Retail Collection – Episode 5: itsu [grocery]: driving growth through innovation

[MUSIC PLAYING] Hi, everyone, and welcome to the Retail Collection. It's a podcast series from Charles Russell Speechleys where the worlds of retail, fashion, and food and beverage come alive through candid conversations. [MUSIC PLAYING] Each episode, we sit down with industry experts and insiders to discuss their work, the challenges they face, and the wins they celebrate. In this ever-evolving retail landscape. My name is Nick White. I'm a partner in the firm, and I'm joined by my co-conspirator and senior associate on the Intellectional Property team with me, Olivia Gray. Hi, Olivia, how are you? Well, thank you, Nick. I like to be a co-conspirator like that. So let's get to it. So today's guest hails from Itsy Grocery. And the Itsy story, probably very familiar to many of you, but goes way back to 1997 when founder Julian Metcalfe returned inspired from Japan and opened his first Itsy restaurant in Chelsea. And the brand has been blazing a colorful and healthy Asian style trail ever since. So Mr. Aiden Tires, joint managing director of Itsy Grocery, amazing to have you on. How are you? Nicky Nick, good to be here. Wonderful. So I think, Olivia, do you want to kick us off with some questions? Yes, absolutely. So Aiden, could you maybe start by telling us about how you got into the F&B industry and into the role that you have today? Yeah, sure. I mean, it certainly wasn't planned. I studied geography at Manchester University, partially because that's why I was good at. And partially because I didn't know what I wanted to do following universities. So on graduation, I applied to probably well over 20 graduate schemes in everything from surveying to MI5 to F&B bridge. And you can probably guess that I'm not a spy, by the fact that I'm here on this podcast. But I applied to the Nestle graduate scheme. I didn't actually get onto the scheme itself, but it was offered a direct entry role into a demand planning position. So demand planning six within supply chain functions and forecasts how much volume we think they're going to sell at any point in time and out up to about 18 months. During my time at Nestle, I was there for just over six years. I kind of worked up through the supply chain function into procurement, buying things like quality street wrappers or flavors for particular products back into forecasting for the confectionery division at the time. And I learned a huge amount from being in a large bleaching organization that has quite a significant budget to spend on training and developing staff. But one of the things that I really got from that was they also really trusted their team. And as a relatively young employee, it was given quite a lot of experience. I remember there was a point in time where KitKat had run out of foil. And I was one of the people that was tasked with trying to get us back into stock to avoid a what would have no doubt been a catastrophe for the nation. That was definitely an enjoyable moment. And also very stressful, of course. So yeah, so that was my kind of early years in feeding beverage. And then I guess, only six years at Nestle, I moved across into Itsu. And it was an interesting point in time. We were very-- so Itsu Graderie, specifically, where they were part of what was called Metcars. So you company at the time, which is where Julian had kicked off the craze that we saw for a number of years. And still is here in popcorn and eating popcorn, as if it was a snack. But at that point in time, I joined. We were demurging and setting off the popcorn part of the business and really focusing on growing Itsu in the seed markets. It's probably worthwhile me touching on the difference between Itsu Graderie and Itsu. Itsu Graderie are part of the business that sells products to seed markets. So everything from phrase and to chill, to ambience, a noodle cup, to sprays and geyser, those kind of items. And obviously, the restaurants are well known for being that sushi offering at lunchtime for office workers across the country now. I'm initially in London, but very much so nationwide with stores in Scotland, Manchester Leeds, Bristol and Tom. In terms of my journey back up to where I am at the moment, I joined Itsu in operations managing technical supply chain and then moved on into development eventually and then up into this decision when our CEO went on maternity leave a couple of years ago. So it's been an interesting journey and probably quite an unusual journey to this level. I think a lot of MDs tend to come from a marketing sales finance background that I think coming from operations background allows me to have a very different perspective. And as you've guessed from the title of Join MD, I am joined MD with my counterpart, who is from a sales background. So together we kind of quite nicely counterbalance each other's knowledge and to make sure that we're pointing the business in the right direction. Very good. I feel like I can't let your boil story go unfinished. How did you, how did you go about securing foil? Was it for Nestle for Kit Kat? It was certainly a panic situation. I think essentially the supplier actually went into administration so it was very much unforecasted for and through working with our European buyers and local buying teams. We identified alternative suppliers. I think there was a point in time where a couple of members of our supply chain had to go into the old suppliers trying to get their remnants