance of design?

Steve Orlando: I am. And I'd suggest the majority of our operators understand the importance of design. It's our greatest strength and still our focus. Certainly, the most successful ones get it. And that's creating a tremendous opportunity for us.

Our growth has occurred because of our reputation, our experience, the fact that Fixturelite just celebrated our 10-year anniversary, and we just shipped our 10,000th market. That's a pretty big number, Bob.

Fixturelite's legacy is quality and expertise. Seeing spaces come to life after we've created them, and the smiles on the faces of the people that will be using them every day, is really in large part the reward for what we do.

Bob Tullio: Here is consultant Orrin Huebner, who has plenty of good advice for operators.

Orrin Huebner: So, I left Canteen in 21, August of 21, and that honey-do list, you know, it was six weeks and the honey-do list was done and I had a lot of, I felt I had a lot of fuel in the tank. And I missed conversations. It's interesting when people sell their business, they miss the conversation.

What I do is different for every single person, whether you've just started out in the business and you have no idea what's going on, or are you going from $4 or $5 million to that $7 or $8 million [level], and you have to add that second layer of management?

Bob Tullio: What do operators really need to focus on to succeed today? How do you answer that question?

Orrin Huebner: So many different things. First of all, what you have to focus on, in my book, first thing I tell people is run your business like it's for sale. Every single time. Run your business like it's for sale. Think about when you sell your house, and you put a coat of paint on it. And you put, and you get the landscaping fixed. And all of a sudden you look at it and you go, why didn't I do this for me years ago?

Run your business like it's for sale. Same as you would a house. Make sure you're doing things correctly. Make sure your processes are in place. Make sure your financials are good.

Number two, what's your retention rate? Nobody knows the retention rate. A good retention rate is 95% or better. That's a good retention rate. And you will grow your business. Retention, so how do you get to retention?

Communications, how often you see your clients. It's more than pricing, it's the relationships you build.

I always tell them to embrace innovation. Change is good.

Years ago, Elliot Slutsky, Coffee Unlimited here in Chicago, he recently sold, but he was always the first one to market whether it was Keurig, whether it was pods, whether it was bean to cup, Breakmate —I mean, that's how far back we go. But, he was always first to market, and we go, oh man, here he goes again! But we better get into it if we want to be successful.

The other piece I always talk about is training. Invest in training for your people. We don't train our people well enough and because we tell them once, we think they will understand it after one time. It takes somewhere between five and seven times of somebody telling you something before you fully grasp it. Training, training, training, whether it's technicians, route drivers, people in the office anywhere, salespeople. We don't do enough. I think we need to do better in training.

Bob Tullio: Gil Cargill says it's time to use AI for business development.

Great NAMA show, very successful. The place was overflowing. And you probably expected when you went back to your home that the phones would be ringing off the hook. And in fact, it's been kind of challenging for you within this industry, hasn't it?

Gill Cargill: Very much so. It's very unique in my experience, uniquely difficult and challenging in my experience. But the biggest theory I have is that this is so new. And you know, I was reminded of an old cartoon. I don't know if you remember this, but there was a sales cartoon circulating back in the ’70s that illustrated a machine gun salesman standing outside of a medieval king's tent. And in the background was the king's opposing army, the enemy. And the king was saying “I don't have time to talk to a salesman. Doesn't he know I have a war to fight?”

Bob Tullio: I like that.

Gill Cargill: I get the feeling that that is similar to the circumstance many of the operators have they're so busy doing what they're doing.

Bob Tullio: But it's also a very traditional industry convenience services, a very face-to-face, relationship-driven [business]. Do you think that to some extent, maybe AI scares some operators away? Is it a misunderstanding of what AI is all about?

Gill Cargill: Absolutely, it's a misunderstanding. I've been told by several operators, well, I don't want to lose the personal touch with my customer. And the reality is our bots, whether they're called a bot or an Android, don't interfere with a relationship that you already have. What they do is they create relationships that you don't have.

So, depending on how our clients ask us to train the bot, it's absolutely impossible to damage an existing relationship.

Bob Tullio: Jonathan Noori of Royalty Distribution believes that operators are paying too much for paper supplies.

Jonathan Noori: My goal is to level the playing field for the smaller operators to compete against the larger companies in the industry.

