Hello, everyone, and welcome to this Capital Markets Day for SES-imagotag, a global leader in digital solutions for physical retail. To the Investors and Analysts here in the room in Paris and those who are joining us remotely from around the world, you're all very welcome. We thank you for your time and your interest, and we welcome your participation. I'm Declan Curry, a Journalist and B roadcaster. I've been reporting on business and the economy in the U.K and around the world for over 30 years. I'm delighted to be here today as your independent moderator and master of ceremonies. Over the next 4 hours, we will look at the strategy and direction of SES-imagotag, how it got here, where it is now, and what the future might hold as it transforms retail. I draw your attention to the disclaimer on the screen behind me.
The company's senior leaders will be making forward-looking statements and assumptions today. The slides from all the presentations will be available online at a later stage. They will include the full text of this disclaimer. If you want to read it word- for- word, then you can look it up online yourself, because I'm certainly not reading all of that out. Behind me on the screen now is our agenda for today. SES-imagotag has today published new sales and profits objectives through to the year 2027 in a strategic plan titled Vusion 2027: A Vision for the Future. It builds on the accomplishments and results of the company plan currently in place. In the first set of presentations today, the company will set out its strategy in the context of current market trends. We will hear from the Chairman and Chief Executive.
We will also hear some outside perspectives from acknowledged industry leaders, and we will discuss the critical importance of sustainability and the company's ESG commitments. We will then welcome questions from our analysts and investors. If you are in the room here in Paris, we invite you to raise your hand, to wait for the microphone to reach you, and then to tell us who you are and which organization you represent. Please do not just shout out your questions in the room because you will not be heard by the remote audience without the microphone. Viewers who are watching us remotely, wherever you are in the world today, you can submit your questions in writing by using the chat box that is on your screen, and we will answer your questions at the end of the day.
There will be three separate opportunities for questions from the analysts and investors here in the room, so we invite you to take a full advantage of those. After that first set of presentations about market and strategy, we'll then move on to set two about technology and product. Again, you will hear from company leaders and from experienced external voices, and you will have that second opportunity to ask your questions. After a short break, we will then look in more detail at the new long-term strategic plan, at the company's plans for Europe and North America, and then we will have a detailed briefing on the company's financials before, once again, an opportunity for your questions. To conclude the day, Chairman and Chief Executive, Thierry Gadou, will offer his final reflections.
We should all be finished in this room by 6:00 P.M., by 6:00 P.M. today. Those here in Paris are then encouraged to join the company's leaders for informal discussions over cocktails. Let us get down to business with our first presentation of the day. We are going to look at key milestones, where the company is today, and get an image of the future. Please welcome the Chairman and Chief Executive, Thierry Gadou.
Good afternoon. Good afternoon, everyone. Sorry. I might need to just adjust the microphone. Is that okay? It's not too loud? It's okay like that? Okay. I have plenty of devices, wireless connected devices in my hand, so, you know, we're already in the subject. Thank you for taking the time. I know it's gonna be a long time, but you know, once in a while, once every 5 years, it's good to take stock and see, look forward. Our company has been around for some time and we're definitely on the brink of new beginnings here. I'd like to thank you. I'd like to thank also the members of our board and advisory board who are here with us today.
I'd like to thank my team, and I'm very happy that today you will be seeing a part of the incredible team that has made this company, that is making this company, and that will take it forward. To start first, 2022 is a special year. You know that. It's the 30th anniversary of our company. The only, I would say, comparison with a startup is that most of our growth is ahead of us. Apart from that, you know, we started the company in 1992, 30 years ago. They were the early times, the pioneering times, you know, the first customers in France, and then, you know, the IPO in 2006. You know all this. Then the last decade, we multiplied the turnover by 10 in 10 years. It was essentially structured around three plans. You remember maybe the name, some of you, iCube, Leapfrog, Vusion 2022.
iCube has been essentially the start of the internationalization. Really, i t's been the conquest of Europe. Leapfrog has been the phase for, you know, completing our IoT portfolio, you know, and acquisition. A lot of acquisitions there. We already had a view of where we wanted to go, but we needed to acquire new technologies, and that's what we did in this Leapfrog plan. Then Vusion 2022 was the software plan, was about the move to cloud, was about to move to the new services, our vision of the transformation of retail, and obviously another step in globalization, which was, you know, China on one hand, and the U.S., obviously, which started. There we are now with our new plan. Before looking at the future, let's consider our current reality and maybe take stock of, you know, what happened in just the past five years.
