Behind the grocery displays on supermarket shelves labors an army of researchers who analyze every single aspect of the retail experience — until now, tracking inventory and sales manually.
But increasingly, large retailers have turned to an Israeli company called Trax Technologies to save thousands of hours of work by doing that analysis automatically — based on nothing more than a photo of a supermarket shelf. The company’s success in the retail space got a big boost this week with an announcement by Trax that it has finalized an A round financing agreement with one of Singapore’s largest private equity funds. According to the terms of the agreement, Trax will receive an immediate cash infusion of $6.6 million, with an option for some $15 million more over the next 18 months.
We know that supermarkets have tricks for getting us to buy certain products — for example, placing sugary cereals on lower shelves, right in the faces of children who clamor for the products they see advertised on their favorite programs. As a rule, the contents, product position, promotion, in-store coupon access and display, and just about any other aspect of what customers see when they shop is the result of a carefully orchestrated plan known as a planogram (or POG) that lays out what belongs on which shelf, next to which product, in what aisle, and so on.
POGs are used not only in supermarkets but in all types of retail stores, and are developed based on thousands of details about the products, customer habits, retail price markup, seasonality, and more. Very often, agreements between retailers and distributors or manufacturers specifying details on how products are to be displayed are a major part of a POG.
In order to ensure compliance, salespeople for distributors and manufacturers visit the retail stores and take notes on what’s being done with their products. In addition, companies often employ independent firms to audit stores and ensure that they are observing the terms of the agreement.
All this work, Trax Technologies CEO Joel Bar-El told The Times of Israel, is usually done manually: “Very often salespeople will write down the details on slips of paper, with the more sophisticated manufacturers giving their staff devices to take notes with.”
For all the parties involved, the analysis, auditing, and enforcement of agreements and POGs required lots of manpower. That’s where Trax comes in, said Bar-El.
“Instead of taking notes and spending long hours inputting data into devices, salespeople and auditors can use our system to take a photo of a shelf. The photo is uploaded to the cloud, where we use our proprietary technology to analyze the position of products, the sales potential based on shelf location, compliance with the POG, whether a sale or discount is needed to move a product, etc.,” said Bar-El. “In addition, we can provide intelligence on a company’s competition, analyzing where their products are located.”
Within minutes, the system provides reports based on the analysis which are automatically sent to company headquarters.
According to Bar-El, some 40 percent of a sales rep’s in-store time is dedicated to manual POG compliance verification instead of selling and restocking. Until now, said Bar-El, companies had few options; without “feet on the ground” there was no way a manufacturer or distributor would know what a retailer was doing with its products.
“It’s only in the past few years that technology has advanced enough to enable the production of devices with cameras that have sufficient resolution, and Internet speeds robust enough, to enable the photographing and transmission of high-resolution images that allow for the analysis we do,” he said, adding “in this business, labor is by far the highest expense, and we can help companies allocate their workforce more effectively.”
Trax was established in 2010, and in the space of barely three years has become the world leader in the retail store auditing and shelf monitoring space (or the FCMG, fast moving consumer goods industry, as insiders call it). During that time, several other image processing solutions for shelf monitoring have been developed, but they have a far smaller footprint than Trax, said Bar-El. While agreements with customers bar publication of the names of the retailers using his solution, Bar-El said the list includes many of the largest retailers, manufacturers, and distributors in the US, Europe, and Latin America.
“We had the right solution at the right time,” said Bar-El, explaining the company’s success. “In addition, two of our top executives have extensive connections and experience in retail and manufacturing, having worked respectively for many years for Procter and Gamble, and for Kraft.” When you’re first to market with an innovative solution, Bar-El added, “you can get a lot of traction in the market very quickly.”
Trax’s R&D center in Tel Aviv employs about 40 people (Bar-El said that the investment announced this week will enable the company to expand “significantly”), and has its corporate headquarters in Singapore — an unusual choice for an Israeli company, especially one with much of its sales in Europe and the Americas. “We didn’t really choose Singapore, but most of the company’s founders were living there already,” said Bar-El, who himself had been the Far East representative for several Israeli companies based in Singapore before starting Trax.
It was from a Singaporean venture capital firm that Trax decided to accept an investment fund (“we received offers from VC’s in Israel and the US,” said Bar-El), and with that money, Bar-El plans to significantly increase the company’s reach. The investment, he said “is a huge vote of confidence in our leadership position in our market, our innovative proprietary technologies, and our management team. The influx of funds will enable the company to accommodate the huge demand it is experiencing to serve new markets and territories, as well as to continue to invest in the research needed to sustain our leadership position.”