Have you ever wondered why the products you see on supermarket shelves do the jobs that they do, and how retailers manage their stock levels? It is the science of shelf management and technology is playing an increasingly important role in this regard.
Following this year’s Fifa World Cup in Russia, Coca-Cola Hellenic Bottling Company (CCH), a leading bottling partner for the global drinks brand, has reported a 6.4% jump in turnover for the first half of 2018.
The football competition, the warm weather and the launch of new products helped boost sales, the company said, but the new technology has also helped, in the form of sophisticated image recognition and data analysis.
CCH established a new system operated by an enterprise of technology-Trax that scanned previously manual record of the process.
When you have 200 000 retail customers through a geographically vast country like Russia, relying on pen and paper, the records of stock that had to then be entered into the computer was hardly ideal. It has led to delays in the replenishment of the empty shelves, which is not good for business.
Out of stock costs retailers more than $634bn (£494bn) a year in lost sales, according to a report by retail analyst IHL Group.
And with the summer of the World Cup attracts 4.5 million visitors, “it was very important that we get the right actions in place,” said Aleksandr Makarov, the project manager for the SAC of Russia.
The implementation of the Trax system has resulted in a 63% reduction in “out-of-stock” occurrences, and the verification of the time that is spent from 20 minutes to a minute or two, said Mr. Makarov.
“We have achieved 99.5% availability of the products in the store three hours before the start of the games.”
So how exactly does CHC achieve this?
Using the shelf-mounted cameras and augmented reality on smartphones and tablets, the Trax’s image recognition system to track all products on open shelves and in the coolers, to understand how they differ in size, shape and color.
A “panoramic stitching engine all parts in-store images to re-create the full tray, while the analysis software identifies each product. The supermarket is immediately alerted if the marks are out of place or missing from the shelves.
But, as Trax ceo Joel Bar-El, explains: “many products look similar, but are of different sizes, such as carbonated drinks, for example. So we have created an additional layer, the understanding of the layout of the store and the price that we will help to determine the likely size of the product.”
The firm is the identification of 250 million products per month and provide real-time data to 170 retailers and brand manufacturers around the world, ” says Bar-El.
As bricks and mortar retailers face the growing challenge of online, a number of technology companies are emerging offering digital inventory management and data analytics services for retailers – Planorama, TransVoyant and MetaMind, to name a few. Tea science
Supermarkets designing of planograms – charts – tens of thousands of marks should go on shelves or in refrigerators and freezers. This allows store workers to put things in the right place, because when it comes to food retail, the position of the questions.
Generally speaking, the high-end products go on the top shelves, the cheaper items on the bottom shelves, leaving middle shelves for the best-selling mid-range products.
According to the consumers ‘ association Which?, it is this “sandwich ” effect” that makes the cost-effective mid-shelf items seem more appealing. Intelligent packaging can subtly suggest that less expensive brands, they are placed near the top of the range brand, are just as good.
Brands pay handsomely for the right to occupy the best shelf positions, so they want to ensure that the retailers are doing what they promised to do so. Sometimes, they do not, whether by human error or poor planning. If the real-time monitoring allows you to resolve this.
And they also want to ensure that there are enough of their product in stock so there is not a yawning gap on the shelf for a very long time.
“The retailers are out of stock of approximately 8% to 12% of the time at the moment,” said Mr. Bar-El, “but systems like ours can bring it down to 3% or 4%.
“We are on alert immediately. It normally takes three to four hours to replenish the shelves today, but we have reduced that to 20 minutes in many cases,” he claims.
Toby Pickard, head of insight and innovation, and futures at retail analysts IGD, said the use of technology to ensure the management of inventory becomes crucial for businesses.
“As more and more retailers match the prices and the range, excellent in-store service and product availability will become increasingly important in terms of allowing retailers to stand out from the crowd and drive traffic to their stores,” he says.
But, as Patrick O’brien, UK retail director of research at GlobalData, said, “this is not exactly rocket science”.
“The existing technology and the workshop staff should be able to maintain shelf stock, so it boils down to whether or not these providers can demonstrate a return on investment,” he said.
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Data analysis also reveals what is really going on. And some of the results are surprising.
For example, a pet food maker is assumed to have its product placed next to its main competitor wouldn’t be good for sales. But it has been. Why?
“We are not bothered by explaining why, we’re just following the data”, explains Mr. Bar-El. “This would be on the color, the brain of the psychology, but we do not know. Our conclusions are based on evidence.”
Online grocery shopping is growing rapidly, with IGD forecasting that 48% of the sales growth in the UK by 2022, 286% growth in China, and 129% growth in the united states during the same period.
This will not be a threat to in-store tech providers?
“There is no question that online grocery shopping will continue to grow and will undoubtedly become one of the main lines of retailers and brands,” says Mr. Bar-El.
“But this increase in online sales is far from being the end of brick-and-mortar stores. Online presents us with a much greater understanding of the behaviour of the customer… the amount of data and information that can be generated will help to improve the customer experience, sales and overall understanding of all aspects of the business.”
It envisages a hybrid world, a mixture of virtual and physical, as evidenced by Amazon brick-and-mortar Amazon Go to the stores and Alibaba “retail sales”, a concept that aims to combine the convenience of online ordering and home delivery with the pleasure of shopping in stores and eating.
“The future of retailing is all about data, and the companies of the future are those who learn to use it on all platforms, both digital and physical,” he concludes.
So, the next time you casually throw away that fizzy drink from the supermarket, consider the science behind your decision.Follow the Company’s Technology editor Matthew Wall on Twitter and Facebook
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