of the foil that were left in terms of that had been produced that hadn't been shipped and to keep us tied over. But luckily we managed to keep supply going, managed to collect the stock and got through it. But yeah, it was a tight one for sure and learn a huge amount from it. And like I said, I think it was very much a reflection on them to give responsibility to their staff and trust them to resolve it rather than walk and often be the case of more senior people taking control of situations and I learned a huge amount from that and was very grateful for that opportunity. Yeah, fantastic. Thanks for that. So at the moment with your role as it is, what are the biggest issues on your plate right now? There's obviously a huge amount going on in the world and how does that sort of end up with you and your role? Absolutely. I say like in terms of the big issue. So I mean, if we look at what's in the news articles at the moment, the geopolitical tensions, particularly in the Middle East, certainly impacted us across the whole of last year. We ship a huge amount of stock from Asia and the route it takes is through the series Canal and with what was going on in Yemen, our ships were having to go by itself Africa essentially. So it has about two weeks on to the lead time. You end up with lots of blockages of poor because everything ends up arriving at the same time which then has an impact on stock and servicing our customers. So luckily we've got a great supply chain team who are managing our stock through a dynamic process of looking at our wheat's cover. So we managed to avoid some of the issues but it's certainly taking a huge cost impact to us over the last year because the containers and the ships are having to go for two weeks longer which means they're burning a lot more fuel as a result and that kind of flows through to costing us. So yeah, that was certainly something that was really top of our agenda last year. It seems to have resolved a little bit in terms of the cost as the shipping line has been able to forecast for it but that's certainly something that impacts us and with our global supply chain, it's something that we have to keep close to to energy of political items. Something that's always kind of there as well is then innovation and making sure that our innovation sticks and works well. And we've got a really, really good track record luckily for it. So we launched suit dumplings a few months ago and it went viral on TikTok. I think the last count was we had 21 million views on some of our videos, which is fantastic. And just making sure that we're ahead of trends or creating the trends sometimes as well that is really fundamental to our ongoing growth. So that's something that's always a focused thrust. And then I guess as you know, over the last sort of five years so carbon for prints and ESG are always very high on both consumer agendas but also at a personal level and across our employees as well. So that's something we always had to look at and focus on. We've made some really great strides in terms of reducing packaging, reducing the amount of plastic we use but also starting to take the first step into mapping our supply chains from the carbon angle and then taking actions to try and reduce our impact. So. - And I was interested in what you were saying about sort of the delays in sort of getting products and ingredients through the supply chain. I mean, I imagine that sort of having fresh, you know, really fresh ingredients is probably more of an issue for the restaurant business potentially but you know, you will still need sort of fresh ingredients for your products. So if you've found that that was a challenge as well to just like stuff that's just stuck in transit or at a sort of, at a relative sort of shelf lives of the ingredients fairly robust. - Yeah, so I guess in terms of our business, shape about 70, 75% of our business is ambient frozen which means shelf life of lowest in ambient would be sort of nine months but that stocks coming from Europe so more manageable and some other frozen lines can be up to 18 months to years. So with a two week delay or three week delay in shipping it really doesn't influence our shelf life that we can give to customers too much. But we do have a chilled supply chain and increasingly growing so we've just launched a range of dragon rolls which are part sushi into some of our retailers and they have a very short shelf life but again, the supply chain matches that so it's a UK-based supply chain so it's more than manageable from that side of things. And yes, so what is it that keeps you up at night that we all have our concerns with our work? - I think anyone that works in the feed industry, the first thing that they will say is feed safety and quality is always the top priority. I and our management team will read through every single complaint and praise comment that comes through about our product. It's so important to keep close to what's going on with our consumers, what they're thinking and it's also the first part of call for if there's an issue that's emerging. Our consumers will tend to let us know so we can really work on it quickly. So yeah, feed safety quality is always top priority something that I, that certainly keeps you up at night sometimes and something that I stay very close to as far as the rest of the team. But then again, linking to what I said, I think as a business, we are very innovation-focused. We launched, I think, over 25 new products to market