X5 installed retail solutions to automate and optimise its stores operations. The solutions have helped the retailer improve the replenishment process, on-shelf availability, and fresh food fulfilment. The technological upgrade comes as X5 drastically expands its store and distribution network. The retailer added nearly 3,000 new stores in 2017, and over 2,500 openings are planned in 2018.
Supply chain efficiency with Big Data and analytics in 2017
X5 began an operation optimisation process in 2017 with an investment in big data and analytics. It aimed to improve locations, layouts, and management of distribution centres. This process boosted warehouse replenishment, especially in fresh. In 2018 it is rolling out other technological upgrades, focused on in-store operations, to translate the efficiencies from warehouse to shelf.
X5 automates in-store replenishment process
X5 invested in software to automate the process of demand and replenishment planning in its supermarket and hypermarket banners, Perekrestok and Karusel, and distribution centres (DC). The retailer reported the automation increased forecast accuracy by 17%, enabling stores to boost availability by 5%, and reduce inventory levels by 13%. X5 is aiming to enhance the process further by 2020, by planning at the category, range, and individual store levels.
‘Smart’ planogramming to maximise product mix and boost sales
X5 will roll out an automated process of planograms across Karusel following three months of tests. Karusel reported a 3% to 11% in sales growth across a range of categories where ‘smart’ planogramming was used. ‘Smart’ planograms make efficient use of shelf space by maximising the mix of products of a given category in a bay. X5 plans to apply the system across the Karusel network, and in up to 90% of the banner’s assortment by the end of 2019.
Testing new labelling technology to boost fresh credentials
X5 is testing three labelling technologies, two of which are colour-changing labels that warn if the required storage or transportation temperatures have not been maintained. The third label will be a barcode that prevents a point-of-sale system to scan an item if it is expired.
Magnit prepares for a ‘digital transformation’
Meanwhile, X5’s leading competitor, Magnit, is investing in what it calls a ‘digital transformation’ of its business. The retailer is looking to transform its business via strategic partnerships with technology companies. Magnit initiated the process in May 2018 in a signed agreement with SAP CIS to develop tools that collect and analyse data on consumer behaviour, sales, and marketing impact. A partnership was also formed with Samsung Electronics to adapt mobile devices in stock management and replenishment.
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Amin Alkhatib, Retail Analyst CEE, IGD International: based in London, UK, Amin is responsible for shaping IGD's research in Central and Eastern Europe; as well as contributing to IGD's broader European research programme. Follow me on Twitter @Amin_IGD for further insight on the region’s retail landscape.