Monument SuperSPAR gains 4% gross profit growth on sales floor following Pricer ESL rollout

11 Feb, 2015
Minesh Manga, director at XON Retail

Monument SuperSPAR has increased its monthly gross profit (GP) margin consistently by 4% since implementing Pricer electronic shelf labels (ESL) by XON Retail Solutions, which has exclusive Pricer distribution rights in Southern Africa.

The SuperSPAR experienced the increase in GP because the ESLs immediately effect price changes as they occur, the ESLs flash to indicate items specially priced, and promo clips attach to the ESLs that further draw attention to items at promotional prices.

“The combination of the immediate price updates, the flashing labels and the promotional clips is what grew our GP,” says partner Nick Nicolaou.

“We have over 24000 stock keeping units (SKU) and about 22 000 labels and we’ve seen an uptick in sales for items on promotion,” says another partner, Jacques Jones. “The combination of the flashing light on the labels that draws people to them, and the promo clip that clips onto the electronic label, even results in people making impulse buys due to the promotional offers.”

Partners Nicolaou, Jacques Jones and Andreas Angelides agree that the ESL system has improved cash flow as a result of their shelf prices never being out of date.

“As soon as the supplier increases the price we know that our shelf reflects the correct price,” says Nicolaou. A case in point was when Jones found a popular brand of dog food priced below cost. “The supplier had recently increased the price but we were still charging the old price so we were losing money on every bag that left the store,” he says.

The partners had originally only planned to implement Pricer’s ESL system in 2016 but the discovery of this particular incidence pushed their plans forward by 18 months. In July 2014 they began the rollout that was complete six weeks later in August and they have made a consistent return on their investment since.

The opportunity for this event to reoccur is now nil. It is reflected also in the complaints about price discrepancies that customers lodge with store managers, which is now also nil. “Ever since the implementation we haven’t had a single customer complaint about an incorrect price,” says Jones.

The manual price updates that were performed in the store prior to the Pricer ESL rollout took two days to complete. Two employees would spend two days creating and printing labels and fixing them to shelves alongside the correct product.

“With all manual processes there’s the chance for people to make mistakes,” says Nicolaou. “Sometimes they can’t locate the product so the price doesn’t get updated or they lose labels that were printed. With over 24 000 SKUs in the store the potential risk is actually quite large. Manual processes also take long to complete.”

“This single step of ensuring that the prices are correct, immediately as the prices from suppliers change, has made the difference to our GP.”

It has also positively impacted customer goodwill.

“Our customers know they can trust the system,” he says, “and we can rest assured that we are always charging the correct price, which has had a positive effect on our cash flow.”

Additionally, Monument SuperSPAR previously dedicated two employees to price updates. Those employees have now been reassigned to other duties in the store, including ensuring orders are placed, that stock levels are correct, and that shelves are properly stocked – positive activities that actively promote the sale of goods. They would, in the past, spend two days printing new labels for changed product prices and attach them to shelves in the correct space. That process is now nearly instantly and automatically performed by the Pricer system.

“The paper price system created more problems than just price discrepancies,” says Nicolaou. “When we ran out of stock of a certain product and the shelf was bare packers would often just expand the space used by a neighbouring product. The label for the out of stock item would then be turned around or removed – that process was prone to human error and sometimes the product would not be ordered. Months can pass before you discover the problem yet you lose revenue in the interim by not having that product available for sale. It’s also easier now to hold managers accountable for their sections because if an item is out of stock or sold out they’re not allowed to expand the space allocation of a neighbouring product. Gaps are visible and managers are challenged on this.”

Pricer ESLs solve that problem by being fixed in a rack affixed to shelves. Only three managers at Monument SuperSPAR have the necessary tool to move or remove ESLs from the rack mounting so shelf space can never be shifted from one product to another. Managers can also interrogate ESLs while standing at the shelf. They can immediately discover how much stock of specific products is available on shelves, in the storeroom, and whether or not an order has been placed. That resolves out of stock issues and helps to ensure a steady supply that keeps customers happy.

“We can ensure that space allocated to specific products remains dedicated to that product until we decide otherwise,” says Nicolaou. “With the ability to quickly check stock on hand, as well as orders, managers are accountable for consistent supply and we can now reasonably enforce that.”

“Monument SuperSPAR is another highly successful implementation for us, like so many other SPAR stores in Southern Africa,” says Minesh Manga, director at XON Retail. “They’ve experienced all the benefits that the Pricer ESL system promises and seen immediate, positive financial effects.”

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