Articles and Press Releases
Nexvu Finds Mobilization and Improved Placement of In-Store Devices Can Save Top 10 U.S. Retailers $500 Million in 2012
Top 10 U.S. Retailers Have More than 106,000 Stores and lose at least $5,000 per store per year to underutilization of poorly located, non-mobile, in-store devices
Naperville, IL - August, 2011 - The top 10 U.S. retailers can add a minimum of $500 million to their bottom line in 2012 by mobilizing their in-store technologies, according to analytics generated by Nexvu. Retailers can mobilize in-store technologies by moving fixed devices, such as point-of-sale terminals and kiosks, to mobile platforms while using real-time analysis of in-store customer activity and traffic flow patterns to deploy devices where they are needed most. Leveraging analytics generated from its major U.S. retail clients, Nexvu determined that the top 10 U.S. retailers by number of stores (according to www.stores.org) can save a minimum of $500 million in 2012 through mobilization and improved placement.
Nexvu (www.nexvu.com) determined through its analytical measures that U.S. retailers underutilize fixed in-store devices by 40 to 60 percent on average. At a conservative average cost of $5,000 per year, per in-store device - each cash register can cost as much as $15,000 per year - a large retailer can decrease its operating income upwards of 30 percent even if it averages just one unutilized, or underutilized, device per store.
"The key for retailers is to mobilize these customer-facing devices by putting them on mobile platforms and moving them to the spots in each store at the right time where they can serve the most customers. That maximizes the return on those assets, which goes right to the bottom line," says Nath.
Nexvu's measurement of 40 to 60 percent average underutilization is based on analytics drawn from working with major retailers. Its $500 million estimate, however, conservatively assumes just one underutilized device per store, though "the number is more likely between three and six," says Nath. Similarly, the average cost per device of $5,000.00 is conservative as Nexvu "regularly sees costs upwards of $10,000 per cash register per year," Nath says. As a result, a failure to mobilize and improve the placement of in-store devices could cost the retail industry between $1.5 billion and $4.8 billion over the next three years.
About Nexvu
Nexvu (www.nexvu.com) delivers analytics solutions to the retail industry that measure, optimize, and visualize the ROI of in-store technology investments in real-time. Based in Naperville, IL, Nexvu's customers include some of the world's largest retailers. The company's monitoring-as-a-service analytics offerings leverage patented technologies and are designed to provide retailers' C-level executives with the control over and visibility into customer and employee interactions with in-store technology. Nexvu's "Store Performance Index" is a unique metric for measuring the top line contributions and bottom line impact of new in-store technology investments including devices, networks, and applications. For more information, please visit www.nexvu.com or call (630) 364-4080.
Contact
Edward J. Finegold
Nexvu Corporate Communications
312.224.0500
efinegold@nexvu.com
Naperville, IL - August, 2011 - The top 10 U.S. retailers can add a minimum of $500 million to their bottom line in 2012 by mobilizing their in-store technologies, according to analytics generated by Nexvu. Retailers can mobilize in-store technologies by moving fixed devices, such as point-of-sale terminals and kiosks, to mobile platforms while using real-time analysis of in-store customer activity and traffic flow patterns to deploy devices where they are needed most. Leveraging analytics generated from its major U.S. retail clients, Nexvu determined that the top 10 U.S. retailers by number of stores (according to www.stores.org) can save a minimum of $500 million in 2012 through mobilization and improved placement.
Nexvu (www.nexvu.com) determined through its analytical measures that U.S. retailers underutilize fixed in-store devices by 40 to 60 percent on average. At a conservative average cost of $5,000 per year, per in-store device - each cash register can cost as much as $15,000 per year - a large retailer can decrease its operating income upwards of 30 percent even if it averages just one unutilized, or underutilized, device per store.
"The key for retailers is to mobilize these customer-facing devices by putting them on mobile platforms and moving them to the spots in each store at the right time where they can serve the most customers. That maximizes the return on those assets, which goes right to the bottom line," says Nath.
Nexvu's measurement of 40 to 60 percent average underutilization is based on analytics drawn from working with major retailers. Its $500 million estimate, however, conservatively assumes just one underutilized device per store, though "the number is more likely between three and six," says Nath. Similarly, the average cost per device of $5,000.00 is conservative as Nexvu "regularly sees costs upwards of $10,000 per cash register per year," Nath says. As a result, a failure to mobilize and improve the placement of in-store devices could cost the retail industry between $1.5 billion and $4.8 billion over the next three years.
