Perekryostok together with GoodsForecast increases store turnover

The Perekryostok retail chain summarized the results of a pilot project that resulted in the full-scale deployment of a system that increased the availability of goods on its shelves.

Moscow, November 2, 2022. The implementation of GoodsForecast.OSA solution that enables on-shelf availability monitoring, helped the Perekryostok retail chain increase retail turnover by 1.4% in the supermarkets selected to participate in the pilot project.

When the project was launched, Perekryostok was already using a product availability control solution that generated signals for best-selling products and promotions. However, it did not allow for the timely elimination of           merchandise display defects and ensuring the availability of necessary goods on the shelves.
Perekryostok chose GoodsForecast to solve its problems. Even before the start of cooperation, the vendor had already developed practices and implemented similar projects in other chains that confirming the effectiveness of the tools used. The industry expertise that the GoodsForecast team featured was also a significant reason.

The project included the implementation of the Alerts module of the GoodsForecast.OSA solution to generate alerts on a wide range of products online for stores. The system receives sales receipt data throughout the day at a given frequency, highlights no-sales periods and, for each product, determines how closely it matches the usual demand for a particular product in a given store. The system then generates a signal, which comes in the form of a task to check the goods in the front shop and sends it to the mobile device of store employees assigned to the relevant department. The responsible department employee then checks whether everything is in order with the availability, price tag, accessibility and quality of the goods and takes necessary action in case of a problem.

Crossroads' partnership with GoodsForecast began in August 2021. At the first stage, specialists set up data integration processes, including sales and balances on an hourly basis. Next, availability estimation models were built based on the collected and labeled data and the alert algorithm was refined to alert stores and rank the issued signals to maximize potential additional revenue. This system was integrated with Perekryostok's microservice that enabled signal exchange and feedback to retail outlets.

To assess the economic effect of the system, a 2-month A/B-testing design was developed by a specialized division of X5 Group.

A pilot group was set up that included about 132 stores with a wide geography. A control group was matched to the selected outlets to evaluate the results. The target metric of the experiment was achieving favorable changes in the retail turnover of stores over time. X5 Group specialists calculated that for statistical significance it should be at least 0.8%.

The model generated up to two hundred signals per store 3 times a day for 30 days. Based on those signals, supermarket employees received to their mobile devices tasks to check shelves for missing goods, presence and correctness of price tags and loss of consumer properties. If an employee identified an issue, it was corrected and the mobile device was used to confirm that the process had been complete.

According to X5 Group’s ad hoc assessment, the model showed a statistically significant result: the point estimate of retail sales growth was 1.4% and the upper limit of the confidence interval was 2.4%. In addition, X5 Group's specialized division concluded that full-scale deployment would achieve the same results in terms of turnover growth, provided that the quality of signals received by store employees was maintained.

The signal generation module was launched in all Perekryostok supermarkets on October 1, 2022 and the project has already gained traction. Currently, the X5 Group team and GoodsForecast are working on signal-based demand recovery with subsequent backward integration to improve forecast accuracy in Perekryostok’s auto-order system.

“A turnover increase of more than 1% has a significant financial effect across the chain. Beyond the financial component, however, there are other impressive results. When customers come to our supermarkets, they expect to see the goods they need on the shelves in sufficient quantities and with a good shelf life. If that doesn't happen, everyone loses. The customer leaves without the purchases for which they came and we lose revenues. The ability to ensure the availability of goods on shelves allows us not only to increase sales but also to meet customer expectations and maintain customer loyalty. That's why the project implemented by GoodsForecast has become unequivocally successful and efficient for us,” Kirill Kovalenko, the Owner of the Mobile Workplace product at the Perekryostok retail chain, commented.

“In business practice, today most decisions are still made based on expertise rather than analyzing data. The partnership project was implemented, as they say, following all the rules, which is a great credit to the Perekryostok chain team and their very progressive approach. In my opinion, we have got an excellent result confirmed by business and math,” Lev Kiselev, Head of Retail Analytics at GoodsForecast, said.

Reference information

About X5 Group
X5 Group is Russia's leading food retailer. The Company operates stores of several retail chains: branded Pyatyorochka convenience stores, branded Perekryostok supermarkets and deep discounters operating under the Chizhik brand. The company holds a leading position in e-commerce, developing Vprok.ru, 5Post, express delivery and Much Salmon digital businesses.
As of September 30, 2022, the Company had 20,227 stores under management, holding leading positions in Moscow and Saint Petersburg and a significant footprint in the European part of Russia. The chain includes 18,865 Pyatyorochka stores, 972 Perekryostok supermarkets and 316 Chizhik deep discounters. The Company also operates 52 distribution centers and own 4,247 trucks in the Russian Federation.
X5 is one of Russia's largest employers. Today, the company has more than 325,000 employees.

About GoodsForecast
GoodsForecast, a Russian vendor of innovative systems based on machine learning and AI, is part of Forexis Group founded by a team of mathematicians of Lomonosov Moscow State University and the Computing Center of the Russian Academy of Sciences. The company ranked among Top 3 in the world by forecasting accuracy at M5 Forecasting Competition and won Russian and international competitions on multiple occasions. Its customers include major Russian companies operating in the FMCG, retail and industrial sectors (Cherkizovo Group, Technonikol Corporation, Rusagro Group, international KNAUF Group, Pulse pharmaceutical company, O'KEY Group, Perekryostok and Verny supermarket chains, M.Video-Eldorado electronic stores and other major manufacturing and trading companies). GoodsForecast is a grantee of the Innovation Assistance Foundation and RFRIT. Skolkovo resident since 2013.