The main goal of the existence and development of any commercial company is to increase profits and reduce operating costs. For the business that sells goods through retail chains, an increase in profits and turnover correlate with the provision stability of the target audience with the company’s products. While their amount in free sale in supermarkets or own stores must correspond to the demand of the end consumer.
The increase in market shares of chain stores among the sales points for retail customers stimulates suppliers and manufacturers to solve many issues. Particularly, analyzing consumer demand, expanding the assortment matrix, while maintaining the required stock of marginal goods in demand.
Multiple stages of the supply chain of retail points and failures at each of them often increase in the risks of insufficient volume, late delivery to the chain, or display of goods on the shelves of commercial equipment. The key reasons for the downtime of shelves in stores are delays in detecting or informing about reaching the minimum stock level, imperfect supply systems, problems in logistics, lack of analysis and forecasting of the growth of customer demand.
According to the survey, in case the necessary product is not on the shelf, the actions of buyers will be the following:
- they will buy a similar product from another manufacturer (most of the respondents);
- continue to search for the originally required product in another store;
- will postpone the purchase until the desired product is available;
- purchase a similar product from the same brand;
- will change their mind and will not buy anything at all.
Regardless of the choice of the above-mentioned options, both for the retail chain and for the manufacturer (supplier) of the goods, its absence for the end buyer at the time of the purchase results in a profit loss, a decline in turnover, switching a potential customer to competitors or changing preferences for another brand.
The issue of constant stock on the shelves in the sales area is one of the most important for the purposes of sales development and marketing campaigns aimed at stimulating consumer demand, attracting and retaining customers. The solution can be organized through various control technologies and systems Out-оf-Stock и Out-of-Shelf, the advantages and disadvantages of which will allow you to choose the best option for each group of goods.
Let’s consider the most popular ways to monitor shelf stock in retail chains.
Physical audit
It is the most common way to check the availability of goods by physical visiting of all assigned sales points by a merchandiser to check the stock of various groups of goods on the shelves.
Its advantages include:
- ease of implementation;
- obviousness of the data received.
Disadvantages of physical audit::
- time spent on gathering information, which results in long shelf downtime without products;
- fuel and transportation costs;
- influence of the human factor, weather conditions, etc .;
- the need to control merchandisers;
- loss of time from the moment when an empty shelf is detected to the moment when the goods are delivered;
- due to the lockdown, there are a number of restrictions on the movement of staff and a reduction in the frequency of forced detours by merchandisers of retail outlets.
The use of physical audit techniques is most common in the supply of food products, household chemicals, and cosmetics.
Recognition and identification of goods
When this method is introduced, field staff who take pictures of the goods in the supermarket and use various applications for photo/video processing, or photo/video equipment located in the display area, serve as a source of information on the placement and quantity of goods.
Typically used as equipment:
- fixed camera, installed opposite the sales shelves with the product of interest;
- dome camera with the ability to change focus, the direction of view, with a larger coverage area and better quality of recognition of details;
- robot-camera with the ability to move between trade equipment.
Product images are set to reflect products turnover. Then, they are transmitted to the server for processing and analyzing data on the availability and placement of the product on the shelves.
Method advantages:
- Methodthe ability to obtain data on the location of products to control the implementation of planograms, a more thorough analysis of the display of goods for making decisions about optimization;
- accuracy of the method and the possibility of recognition by several parameters (size, shape, package colour, logo, etc.);
- in addition to product shots, this method allows you to get photos of customers to identify target audience groups, analyze traffic and consumer behaviour, which is used in marketing research and advertising campaigns;
- control of pricing policy, correct placement of price tags in supermarkets and other factors affecting product sales.
Disadvantages:
- in the case of sourcing pictures from field staff there is the influence of the human factor, the need to track the schedule of bypassing retail points, compensation for transportation costs, etc.;
- photo recognition does not provide control of storage conditions, which is important for maintaining the freshness of food;
- inaccuracies in recognition of product due to various factors (poor lighting, neon lighting, product placement at an angle or on lower shelves, reflections from glass surfaces of commercial equipment, non-standard racks, etc.)
- The method of product recognition by photo is the most common for all groups of food products, cigarettes, packaged pre-cooked products, alcohol, household chemicals, detergents, etc.
RFID-technology
Radio frequency identification refers to a contactless technology in which information about the availability of goods is transmitted via radio waves. RFID tags are used as information carriers, that should be activated by a reader with an antenna.
When using this technology in retail, a passive RFID tag is attached to each item subject to accounting.
Advantages this technology for retail:
- allows you to organize automatic data collection and analysis of inventory in large stores;
- contactless technology, which does not require any contact with the reader (standard operating range is about 10-15 m, up to max. 100 m);
- the operation of devices and data transmission is not affected by temperature, humidity, environmental pollution, the location between the tag and the antenna of non-metallic barriers;
- high speed of information processing;
- protection against theft of goods.
Disadvantages:
- high cost of RFID system implementation (equipment, installation, connection, configuration and debugging);
- irrevocability of tags on sold products, the need to purchase tags for each new batch of goods;
- the need to attach a tag onto each item of goods is labour intensive;
- susceptibility to interference from electromagnetic fields that can be caused by computer monitors;
- inability to control the storage conditions of food.
Taking into account the peculiarities of RFID technology in retail points, it is mainly used for stores selling clothing, electronics, elite alcohol and other expensive goods.
Weighting shelves
In this case, the control of the availability of the goods is conducted through equipping shelves with built-in weight sensors. When the number of products placed on such a shelf goes below a predetermined level, a notification about a decrease in the remaining stock occurs (notification in the software, sending notifications to merchandisers).
Benefits:
- the possibility of equipping the weighing shelves with temperature sensors to control the storage conditions of food and pre-cooked products, which reduces the chances of buying a spoiled product;
- optional connection of additional sensors or devices according to the customer’s specifications (humidity sensors, photo or video cameras to control the location of products, batteries for autonomous operation, etc.);
- production of weight shelves in various form factors: dimensions, the inclination of the surface, sides, clamps for certain products, etc.;
- quick installation at the sales point;
- simplicity in operation, no effect on the temperature-regulating or lighting system operation; -functionality of the software, basic and additional options for reports on monitoring results, the ability to export data for the accounting, marketing, and making management decisions.
Disadvantages:
- does not prevent theft of goods or cross-picking of products;
- not suitable for very light goods (the weight sensor may not detect small loads)
Weighing shelves have proven themselves well for analyzing food leftover stock (pre-cooked products, meat products, alcohol).
Based on the description of all the technologies for controlling stocks on shelves in retail stores, we can conclude that the most acceptable option for suppliers and food manufacturers is fitting store equipment with weighing shelves. They provide the optimal balance of automation level, equipment cost, installation speed, subsequent maintenance costs, and consumables.
Our LibraDataShelf system includes bespoke weighing platforms for a specific type of product, a system for collecting and transmitting information, and software for processing the collected data, generating the necessary reports on their basis, and sending notifications to sales representatives via Telegram.
For more information about the cost of implementing the LibraDataShelf system, please call +38(050)558 07 20 or email us info@libradatashelf.com.
