smartShelf™ Proof of Concept Results
Introduction
newave® conducted a smartShelf™ (SS) proof of concept (POC) in 6 stores over 4 months. The SS System was Generation 5, which benefitted from the learning from the previous, rigorous, in-store tests in varied product categories.
Proof of Concept (POC) Details
- Tobacco Category
- Convenience stores generally open 24/7 in Toronto, Canada
- Cigarette sections were 16 ft. in length, with approximately 250 SKUs.
- Store installations were completed in August, and the POC ran September through December.
- On-site store audits were completed frequently to verify SS accuracy.
- In October, SS Instant Low Stock Alert Training was completed with in-store personnel.
- The following pages display the key POC learnings. These findngs are consistent with previous SS pilot test results.
- The Category SKUs were sorted by the total unit sales and then separated into five cohorts of equal size (approximately 50 SKUs per cohorts).
Improvements in Out-of-Stock (OOS) Occurrences
| The Top 20% of SKUs led the way with a 56% reduction in OOS Occurrences. | ||
| Category OOS Occurrences were reduced by nearly 50% by month 4. | ||
| Training and OOS visibilty resulted in the most significant reductions in mos. 3 and 4. | ||
Improvements in Out-of-Stock (OOS) Time
| smartShelf™ (SS) reduced OOS hours for the Top 20% of SKUs by 74% in only 4 months. | |
| Following SS Instant Low Stock Alert Training, OOS hours decreased by nearly half in each mos. 3 then 4. | |
| The overall category improved by nearly 71%. | |
Share of Shelf
| The Top 20% of SKUs generated over 64% of the total sales, but was allocated only 35% of the shelf. | |
| The Top 40% of SKUs generated 81% of the total sales, but was allocated only 58% of the shelf. | |
| The Bottom 40% of SKUs generated only 8% of the total sales, but was allocated 23% of the shelf. | |
| SKU rationalization and planogram optimization is needed to improve sales and in-store productivity. |
Note: Due to rounding, sum of percents may not equal 100%.
Lost Sales and Profit Due to OOS
| Cohort | $ Sales at $10 per Unit | $ Sales Lost at $10 per Unit | $ Profit Lost at $1.50 per Unit |
|---|---|---|---|
| Top 20% | $1,165,860 | ($62,188) | ($9,328) |
| Middle Top 20% | $316,994 | ($53,770) | ($8,065) |
| Middle 20% | $184,206 | ($46,661) | ($6,999) |
| Middle Bottom 20% | $104,033 | ($28,805) | ($4,321) |
| Bottom 20% | $32,128 | ($11,176) | ($1,676) |
| Total SKUs | $1,803,220 | ($202,600) | ($30,390) |
| With 11% lost sales and profit, improvement can continue well beyond Month 4. | ||
| The Top 20% of SKUs continue to offer the greatest opportunity for increased sales and profitability. | ||
smartShelf™ can generate continual incremental sales and profit.
- Annual planogram optimization
- Immediate assessment of new product introductions and promotional programs
- Supply chain optimization, e.g. replenishment, production efficiencies, and more
smartShelf™ (SS) POC Findings
- Audits proved that the syndicated data employed significantly understated out-of-stock.
- smartShelf™ calculated, in real time, category inventory at 99%+ accuracy by store, by SKU and for any desired timeframe, down to the second if needed.
- SS data can be integrated into an ERP system or into reports formatted by the client in any form and frequency (CSV, HTTP, JSON).
- SS provided visibility by function for managerial analysis (e.g. sales, marketing, finance, production).
- POC benchmark metric results: the Payback Period was between 7-8 months, IRR of over 200%.
smartShelf Return on Investment
| Category | Actual Data Tobacco Category | Avg. Vol. Avg. Profit Avg. OOS | Lower Vol. Avg. Profit High OOS | Low Vol. Good Profit Avg. OOS |
|---|---|---|---|---|
| Unit Sales per month per store | 8,332 | 5,000 | 3,500 | 2,500 |
| OOS Units per month per store | 2214 | 600 | 525 | 250 |
| OOS % | 27% | 12% | 15% | 10.0% |
| % of OOS Units recaptured | 85% | 85% | 85% | 90.0% |
| Profit per Unit | $1.50 | $2.00 | $2.75 | $4.25 |
| Potential $ Savings per Month @ 95% OOS efficiency within 2-3 month start up | $2,822.85 | $1,020.00 | $1,227.19 | $956.25 |
| $ Investment per store - 16 Ft Section | $9,500.00 | $9,500.00 | $9,500.00 | $9,500.00 |
| Payback Period in months | 6 | 12 | 10 | 12 |
| Sales per Linear Foot Per Day | 3 | 2 | 1 | 1 |
If you can push it, smartShelf™ can track it!
Let us show you the value of SS to your business.
A simple spreadsheet model is available to instantly estimate the smartShelf™ ROI, IRR and payback period.
Three inputs are needed:
- Average Unit sales per month
- Average OOS %
- $ profit per unit