About Nexvu
Nexvu (www.nexvu.com) delivers analytics solutions to the retail industry that measure, optimize, and visualize the ROI of in-store technology investments in real-time. Based in Naperville, IL, Nexvu's customers include some of the world's largest retailers. The company's monitoring-as-a-service analytics offerings leverage patented technologies and are designed to provide retailers' C-level executives with the control over and visibility into customer and employee interactions with in-store technology. Nexvu's "Store Performance Index" is a unique metric for measuring the top line contributions and bottom line impact of new in-store technology investments including devices, networks, and applications. For more information, please visit www.nexvu.com or call (630) 364-4080.
Contact
Edward J. Finegold
Nexvu Corporate Communications
312.224.0500
efinegold@nexvu.com
Mobilization: Retail’s $500 Million Problem Solving Opportunity
By Eddie Nath, CEO, Nexvu
Addressing technology underutilization represents at least a $500 million per year opportunity for the top 10 retailers in the United States because more than ever before the in-store customer experience is built on technology.
As they compete for sales in a hypercompetitive marketplace, retailers are adding technology to their showrooms. From more sophisticated cash registers and self-service POS terminals, to Internet connected kiosks and hands-on demonstrations, technology is meant to entice and inform customers and to drive sales.
The downside to this increased reliance on technology, however, is that when devices sit idle due to malfunction or poor placement within a store, they represent stranded operating expenses that undermine profitability. Also, when they don’t perform well, they create negative experiences that can discourage sales. Retailers can address these problems and reap significant financial benefits through technology mobilization that is driven by intelligent analytics.
The Mobilization Concept
Mobility is one aspect of mobilization, where new mobile devices are playing bigger roles in retail. Retailers are adding leading edge devices like touch screen smart phones and lightweight tablets to serve customers in new ways. Mobility also means putting devices like kiosks and POS terminals on mobile platforms-sometimes literally on wheels - so they are no longer fixed in one static position.
Nexvu finds that 40 to 60 percent of all in-store devices, from cash registers and self-service POS terminals to Internet connected kiosks, go unused in retail stores.
The other critical aspect of mobilization is optimization, in terms of both asset placement and performance. Technology assets must be placed in the right locations within a store, and be available at the right time, in order to maximize their output in terms of serving the most customers or facilitating the most purchase transactions at any given time. The only way to maximize utilization in this sense is through improved visibility and real-time data analysis that identifies hot spots in a store and alerts personnel to take action by moving technology assets to where they are needed most.
For example, when lines grow long in a store, retailers risk abandonment. When competitors across the way sell the same products at roughly the same price, retailers simply cannot afford to lose sales to long wait times. If registers and POS terminals are mobilized, they can be moved to take on the added volume of purchase transactions, insuring customers not only don’t leave the store, but receive a level of service that encourages their loyalty and increases satisfaction.
Further, there is always the danger that even if devices are placed optimally, they will fail to perform. Outright failures or malfunctions are always problems that need to be addressed immediately to save sales, avoid lengthening checkout lines, and keep customers happy.
Customers are increasingly accustomed to fast access to information and transactions because of what they experience online. A kiosk that is slow to respond due to a congested in-store network can sour the customer experience and dissuade customers from buying.
Real-time monitoring and root cause analysis tools are necessary to identify failures as well as problems that result in decreased performance so that in-store or enterprise IT personnel can address them immediately. In this sense, mobilization is as much about optimizing the customer experience as it is migrating devices to mobile platforms.
The Real Cost of Underutilization
There’s a real cost associated with the failure to mobilize in-store technology assets. It is underutilization cost. The equation that calculates this cost factors in the total number of stores a retailer operates (S); the average number of devices per store (D); the measured rate of underutilization (%U); and the average annual cost of ownership per device ($D).
The easy numbers for any retailer to measure are their total number of stores (S) and average devices per store (D). Often retailers struggle a bit with measuring their true average cost per device ($D), and rarely is average idle time, or underutilization percentage (%U), measured.
((S x D) x %U) x $D =
Annual Underutilization Cost
Leveraging Nexvu’s analytics capabilities, which analyze data gathered from major retail clients using Nexvu’s in-store application and device monitoring technology, Nexvu finds that retailers experience 40 to 60 percent underutilization across their customer-facing devices. In other words, devices like cash registers and other POS terminals as well as Internet connected kiosks, sit idle 40 to 60 percent of the time. Or, similarly, 40 to 60 percent of all such devices effectively go unused in the retail stores they inhabit.