Bob Tullio: But you're more than capable of serving the large guys too.

Jonathan Noori: We are able to cover from large to small companies, coast to coast for our diverse product line.

Bob Tullio: Jonathan, how do you plan to level the playing field for operators?

Jonathan Noori: Our number one goal is going to be cost reduction. I'm a firm believer in if you buy right, you can sell right. Also, our product line, our product selection, the diverse product line that we have, will enable operators to buy multiple different categories from one person. You know, reducing the amount of POs, the amount of deliveries, and internally, you know, reducing the amount of overhead to run their operation.

We have many different options when it comes to environmentally friendly products. We also have a cup capable to serve hot and cold beverages, which also helps to reduce the amount of SKUs.

Bob Tullio: Here is Yang Yu of MicroMart, a fast-growing smart market supplier with innovative solutions.

Yang Yu: We were all not from the industry. We're a bunch of engineers with experience building our software companies in the past, but we just saw, I guess, a big opportunity to try to reinvent vending and reinvent food in an unintended self-serve manner. So, we started the company at that time as an operator actually in the beginning. There's a lot of lessons learned from running a self-serve smart cooler operation, scaling it up, and I didn't know what I was getting myself into at that time. It's a lot of complexity and basically a lot of edge cases being an operator.

Coming out of that was an opportunity we saw to really take what we've developed for ourselves.

After looking at all the options, we actually have something that is quite unique. And so, two years ago when we started, how do we scale this instead of scaling up our operation ourselves as an operator, we decided to scale the technology portion, which is why MicroMart was born at that time.

So, this is early 2023. It's really a smart store, right? Because it's a new experience, and consumers don't think of them as a cooler, they think of them as a destination, as a store.

Bob Tullio: Your solution, does it include a cooler that you're manufacturing or sourcing, and you're adding technology to it?

Yang Yu: We decided to do an entire solution to an operator. So, rather than kind of piecing all these things together, most operators just want something plug-and-play. They just want something that makes money and just works, right? We wanted to bring something that is invisible to the consumer, but very easy to use for the operator. And that's not offering technology per se. We wanted to offer an entire solution.

So, the MicroMart solution, to an operator, is literally a smart store that someone can purchase, plug it in, upload their product list, and they can get up and running the next day.

Bob Tullio: Also in the smart market space, here's Mike DeLazzer, the founder of Redbox, who's now with Instant Retail Systems.

Mike as a founder of Redbox, do you own every DVD in existence?

Mike DeLazzer: Personally, I own none. I am really agnostic. I'm a Hollywood hater.

And they hate me too because they blamed our company for destroying their DVD buy-through business, you know, because we came in with a $1 thing. And [customers thought], ‘Why am I buying a $20 movie on their watch when I can rent it for a buck?’ Kind of a mutual hate society there, but it's okay with me. I can live with that.

So initially, we were looking to do retail and come up with like big data stuff because our company is basically a software company. However, we make our own product. So, in our ecosystem, we build software to work in the hardware that we also build. We don't build coolers. We buy the coolers, but the technology that surrounds — that actually makes the coolers smart — is all ours.

Bob Tullio: DeLazzer uses weight-sensor technology and AI.

Mike DeLazzer: So the hardware is to be as simple as I could possibly be. It's like your digital scale at home, but on steroids. So, we can sense down to a pill. So, if you had a box of a bottle of pills and they had 30 pills in it, and if you took one out and say, now it has 29. So extremely sensitive. And behind that is some very, very smart AI that allows us to control things remotely and be accurate.

Bob Tullio: Here is Detlev Goodbloed, formerly with Structural Concepts.

Bob Tullio: You know, I have this quote here, our award-winning autonomous retail merchandiser is now available in an ambient version as well as a satellite merchandiser for unmatched flexibility to create the perfect combination display. What does that mean to a micro market operator?

Detlev Goodbloed: Basically, it means that the flexibility that allows them to design their own customized display configurations to better suit their layouts or customer flow, so maximizing sales potential.

The ambient version expands the type of products that they don't need refrigeration for.

Bob Tullio: Snacks can go in there as well, obviously.