last year and therefore there's a lot of risk that goes alongside the project and make sure the projects are running to time. So there's always some kind of stress related to that whether it's an artwork that's wrong or the product doesn't taste quite like you wanted it to and you're having to go through more trials before you progress to launch. We need to keep our retailers happy. And we have to meet certain deadlines so we need to make sure the project is running effectively on those kind of things. So yeah, we're very innovation-led and that part is safe, fundamental, and that's something that really is a massive focus for us. - Absolutely fascinating. I love the idea of reading all the comments that come in and really keeping your ear to the ground. In terms about sort of thinking ahead, what's, what's keep you occupied for the coming year? What are the things you're already focusing on? - Yeah, so we've, we've got a really successful range of noodle cups. They were the first range of, in that fixture to really premiumize noodle cups. Up until then it had been very much that kind of powdered noodle cup that you remember from when you were a student or when you're a teenager and you're making a quick easy meal, what we want to do is elevate it and we use this incredible miso paste, which we add spices and herbs to create different flavors. It comes from Japan to a really high quality product and there's so many health benefits that are related to miso and the rice noodles that we put them with. So what we're doing on that range is redeveloping it, adding more flavor to it and really seeking to further elevate it again for the future. So that'll be launching at the back end of this year. So the team are working really hard on that. And we see that as a really important lever for our future growth globally as well. It's a really good product that could take us much further than we currently are. So yeah, that's definitely one focus area. Second bit is one around, we did some studies a few months ago and realized that our consumers aren't buying enough of our ranges, we'd like them to. So we realized that actually, I think it's something like 80% of our consumers are only buying one of our ranges. When in fact we have multiple ranges, we have over 130 skews. So we've got a lot of products out there but they're only buying into one part of our product ranges. Say one of the challenges for our marketing team is saying to our consumers, by the way, we have all of these other ranges that you could be buying into, you're an ITC consumer, you clearly like our products. Hopefully there's some other products that we sell that you could be interested in. And we're in probably quite a unique position when it comes to food and beverage that we do offer all of the required components to make a full meal at home in the evening. That's healthy, nutritious and really accessible as well. And fundamentally tastes really, really good. And so one of the focus areas is around ramen and how we can own ramen. We've got an incredible broth product that you can find in the stir fry aisles of seed markets, which we sell alongside noodles, geota, and you've got the basis of an incredible ramen that you can make at home for a fraction of the price that you'd spend on buying it outside at restaurants. So it's how we can make sure that consumers are thinking about us. It's not just a single product, but as a range of products that can become a weeknight regular for them. So where they used to making their stir fry or their fish and chips, we want there to be an ITC ramen as part of their weekly shopping base, I think. So that's a really interesting one. And finally, I think, chilled, as I touched on, we've launched drag rolls and sushi in such a supermarket. And that's going to be a real focus for this year, again, is how do we drive that out further? We've got a really good product, and we think that there's more people that could be buying it. So it's in one of the meal deals at the moment, and we'd like to roll it out further to say, how do we add in those doors and make that happen? It sounds very busy, but also quite delicious. Aden, sort of obligatory lawyer question, as you might expect. Tell us something you may maybe you've seen, or you've heard of a lawyer doing that's either really impressed you, or delighted you, or on the other hand, really annoyed, or disappointed you. Hopefully not in relation to us. But yes, it's something on either sides that-- because I'm sure you have to engage with lawyers fairly often when you're running a business. So, yeah, we'd be really interested in that. So I think one of the main ways we interact with lawyers is around contracts, but also protecting and making sure that we're doing the right things for our brand. I think for me, when I deal with lawyers, there's two key things that make a good lawyer stand out to me, which is the classic one about being able to translate law into layman's speech and make it understandable for people who don't know the detail around law. So helping us with clear, proposed actions and making sure that we're able to communicate that effectively to whoever we're dealing with is really fundamental. And then being able to give a balanced viewpoint on risk versus real-world application, and how do you make that decision effectively without taking on-- you sometimes you have to take on a level of risk to make the right decision for the real-world, and it's like, how do you walk that tightrope? And