Average cost per such device can vary among major retailers, but Nexvu’s analyses regularly find retailers spending as much as $5,000.00 per year on average to own, maintain, and operate each device. Taking a conservative approach to the underutilization equation, using 40 percent and $5,000.00 as industry-wide benchmarks, the equation looks like this:
((S x D)x (40% )) x $5,000.00 = Annual Underutilization Cost
It is possible to simplify this equation even further. Nexvu’s data shows that the average number of underutilized devices per store for a major retailer is somewhere between three (3) and six (6).
If one makes the extremely conservative assumption that the number of underutilized devices per store is simply one (1), it becomes readily apparent that underutilization is at least a $500 million problem for the U.S.’s top 10 retailers, as measured by total number of stores.
A $533 million underutilization cost represents roughly 3.1 percent of total operating income across the top 10 U.S. retailers.
According to Stores.org, which tracks and measures the retail industry and provides data online for assessing the relative size, sales, and profitability of the U.S.’s leading retailers, the top 10 retailers by number of stores had 106,655 locations at the end of 2009. The number is actually greater today. Assuming 106,655 locations, with one (1) underutilized device per location on average, multiplied by an average cost per device of $5,000.00 per year, total stranded operating expense as a result of underutilization calculates as :
106,655 x 1 x $5,000.00 = $533,275,000.00
In other words, there is at least a half billion dollars in stranded investment sitting idle across the top 10 retailers’ stores today. Every time a consumer waits in line staring at an empty cash register, or approaches a self-help kiosk with a blank screen, or meets a POS terminal that can’t swipe cards that day, it represents a small piece of a huge problem that can be solved, or at least minimized, through analytics-driven mobilization.
A $533 million underutilization cost represents roughly 3.1 percent of total operating income across the top 10 U.S. retailers. Examined on an individual basis, the cost ranges anywhere from just under 1 percent of operating income, for a major pharmacy operator with more than 7,000 locations and roughly $569,000.00 annual operating income per store, to a high of 36.4 percent of operating income, for a major fast food chain with less than $14,000.00 in annual operating income per store.
A $533 million underutilization cost represents roughly 3.1 percent of total operating income across the top 10 U.S. retailers. Examined on an individual basis, the cost ranges anywhere from just under 1 percent of operating income, for a major pharmacy operator with more than 7,000 locations and roughly $569,000.00 annual operating income per store, to a high of 36.4 percent of operating income, for a major fast food chain with less than $14,000.00 in annual operating income per store.
The median percentage of operating income – the middle of the pack number - stranded in underutilized customer-facing technology is 6.4 percent across the top 10 U.S. retailers. Given a median operating income of roughly $647 million, underutilization would translate into at least a $41 million problem per year for a major retailer falling somewhere in the middle of the spectrum, as compared to its peers. That’s $41 million lost per year to technology that isn’t mobilized or deployed in the right place at the right time to serve the most customers in every store. And that’s a conservative estimate, based on just one underutilized device per store.
If the assumption shifts to a more realistic number of 4 underutilized devices per store, averaged across the top 10 U.S. retailers, the total cost of underutilization skyrockets to nearly $1.7 billion per year, or roughly $5 billion over the next three years if left unchecked. On this basis, the median percentage of operating income increases to a whopping 25.4 percent, with a middle of the pack performer with roughly 7,400 stores losing nearly $165 million per year to underutilization. That’s a staggering number, but it likely represents reality for more than one major U.S. retailer.
Gaining Measurable Competitive Advantages
The bottom line amidst all of these calculations is that the retailers who address this problem and invest in managing their technology assets are going to gain significant, measurable financial competitive advantages over their peers, simply by reducing underutilization.
Reducing underutilization by just one device per store can save a typical top 10 retailer more than $41 million per year, or 6.4% of operating income.
As stated, a top 10 retailer performing in the middle of the pack can reduce its underutilization cost by more than $41 million per year by reducing its average underutilized devices by just one (1) device per store, boosting operating income by 6.4 percent.
And this only speaks to the measurable expense that can be recovered by reducing a retailer’s underutilization percentage. There are also measurable top line benefits in the form of saved or increased sales, improved customer experience and satisfaction, and improvements in long term customer loyalty.
Ultimately, however, the solution begins with effective in-store technology monitoring and analytics. The store-specific business intelligence that can be gleaned from such practices can be used immediately to improve in-store technology performance and its associated customer experience. It can then be used similarly to drive decisions regarding device mobilization and redeployment.
