Alimentation Couche-Tard expands partnership with Relex Solutions
Seeking a "more integrated management system” to handle supply chain in North America, Alimentation Couche-Tard has forged a partnership with Relex Solutions that will optimize stock levels at Circle K and Couche-Tard stores in Canada and the U.S.
Headquartered in Finland, Relex provides machine-learning technology solutions to addressing supply chain and retail planning issues like demand forecasting, stock replenishment, and space and floor planning.
Couche-Tard and Relex have worked together in Europe since 2016, generating “measurable results.”
“Key to our mission to make our customers’ lives a little easier every day is ensuring we always have the products and brands they want, when they want them, which is why we are very pleased to incorporate Relex Solutions into our North American operations,” said Trey Powell, senior vice-president of global merchandising for Alimentation Couche-Tard, in a press release. “With Relex, we can tailor advanced forecasting and inventory management to the needs of our individual stores and streamline our internal processes for better efficiency to provide the best quality products and a best-in-class customer experience.”
The Laval, Que.-based multinational convenience and gas store chain has 2,154 stores in Canada and 7,153 in the U.S., and said the decision to implement Relex had to do with finding a solution “capable of managing the scale and complexity of Couche-Tard’s operations.” The company declined further comment.
The agreement is expected to optimize inventory levels, significantly reduce out-of-stocks, and improve the effectiveness of merchandising and internal team efficiency.
Effective supply chain is critically important to retailers. According to research and advisory firm IHL Group, global inventory distortion costs retailers an estimated US$1.77 trillion dollars in 2023, with out-of-stocks accounting for $1.2 trillion and overstocks totalling $562 billion.
While inventory distortion costs are down $172 billion from 2022, the drop a reflection of retailers adjusting their strategies post-pandemic, the issue of overstocking and understocking is clearly still a huge issue.
In North America, out-of-stocks, however, increased by 17.7% in 2023 over 2022. The primary driver of this increase cited by the study was empty shelves, which have risen by 22.8% ($29.6 billion), but the problem is also compounded by inventory visibility on floor, leading people to think an item is out of stock, among other factors.
The study cites AI as a way to tackle inventory distortion “through improved demand forecasting”, noting traditional forecasting methods often rely on historical data and manual analysis, and, by nature, are prone to human error. Traditional methods also fail to capture real-time consumer behaviour changes.
“AI algorithms, on the other hand, can analyze vast amounts of data from multiple sources, such as sales data, customer trends, social media, and external factors like weather and events … enabling retailers to stock the right products in the right quantities,” points out the study.
Relex’s other c-store clients include 7-Eleven, Kum & Go in the midwestern U.S., Franprix in France and WHSmith in the U.K., according to its website.
Results from t clients collectively include a 67% decrease in stockouts, 8.5% increase in fresh product availability, two percentage points in margin improvement and 49% increase in like-for-like product sales.
In parts of its European business, Relex helped Circle K avoid stockouts without increasing stock to improve margin in its most profitable but challenging category: tobacco.
Circle K’s initial KPIs were to increase availability and assortment loyalty by at least 2% and reduce tobacco inventory by at least 10%. Relex said “they significantly exceeded their goals in all metrics.”