getting a new price from lawyers to do that effectively is really important. So I think there's an example of where one of our suppliers went into administration the other year, and we've got some really good advice as to what the risks are in terms of how to approach dealing with the administrators and things of that. And then going back to my first point around converting into layman's speech there's some work we actually do with yourselves around protecting our brand from people who are copying it and how we effectively do that in a way that makes sense. So yeah, I think those are the two key things I look for. And that's what makes any good lawyer stand out to me is the ability to deal those two things effectively. So that risk point is really interesting, because lawyers and law firms have their sort of insurance policies to think about, and it's all too easy for a lawyer to kind of just take the most risk of us line and just say, if you don't want any risk, you need to do this. But running a business is completely different to that, isn't it? It's about taking calculated risks all the time because otherwise you're really not going to get anywhere. So that, yeah, it's always been, and I'm sure, will remain a sort of challenge for lawyers to put themselves in the client's shoes and kind of explain, there is some risk associated with this, but it might still remain a sort of a sensible commercial decision to do that thing. And you're quite right about that calculated risk piece because business is around that calculation and taking that gamble, and we do it on products day in and day out. And hopefully, I mean, like I said earlier, it's going well in terms of our longer term growth has been roughly 30% year and year for the last 10 years. And we're continuing that going forward. So the only way we can do that is by taking those risks, and like I say, law is part of that the way we work, and we will always be compliant. But it's then understanding how you can work with your lawyers to get to a good position, say. Be good. So, yeah, you mentioned a couple of things that they're that sort of touch on your brand, basically, and what it stands for. So we had a question for you around other brands. They could be F and B brands, or they might be brands in completely unrelated. The brands or businesses out there that you kind of really admire and respect, or whose products or services you sort of use all the time, yeah, interested in your thoughts on that. In the feed and beverage space, one brand that stood out in terms of those last few years, which is fuel. I think they've done an incredible job of challenging what the norm of food is. And they've gone into the market that would probably be ignored by traditional feed and beverage companies, because it may not be fully considered as do. But they're actually saying, well, what's the basis of feed and it's nutrition, but also ensuring that they're focusing on health, and health is something that we really focus on as well. Health is fundamental to it and how we differentiate from our competitors. So when I look at what you all are doing, and they're taking a slightly different angle on it, but it gives me a lot of insight from doing that. And likewise, we take our angle on it, which is around nutrition and making sure that we're full of vegetables and trying to remove unnecessary ingredients where possible. So there's obviously a huge focus on ultra-process feeds at the moment, and we're trying to take a really-- and we have always trying to take a step on where we don't need an ingredient in it, it's taken out. And again, you could apply that to what you all are doing in a different way, which is saying they're very focused on the numbers and the figures that come out and how they nutrition the balance, what they're doing. So it's very interesting. I think they've done a fantastic job on their branding as well, and the engagement that they've got from their consumers. So certainly, things that we can take from that. And I think the other one I've got, which is a bit lack of people, and certainly not very cool, by any means, is very liquid. I always bought into them. And I kind of realized that they kind of play a role that a brand should play, which is around making sure that they are genuinely better than the competitors or the own label offerings. And they have innovated to stay relevant through dishwasher tablets and the likes. But I think they stand out as a brand that's got that history. But actually, genuinely, does what a brand should do. And again, that inspires us in the way or in spot me, certainly. And I can see it in terms of how we've approached it with our products as well. We sometimes go through-- so when we were developing our chicken geos, or which is our best selling product, we genuinely were in the kitchen for week after week after week. And we went through about 80 different samples before we landed on a recipe. And I think it's that care and craft and that attention to the detail which sets a brand apart from other brands or own-nable products is, if you're doing it correctly, you should have something that you can be really proud of that will stand the test of time. And that was something I think we've certainly been able to achieve over the last few years with some of our products, but very liquid have done it for probably hundreds of the years as well. So definitely have a lot of respect for the very liquid, which is probably a bit of an unusual one. Yeah, no, I