The largest Russian retail company X5 Retail Group announced that it has opened a shop-laboratory X5 Lab for rapid technical testing, research and development of new technologies.
The X5 Lab is located in the south-east of Moscow in the Pyaterochka building and is equipped for quick launch of technologies for testing. Next to the sales area there is an office-laboratory for developers, service engineers, support staff, analysts and IT-specialists who can see the testing directly in the store.
Capital costs for the laboratory amounted to approximately 35 million rubles, Vladimir Kapustin, X5 strategy director, told Vedomosti. “Pyaterochka” is the dominant format of the group (about 80% of revenue), this is one of the reasons why the laboratory appeared on the basis of a store near the house, he explained.
This is the X5’s second attempt to open an innovative store. Six years ago, on the basis of the corporate store of the Moscow office of X5, together with the financial partner Rosnano and technical Sitronics opened a “store of the future” accessible only to employees. They tested, in particular, RFID technology (Radio Frequency Identification, Radio Frequency Identification), which allows using the contactless radio scanners to track the movement in the store goods with radio tags. Investments were estimated at 350 million rubles. The project was completed in a few months, as X5 stated, at the end of testing.
In the experimental Pyaterochka, electronic price tags, video analytics, smart shelves are being tested (they determine whether the goods are left), digital information panels, and cash desks for self-scanning and paying for customers. In total, X5 is currently evaluating and working on more than 500 startups, Kapustin said.
Part of the X5 innovation may soon begin to apply in the "Pyaterochka", "Crossroads" and "Carousel". “I think that electricity metering and climate systems in the store will be massively introduced next year,” says Kapustin. Prospects for a quick mass launch have both video analytics and electronic price tags, he said.
Electronic price tags have recently begun to be massively introduced in food retail even in Western markets, Kapustin knows: "Before, the price of such price tags was high for food sellers." Now it has fallen below $ 6, but it’s still expensive for stores where a unit of goods costs about $ 1, he continues: “Negotiations are underway with foreign suppliers to reduce the price of price tags when they are mass purchased, and then this will probably be the first technology we will massively deploy. "
Technologies tested at X5 Lab can save large sums, Kapustin hopes: “The technology of tracking electricity consumption and climate conditions alone will reduce our energy supply costs by 15%.”
The same technologies, including electronic price tags and self-service cash desks, are actively used by competitors X5, and the group itself in larger formats - Perekrestok and Carousel. Many “Magnit” hypermarkets have self-service cash desks; for several years, electronic price tags have been used there.
Since the beginning of 2018, Lenta has been testing self-checkout cash registers: buyers scan the goods themselves. The retailer on the loyalty card identifies the buyer, the system recognizes it, welcomes by name, offers personalized discounts and promotions. Lenta hoped that innovation would increase sales.
Among the most active in terms of innovation in Russian networks is not only Lenta and X5, but Auchan and Vkusvill, said Bain & Company partner Yevgeny Belashchenko. Retailers in Russia are focused on two areas, he knows: technologies that allow you to communicate with the customer (self-checkout, mobile applications, etc.), and technologies that are associated with improving the efficiency of the store in pricing, managing inventory and availability of goods on the shelf.
Electronic price tags are a practical and important innovation, Belashchenko admits: they reduce operating costs (less manual labor) and introduce dynamic pricing. These price tags and solve the problem of discrepancy with the price at the box office. “Mobile applications and other technologies of interaction with the customer allow you to make personalized offers, develop online sales and loyalty programs, etc.,” the expert said. “It increases customer attachment to the network.”
So far, the X5 has only the Perekrestok online store, but, Kapustin promises, most likely it will not be the only online platform. X5 is developing a multi-channel sales strategy, both online and offline, he says: “It’s equally convenient for customers to shop in a store, a mobile app, and a computer. A seamless path [between different sales channels] for the buyer is what we started to develop now. ” All successful technologies in traditional stores will be integrated into the multi-channel system in the future, I'm sure Kapustin.