Seattle, Washington-based Shelf Engine helps grocers increase profits and drastically reduce food waste in thousands of retail locations across the country through automation.
Stefan Kalb, CEO and co-founder of Shelf Engine, recently provided some company updates in an email interview with The Shelby Report.
We see that Shelf Engine is progressing more toward “Results as a Service,” can you talk more about what this means for your company and grocers?
Shelf Engine began as a more traditional SaaS provider, but made the shift to Results as a Service. We realized that there was a lot of value to retailers being left on the table by providing them with only data and software, but stopping short of guaranteeing outcomes.
We wanted to ensure our customers’ success, and pivoting to a RaaS model made that possible. Our intelligent forecasting and automated ordering capabilities now take those functions off the plates of our retail customers.
As a RaaS provider, we guarantee sales. Shelf Engine pays vendors for everything they deliver and absorbs 100 percent of the retailer’s shrink. We only charge the retailer for items that sell. This unique model was a game-changer for our business because it intrinsically aligned our incentives with our customers’ incentives.
Kalb provided an in-depth story on this subject in Forbes.
A few reasons RaaS works better than SaaS:
- Shelf Engine has better data about each store than the grocer often does. Our dedicated field team captures these insights at the store level to train the AI.
- Because Shelf Engine’s incentives are fully aligned with our customers, we’re more committed to our mutual success than a SaaS company that just wants to sell a license.
- Shelf Engine audits vendors to make sure they’re delivering the right amount of product with the right shelf life to our retail customers.
What would you like to say regarding your current relationships with grocers?
Shelf Engine is fortunate to work with four of the top 10 largest grocery retailers in the U.S., delivering an average gross margin expansion of over 15 percent. Retailers also value the sales increase they achieve through partnership with us.
Ordering perishables isn’t easy—literally thousands of variables impact the ideal order that reduces stockouts yet maximizes sales. Manual and computer-assisted ordering tools are simply no match for the complexities retailers must factor in today.
Our retail customers appreciate that partnership with Shelf Engine not only increases sales and reduces waste, it also eases their labor burden and affords the freedom to do something almost unheard of in a low-margin industry: experiment without risk. Because retailers bear no inventory risk or shrink costs for the items Shelf Engine manages, they can try out new brands, chase trends, and even define category trends without negative financial impact.
Are there any goals for 2022 you’d like to share?
Shelf Engine’s objective in 2022 is to expand its footprint in highly perishables, which represent 39 percent of grocery sales and is arguably the most difficult part of the grocery store to manage.
In 2021 alone, Shelf Engine diverted 3.6 million pounds of food waste from landfills. The way we see it, the more reach we have into the dynamic and difficult highly perishable categories, the more value we will create for our retail partners and the greater environmental impact we can achieve together.
- Additional insights – intentions for the coming year:
- Shelf Engine is going to launch in 5,000 more stores in 2022
- Shelf Engine will expand its footprint in each store by 3X, as we’re launching dairy and meat & seafood.
For our readers who may be unaware, Shelf Engine can work for any size grocer, correct?
Shelf Engine’s solutions are optimized for scale, ideal for mid-market regional grocers to national chains with thousands of locations across the U.S., and everything in between.
Is there any other company progress you’d like to share?
To support our continued expansion with current retailers and establish new partnerships, Shelf Engine’s team doubled in 2021 – and we’re just getting started. If you have a passion for the problem of supply chain inefficiencies that cause food waste in grocery retail and want to join a company whose mission is to solve it, we’d love to connect with you.
Why should grocers consider Shelf Engine?
Shelf Engine currently operates in thousands of retail locations across the country. Because our solution absorbs a retailer’s inventory risk and guarantees their margin, naturally we believe that giving us a try should also be risk-free. In fact, we believe it’s risky not to try Shelf Engine because so much of the industry is already leveraging advanced order automation technology.
Retailers interested in seeing how seamlessly Shelf Engine integrates into their existing operations begin with a pilot. This involves selecting a few strategic products and 5-10 geographically clustered locations. The pilot gives a retailer a zero-risk opportunity to validate the impact Shelf Engine can achieve in just eight to 10 weeks.
We win when our customers win, and the fee they pay is always less than the cost of their shrink before partnering with Shelf Engine. There are no long-term contracts and, because we are not a SaaS solution, retailers never pay a software licensing fee.