like that. Yeah, definitely wasn't expecting that. And yeah, I still get that jingle. But it's really going to age me, but the sort of-- I'm not going to try and sing it, because that will-- everyone's ears will bleed. But mild green, fairy liquid, jingle-- do you remember that one? Just sort of stuck in my head, as you mentioned, fairy liquid. After people listening, I'm not going to have a clue of what I'm talking about. But yeah, that just-- that makes me think of fairy liquid. But aid is now thinking, shall we create it, so jingle? Maybe we should. I'll pitch it to the brand team after that. Very good. And then the heel one is interesting, because the branding is quite black and white, isn't it? So it's quite stripped down and simple. And for a sort of-- and that contrast, actually, quite a lot with you guys, which I think of as-- yeah, you do have quite a lot of white, so that's pure, pure enough. But there's a load of color in what you do. And you've got your signature pink color. It's a really interesting one, actually. But with our brand, I think in the supermarkets, we do stand out because we have a level of simplicity. And let you say, white is a really fundamental part of how we present our products. But on the flip side, we have a huge amount of color in our butterfly logo in the pink that we use throughout our ranges, and which is really important. But we also use color as that key differentiator for our consumers on shelf. As you'll see across a lot of our ranges, we have certain brand colors that we use time and again, which link the consumer to the product type, so it'd be a variant like chicken. We use orange across our phrase and range. But yeah, it's interesting. I think having that stand out through simplicity is certainly something that I feel like when Julian created the brand was really fundamental to how he approached it. And we've seen a lot of other brands come into that type of space and utilise, and yeah, pure a prime example of that. And they've got huge stand out because of it. It gives that clarity. And I guess you've got your butterfly logo as well, don't you, which sort of accept on that sort of likeness idea and really sort of chimes with what the rest of the brand stands for? Definitely. It links into the beautiful concept of products being healthy, light, nutritious, but also really tasty. And it tries to hit the whole thing. So the butterfly represents that in kind of a pictorial format, which is really fundamental to our brand. A lot of new stuff. So we've got-- it's not an easy question necessarily, but so this is one-- I don't know if you know Tim Ferriss, the sort of well-known podcaster. But one of the questions he asks his guests is if you could have a billboard up in, say, pick it at least, circus with a message to send to the world, what would you say on it? I had heard of Tim Ferriss, but I hadn't listened to his podcast. So when you mentioned this to me the other day, I did actually have to put into the chat GVC to give me an idea of what kind of answers are normally given to this. And there are other AI providers, of course. So I realize it's around something that is that kind of statement of that you can pass on to other people in terms of what I've learned. I think the key thing that I kind of try and live to is about be flexible. I think it plays out in a number of ways for me, which is around being open to change, and that links into both a business side, where as a business like I've touched on, we move quickly, we innovate, we try and bring new products to market and listen to what the trends are and never stuck in our ways. And we're very much a company that tries to keep hold of our startup mentality, whilst recognizing that we are a bigger business now. But that startup mentality is really important to how we operate. So being open to change, I think with that flexibility has, it is also linked to resilience. And resilience is really important, especially in a world like it is at the moment where things are moving all the time and you need to be, you need to have inbuilt resilience to be able to adapt to that. And I also think being flexible, so fundamentally makes life much more enjoyable. If you are open to new experiences and new way to working or new opportunities where you can run a tasting different food or whatever else, makes life much more colorful, much more enjoyable. I think I sort of start the other day that one in six people have the same lunch every day. And that kind of always blows your mind a little bit. But I think that kind of sums up that it's so many opportunities for new things out there and new experiences that by being flexible, I think it kind of definitely opens the doors to that and makes your life much more enjoyable. What's the only has in my case? - Yeah, so embrace variety and be flexible. I like it. I like it. - I know, I thought awful, because I'm one of those people eats the same lunch every day. Dave, you're inspired me to change. - I guess it's one less thing to think about, isn't it, when you go in to get your sandwich or your itsy, for sure. - Sadly, that's all we have time for today, but it's just nice for me to say a huge thank you to Aiden for some fascinating insights, your candor, and a really interesting session, including what about foil. It's been a real pleasure talking with you, so thank you very much. - Right, thanks for having me, Olivia and Nick. It's been great to have a chat with you both, and look forward to speaking to you soon.