Analytics can be used to drive effective, real-time decision making in each store while also improving technology procurement budgeting and forecasting, which adds yet another incremental, measurable benefit.
The Power of Nexvu
Nexvu has spent more than half a decade developing and perfecting the technology retailers can use to monitor in-store technology performance and the retail-specific, analytical dashboards executives use to make real-time and long term investment decisions.
The company focuses on maximizing the return on investment (ROI) retailers can derive from in-store technology assets. We help our customers to measure their underutilization rate, their true cost per device, the extent of their underutilization challenges, and the benefits they derive when they address them with real-time analytics.
As a result, we deliver unique competitive advantages that contribute directly to the bottom line. That’s what sets Nexvu apart as a retail-focused technology and business intelligence provider.
Addressing technology underutilization represents at least a $500 million per year opportunity for the top 10 retailers in the United States because more than ever before the in-store customer experience is built on technology.
As they compete for sales in a hypercompetitive marketplace, retailers are adding technology to their showrooms. From more sophisticated cash registers and self-service POS terminals, to Internet connected kiosks and hands-on demonstrations, technology is meant to entice and inform customers and to drive sales.
The downside to this increased reliance on technology, however, is that when devices sit idle due to malfunction or poor placement within a store, they represent stranded operating expenses that undermine profitability. Also, when they don’t perform well, they create negative experiences that can discourage sales. Retailers can address these problems and reap significant financial benefits through technology mobilization that is driven by intelligent analytics.
The Mobilization Concept
Mobility is one aspect of mobilization, where new mobile devices are playing bigger roles in retail. Retailers are adding leading edge devices like touch screen smart phones and lightweight tablets to serve customers in new ways. Mobility also means putting devices like kiosks and POS terminals on mobile platforms-sometimes literally on wheels - so they are no longer fixed in one static position.
The other critical aspect of mobilization is optimization, in terms of both asset placement and performance. Technology assets must be placed in the right locations within a store, and be available at the right time, in order to maximize their output in terms of serving the most customers or facilitating the most purchase transactions at any given time. The only way to maximize utilization in this sense is through improved visibility and real-time data analysis that identifies hot spots in a store and alerts personnel to take action by moving technology assets to where they are needed most.
For example, when lines grow long in a store, retailers risk abandonment. When competitors across the way sell the same products at roughly the same price, retailers simply cannot afford to lose sales to long wait times. If registers and POS terminals are mobilized, they can be moved to take on the added volume of purchase transactions, insuring customers not only don’t leave the store, but receive a level of service that encourages their loyalty and increases satisfaction.
Further, there is always the danger that even if devices are placed optimally, they will fail to perform. Outright failures or malfunctions are always problems that need to be addressed immediately to save sales, avoid lengthening checkout lines, and keep customers happy.
Customers are increasingly accustomed to fast access to information and transactions because of what they experience online. A kiosk that is slow to respond due to a congested in-store network can sour the customer experience and dissuade customers from buying.
Real-time monitoring and root cause analysis tools are necessary to identify failures as well as problems that result in decreased performance so that in-store or enterprise IT personnel can address them immediately. In this sense, mobilization is as much about optimizing the customer experience as it is migrating devices to mobile platforms.
The Real Cost of Underutilization
There’s a real cost associated with the failure to mobilize in-store technology assets. It is underutilization cost. The equation that calculates this cost factors in the total number of stores a retailer operates (S); the average number of devices per store (D); the measured rate of underutilization (%U); and the average annual cost of ownership per device ($D).
The easy numbers for any retailer to measure are their total number of stores (S) and average devices per store (D). Often retailers struggle a bit with measuring their true average cost per device ($D), and rarely is average idle time, or underutilization percentage (%U), measured.
Leveraging Nexvu’s analytics capabilities, which analyze data gathered from major retail clients using Nexvu’s in-store application and device monitoring technology, Nexvu finds that retailers experience 40 to 60 percent underutilization across their customer-facing devices. In other words, devices like cash registers and other POS terminals as well as Internet connected kiosks, sit idle 40 to 60 percent of the time. Or, similarly, 40 to 60 percent of all such devices effectively go unused in the retail stores they inhabit.
Average cost per such device can vary among major retailers, but Nexvu’s analyses regularly find retailers spending as much as $5,000.00 per year on average to own, maintain, and operate each device. Taking a conservative approach to the underutilization equation, using 40 percent and $5,000.00 as industry-wide benchmarks, the equation looks like this:
It is possible to simplify this equation even further. Nexvu’s data shows that the average number of underutilized devices per store for a major retailer is somewhere between three (3) and six (6).
