O'KEY is one of Russia's largest food retail chains and ranks among the top three in terms of the number of hypermarkets in Russia.
The O'KEY chain pays great attention to on-shelf representation and reduction of lost sales. In 2015, in order to increase turnover, the management team of the chain decided to automate the monitoring of on-shelf availability and ensure timely display with the help of state-of-the-art software solutions. Based on the results of the comparative analysis, the GoodsForecast.OSA (On Shelf Availability) product was chosen as matching the company's needs to the greatest extent.
GoodsForecast.OSA service helps address the problem of product off-shelf representation and improve it in the following ways:
The OSA.Analytics module was the first to be implemented in 2015. As early as in the first year, analytics on product representation and lost sales helped identify the causes of declining sales and identify and rectify a number of bottlenecks in the supply chain. According to the network's own estimates, the commercial effect from the use of the system totaled about 1% of turnover growth.
The value of the implemented solution for business operations was obvious: product representation has a very strong impact on the turnover, traffic and sales margin of any retailer. However, the chain found that analyzing product representation in a historical period was no longer sufficient and it was required to implement an algorithm to analyze intra-day data. This would solve the so-called last mile problem where shelves in the store are not always replenished as fast as required to meet demand. Therefore, together with the GoodsForecast team that had already well-established itself, a pilot project was initiated to generate online alerts for store employees to check and replenish shelves in a timely manner.
The new algorithm of the system that used data on hourly sales and retailer's balances as well as changes in sales in similar stores over time and percentage of the specific product in the product group as a whole showed excellent results in terms of analysis correctness and signal generation. Potential turnover growth was estimated at 2%. As a consequence, in late 2020, the O'KEY chain launched a project to implement the GoodsForecast.OSA Alerts module. That was GoodsForecast's first project implemented on a success fee basis where the solution provider's consideration was subject to the accuracy of the signals produced by the system.
The GoodsForecast solution allows the retailer not only to analyze sales history and identify lost sales and causes behind them but also to prevent new losses, thus significantly improving turnover and traffic indicators. In addition, the system helps reconfigure internal business processes involved in monitoring product display and setting tasks for merchandisers.
The solution's toolkit enables the chain's management to see the situation from different perspectives: by category, by store format, by region and specific products, which makes it possible to set goals and monitor their achievement at different management levels.
In addition, GoodsForecast provides flexible and efficient in-store inventory management. The algorithmic framework provides an opportunity to optimize costs and improve business profitability. It can also be used to reduce balances, planning labor, lost sales and logistics costs.