HERE’S HOW WE HELPED ONE RETAILER MAKE R3,3M IN EXTRA SALES

Hendrik Bredenkamp, MD of NEC XON Retail

When we did a proof of concept (POC) for a retailer we didn’t expect to find anything beyond the usual benefits of installing electronic shelf labels (ESL).

Hendrik Bredenkamp, MD of NEC XON Retail

We’ve delivered ESL into hundreds of stores throughout Southern Africa. They make it quick to update prices automatically, eliminating manual labour, paper tags, and incorrect prices.

The ROI is well established. We were quite sure the POC on 5,000 products for the new customer would demonstrate the customary benefits. Which is why we were surprised when the ESL project showed us how we can help them reduce the ROI from six years down to just three.

The customer spends R568,000 a year managing paper labels in one of its stores. The POC, however, revealed that 6% have the wrong description, 20% the wrong price, 7% are missing the label or pricing, and 320 of 4,000 are without a label at all. That’s not particularly unusual in a typical retail environment.

Challenges

In all, we found that 930 of the 5,000 products had problems. The result was that customers weren’t easily able to buy as much as 14% of the store’s products. All of this right after a stock take.

There were the usual reasons, such as products that had been mistakenly moved, others moved to secure offices to dissuade shoplifting valuable items, some not ordered, some ordered but no stock availability – again, nothing unusual.

But we quickly realised that store managers and floor workers were having a hard time matching stock on shelves with stock in the back room and stock at the distribution centre (DC), against rates of sale, volumes of sale, high-ticket items, and more.

We ran those different stock lists through the database but, because the shelf-edge labels are larger graphic displays, they can show us a lot of information, in less than a second from the query. They also flash to draw attention so it’s quick and easy to see which products are affected.

We immediately saw that some items were available in the back room or the DC but weren’t on the shelves. When we dug into it by interrogating rates of sale and matching that data, we saw that there some faster moving items that would routinely go out of stock.

Bankable Benefits

Overall, we helped the customer improve sales by 10% by fixing the 17% of products that experienced delayed ordering, the 8% that had negative stock on hand values. It worked out at nearly R50,000 of sales a week. Drawing attention to promotional offers, without the challenges associated with paper warblers, added another 5%. In total, it worked out just over R3,3 million a year.

Problem Solved

Because the system isn’t normal RF, it uses near infra-red, it’s fast, which means we can query and get a response back at the shelf edge in less than a second. It also doesn’t suffer interference from Wi-Fi and other typical signals. It sends information both ways so you can send prices down to the shelf or update information in the computer system.

The large graphical displays not only share more information with customers that makes shopping easy and pleasant. They also feed more data back to store managers and floor workers. Plus, they come in a range of colours and flash in a range of colours. That’s good for click and collect, picking and packing, and even enables competitive new customer experiences.

ESL used to be a solution that paid dividends over time. Now they pay more dividends, in half the time. Reliable stock management means you provide quality customer experiences. But it’s also good for GP and connecting stores to online commerce.

About NEC XON

NEC XON has provided custom ICT and related integration services since 1996 for government, telcos, mobile operators, network service providers, and enterprise organisations throughout Africa. The business’s four clusters: Communications, Infrastructure, Safety, and Digital Solutions, contain 10 integrated business units that help customers transform their operations through computer, networking, security, energy, surveillance, analytics, infrastructure, platforms, and digital solutions. It provides comprehensive managed services, project management, professional services, maintenance, and support.