If one makes the extremely conservative assumption that the number of underutilized devices per store is simply one (1), it becomes readily apparent that underutilization is at least a $500 million problem for the U.S.’s top 10 retailers, as measured by total number of stores.
According to Stores.org, which tracks and measures the retail industry and provides data online for assessing the relative size, sales, and profitability of the U.S.’s leading retailers, the top 10 retailers by number of stores had 106,655 locations at the end of 2009. The number is actually greater today. Assuming 106,655 locations, with one (1) underutilized device per location on average, multiplied by an average cost per device of $5,000.00 per year, total stranded operating expense as a result of underutilization calculates as :
Stores x underutilized devices per store x cost per device = total cost of underutilization
In other words, there is at least a half billion dollars in stranded investment sitting idle across the top 10 retailers’ stores today. Every time a consumer waits in line staring at an empty cash register, or approaches a self-help kiosk with a blank screen, or meets a POS terminal that can’t swipe cards that day, it represents a small piece of a huge problem that can be solved, or at least minimized, through analytics-driven mobilization.
A $533 million underutilization cost represents roughly 3.1 percent of total operating income across the top 10 U.S. retailers. Examined on an individual basis, the cost ranges anywhere from just under 1 percent of operating income, for a major pharmacy operator with more than 7,000 locations and roughly $569,000.00 annual operating income per store, to a high of 36.4 percent of operating income, for a major fast food chain with less than $14,000.00 in annual operating income per store.
A $533 million underutilization cost represents roughly 3.1 percent of total operating income across the top 10 U.S. retailers. Examined on an individual basis, the cost ranges anywhere from just under 1 percent of operating income, for a major pharmacy operator with more than 7,000 locations and roughly $569,000.00 annual operating income per store, to a high of 36.4 percent of operating income, for a major fast food chain with less than $14,000.00 in annual operating income per store.
The median percentage of operating income – the middle of the pack number - stranded in underutilized customer-facing technology is 6.4 percent across the top 10 U.S. retailers. Given a median operating income of roughly $647 million, underutilization would translate into at least a $41 million problem per year for a major retailer falling somewhere in the middle of the spectrum, as compared to its peers. That’s $41 million lost per year to technology that isn’t mobilized or deployed in the right place at the right time to serve the most customers in every store. And that’s a conservative estimate, based on just one underutilized device per store.
If the assumption shifts to a more realistic number of 4 underutilized devices per store, averaged across the top 10 U.S. retailers, the total cost of underutilization skyrockets to nearly $1.7 billion per year, or roughly $5 billion over the next three years if left unchecked. On this basis, the median percentage of operating income increases to a whopping 25.4 percent, with a middle of the pack performer with roughly 7,400 stores losing nearly $165 million per year to underutilization. That’s a staggering number, but it likely represents reality for more than one major U.S. retailer.
Gaining Measurable Competitive Advantages
The bottom line amidst all of these calculations is that the retailers who address this problem and invest in managing their technology assets are going to gain significant, measurable financial competitive advantages over their peers, simply by reducing underutilization.
As stated, a top 10 retailer performing in the middle of the pack can reduce its underutilization cost by more than $41 million per year by reducing its average underutilized devices by just one (1) device per store, boosting operating income by 6.4 percent.
And this only speaks to the measurable expense that can be recovered by reducing a retailer’s underutilization percentage. There are also measurable top line benefits in the form of saved or increased sales, improved customer experience and satisfaction, and improvements in long term customer loyalty.
Ultimately, however, the solution begins with effective in-store technology monitoring and analytics. The store-specific business intelligence that can be gleaned from such practices can be used immediately to improve in-store technology performance and its associated customer experience. It can then be used similarly to drive decisions regarding device mobilization and redeployment.
Analytics can be used to drive effective, real-time decision making in each store while also improving technology procurement budgeting and forecasting, which adds yet another incremental, measurable benefit.
The Power of Nexvu
Nexvu has spent more than half a decade developing and perfecting the technology retailers can use to monitor in-store technology performance and the retail-specific, analytical dashboards executives use to make real-time and long term investment decisions.
The company focuses on maximizing the return on investment (ROI) retailers can derive from in-store technology assets. We help our customers to measure their underutilization rate, their true cost per device, the extent of their underutilization challenges, and the benefits they derive when they address them with real-time analytics.
As a result, we deliver unique competitive advantages that contribute directly to the bottom line. That’s what sets Nexvu apart as a retail-focused technology and business intelligence provider.