Detlev Goodbloed: Yes, absolutely. And then the satellite version allows operators to double the sales potential while maintaining one user interface. And you can combine temperatures too. So you can say, well, hey, I want a refrigerated unit, but I also want an ambient unit. Or you can just have two refrigerated or two ambient units.

Bob Tullio: We talked to Fred Khan from Kooick.

I'm just going to ask you here, you develop low footprint, scalable plug-and-play solutions with an attractive total cost of ownership.

Fred Khan: Our strategy is to partner with manufacturers of refrigerators and cabinets. We're also working on warmers, and we'd also like to do freezers. You know, smart cooler has a door, you tap, grab and go. But we can also use our solution for other types of applications. For example, we can have a pantry-only type of solution with cameras that are looking at the shelves, monitoring the inventory that's there.

And so we partner with manufacturers and what we have is a reference model design of a shelf that has sensors on it. Those sensors are essentially supplied by third parties. It's off the shelf in the way of a kit. And anybody that has an existing shelving solution can use our kit and adapt their shelving with the hardware that's needed to then plug into our software.

Bob Tullio: Here is Guy Moshe from Shekel.

Okay, so Shekel improves everyday life by providing smart weighing systems capable of recognizing and weighing at high speed and extreme accuracy while collecting valuable data to support customers' needs.

Guy Moshe: So, this means that micro market operators can now offer their great small store shopping experience not only in trust-based location, but in more public locations with Shekel's scale AI security system. Shoppers can take, return products, browse them, look at the ingredients, return them if they don't want [them]. And with Shekel product-aware technology, you can see all that in real time, what they have been charged for, what they took, what they are returning.

So that's from the shopper perspective, but also from an operational standpoint, the operation of this small store is simple and efficient because onboarding new SKUs is super simple and intuitive and fully independent process.

Bob Tullio: Is there a camera element involved or is it strictly a weight element?

Guy Moshe: Strictly weight element. And not only that, we are providing only single weighing platform. And we are recognizing multiple SKUs on the same weighing platform. And we now offer our own end-to-end smart cooler solution. We call it Innovendi Elite.

Bob Tullio: Dean Prather is a Kansas City operator [of Quality Vending & Coffee in Kansas City] who invented Q-Tote, a product that is taking off with micro market operators.

I know you're still having fun. I know you love the business. I saw Dave Marler showing off the Q-Tote at Executive Vending when he was doing a Lightspeed demo, and it really caught my attention. Is this your company? Your baby? Is it a Quality project? Tell me about it.

Dean Prather: So, it started off as a Quality Vending project. Again, Dave Marler was actually in our warehouse, and we had recognized that using the bottler's trays to pre-kit soda out of was fine. You know, they worked. Hey, you got this tray, put your product in there.

But, anybody knows that the pre-kitting soda — when you're blending those trays — you have to put the tallest product on four outside corners. Otherwise, you can't stack those trays. So, we kept looking at ways that we could improve this, and we built a prototype that basically was tall enough. Drinks that went inside that tray could be at various heights, but the tray stacked on top of itself without touching those products.

When you're pre-kitting, you're picking products typically either for a market, a glass-front soda, even a stacker, traditional stacker machine — you're gonna have various products. You're not necessarily going to pre-kit by the case. You may not have full cases. If you have five or six of one item and five or six of a different item, those items, as we all know — the Pepsi bottle, the 7-Up bottle, the Coke bottle, the 12-ounce can, the 16-ounce Monster can, the seltzer waters — are all various sizes, right? Juice bottles are different heights, different widths.

The Q-Tote allows you to pick all of those various products, regardless of size, shape or flavor, and put them into a tote that is able to stack on top of each other with [the tote] eever having to touch the product.

And then, once it's empty, you turn it 180 and it seats down inside itself. So, it takes up minimal room in your warehouse and in your van. They're vented so that if — we never have this, right? — if a product were to break and you get soda or juice or Monster drink all over the inside of your tote, you can rinse them off and they dry out real quickly. That makes them a little lighter so that they're easier to handle.

The Q-Tote has a similar concept design that a 20-oz plastic tray for the bottlers has. And, that's our goal is to keep it at around 24 units, around 20-ish pounds at max, so that you're making it acceptable for the driver — a weight that they can handle. And you can see it — you can actually see inside of it so you understand what you're pulling on and what you're dealing with.