smartShelf™ Proof of Concept Results
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|
|Middle Top 20%||$316,994||($53,770)||($8,065)|
|Middle Bottom 20%||$104,033||($28,805)||($4,321)|
|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
|Unit Sales per month per store||8,332||5,000||3,500||2,500|
|OOS Units per month per store||2214||600||525||250|
|% 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