A shopping innovation | Fin24
 
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A shopping innovation

Jun 27 2019 09:21
Timothy Rangongo

Over the years, items like baby formula, face, neck, shaving, medication and sexual wellbeing products have been disappearing from supermarket shelves and increasingly tucked away behind cigarette counters. 

These items have come to be considered high-risk by retailers in that they tend to be the most stolen. 

Therefore, they carry massive shrinkage costs atop of their high purchase cost, according to Quattro Management Systems, a Cape Town-based retail solutions company, founded in 2015.

“The moment you take the merchandise off the aisle, two things happen. The first is that staff, as we’ve come to realise, continue to steal the products. The second, which is a more concerning matter, is that consumers don’t see them anymore – so now they can’t and don’t buy them,” says Vincent Lanz, founder of Quattro. 

As a result, he adds, big pharmacy, health and beauty retailers gained a considerable market share in premium high-risk items.

Lanz’s company has developed a tech-intensive solution aimed at returning the high-risk products back to the aisle where customers can see and purchase them again. 

Quattro’s AutoAisle solution is premised on a three-step approach: visibility, availability and security.

Visibility 

“We make sure that the product is visible,” says Lanz. “We take the products from the tobacco kiosk and we put them back in the aisle, but behind glass…where the shopper expects to find them.”

The typical consumer journey comprises coming down the aisle and, for example, deciding that you need razor blades. 

You look for the product that you want from behind the glass of the AutoAisle unit, which carries about 40 to 45 arranged product offerings. 

Once you find the product(s) you need (which would be numbered), you punch in the number on the nearby touchscreen which will generate a slip that you produce at the till. 

You then pay for them and redeem the product(s) on the way out of the store.

Lanz initially had some reservations about the usability of the touchscreen until they ran an under-the-radar pilot at a Pick n Pay situated in a lower-LSM area north of Pretoria and was surprised by how quickly customers positively responded to the unit.

Availability 

“We are big on the availability of the product. 

It’s our job to ensure the stock is there. We don’t want the consumer to go through this entire exercise, only to get to the till and be told there’s no stock,” Lanz explains.

Because almost everything is automated and thus linked up, availability is achieved by Quattro’s stock management system, which provides real-time information about inventory, allowing suppliers to quickly react when there is imminent shortage. 

To avoid disappointing customers, the system will not allow users to select a product if it’s unavailable. 

He says it boils down to one of SA’s most successful businesspeople, Anton Rupert’s, lesson that “there are only two things that you need to get right in retail; the first is you’ve got to make sure that you have a top-class product and the second is making sure that whenever the consumer wants to reach for it, it must be available.”

What Quattro also found, from its official pilot at Westwood SuperSpar in Boksburg, was that as Quattro was trying to push orders of high-risk items up, the store tried to push orders down due to the fact that they had grown accustomed to stocking less of those items that they had not been selling.

“There was a period of getting the purchasing department to be aligned with what was actually going on. The increase in sales caught them off guard. For instance, for baby formula, the store was buying around 40 cans a month, which was impressive for them. But by month two of the pilot, they had now ordered 120 cans and by the third month, 165 cans.” 

Security

Due to losses from theft, the owner of the Pick n Pay north of Pretoria generally did not order beauty and health products, such as face creams, priced above R39.99, says Lanz. 

The AutoAisle solution set out to remedy this.“We secure the product. It’s because of the security that retailers are prepared to have a conversation with us.”

Lanz says some retailers say there are other solutions, such as putting security tags on the product. But, while putting tags on products could help prevent shrinkage, it remains a manual process undertaken by employees and is not always perfect, says Lanz.

“From a security point of view, it’s a lot safer now…,” says George Hajimarkos, the owner of Westwood SuperSpar. 

“We’ve also got a constant feel of the stock that’s in the store, so we’re not over-ordering. We always have adequate stock without as much losses. I think it will definitely increase the basket spend and get back the customers we were losing.” 

With the pilot done and dusted, Lanz says it’s back to the drawing board to make a few tweaks to the AutoAisle. 

“We have to make certain value judgements about how we design and roll it out as there is nothing quite like it around.” 

Quattro has since been approached by OK, Checkers and a large Asia-Pacific retailer, and are considering the company’s retail solutions. 

Quattro intends on rolling out the AutoAisle solution at more Spar and Pick n Pay stores in the near future. 

This article originally appeared in the 4 July edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

innovation  |  shopping  |  risk-items
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