You see today, this is the company basically, around EUR 600 million revenues, which is still focused 75% in Europe. We have here, Sébastien, the head of Europe, who will be talking to you earlier, a big part. You see North America already 18%. We have our solutions in 35,000 stores. We have 630 employees, and we're present in 62 countries, but we're located in 19 countries across 4 continents. We have probably the most incredible customer base, incredible customers, the best-performing retailers in the world. Happy customers, by the way, if you look at our NPS compared to the tech average, a great base of customers, and that alone is an incredible asset.
We are famous for being the ESL company, right? The ESL pioneer, the ESL global leader. Actually, it's true, and it's great because it's gonna be a massive market. The scope of our solutions go much beyond, you know, including shelf management, in-store fulfillment, real-time, you know, shelf monitoring, computer vision, artificial intelligence, data analytics. This has been really broadening a lot over the past five years. You know, it's been essentially due to the acceleration of our innovation over, you know, over the Vusion 2022 plan, which has been, you know, really kicked off with the move, or the shift to the cloud and the shift to a platform architecture.
Starting from that, a number of products which are, you know, value-added products, some of them we're gonna talk to today. We basically completed a very important shift of paradigm, moving from, you know, and that's probably, you know, the biggest disruptive innovation since the invention of ESL, which is the move from ESL to digital shelf system. What is a digital shelf system? Digital shelf system is a cloud-operated set of integrated, synchronized ESL cameras and sensors, which basically fully digitizes the shelf and obviously fuels a number of processes in the store with data, with automation capability, and you see all these different types of processes it actually feeds.
That is something where, you know, that shift of paradigm sometimes to our customers, I ask them, you know, just to make them understand, would you buy today a phone without a camera, you know? It's about that, you know, what we're talking about. We completely changed the paradigm of how to digitize the shelf, but we'll be talking about that. The numbers all of you know, but I think it's important to say that the very important, you know, shift is again to the cloud. We have now 50 million devices in the cloud. That's 15% only, you could say, of our total install base, but that's going very fast, and that's obviously the future because it's enabling all the other innovations. The numbers are clear. We've been accelerating growth.
We've been accelerating internationalization up to 90% now. I'm nearly ashamed of that when I speak in France, but anyway. You know, it's probably not even representative of the French share in the global GDP, so we still have you know to go. Anyway, you know, the total ESL footprint or install base has been growing. Our profitability has been growing. I can't really testify that our customer satisfaction has been increasing because we've not been you know measuring NPS before in 2017. The team has been doubling. During that, another part of the achievement has been building a global supply chain. Building a global supply chain, I think, means building a strong foundation, a very resilient supply chain.
I think it has been massively stress-tested over the past two years. You've seen the resilience of our supply chain. You've seen the figures literally not move, even though we were going through the worst disruption in supply chains and the worst commodity shock. This is because we have a very strong supply chain. You will see the strength of the supply chain in the future because we're ready to scale that supply chain. Not only to scale it, but to make it more and more global and risk-free. I'd like to say also that a number of underlying, you know, work that we are doing is really about, you know, we're a long-term company and we're building for the future. We've been always optimizing our processes.
We're very happy that actually last week we had the ISO 14001 certification, which is the environmental certification. We're working very hard for a few years already, and certainly we'll get it next year about cyber security management on ISO 27001. This is a very important, a bit invisible, but when you look for the long term, it's quite important. The other thing we're extremely proud here is that last week, actually again, so you see there are plenty of news today. Last week we got the platinum rating of the EcoVadis certification. Which, you know, EcoVadis is, we all know EcoVadis, they've been rating us year- after- year.
This year we're very happy about the balance of all the ratings we had on environment, on labor and human rights, and sustainable procurement, and on ethics. This is top 1% of all the companies rated by EcoVadis, and we're very proud. I'm very proud of my team to have achieved that. Finally, just wrapping up the transformation of the past, you know, few years. We also walked the talk here about aligning our capital with our business, with our geography. You see from 2018 to now, we've been basically doing what we said.
Early in 2017 and 2018, we said we will stay listed, we will stay, you know, we will increase the float, we will increase the liquidity, we will increase the space for you, for investors. We will stay a very entrepreneurial company, and here you see that the second-largest shareholder of the company is actually the people of this company. So here again, we've been extremely, you know, sort of, I think, trustworthy in our words. Yet the best is to come. You know, the amount of problems to solve in retail are huge. The needs of retailers, the needs that are unmet are considerable. Most of our growth is ahead of us. That's the good news. Now, is there a bad news?
Well, I don't know if it's bad news or just less good news, but the fact is our customers struggle. The fact that physical retail has always been under a little bit of pressure, but I must say there is a certain acuteness on, you know, the pressure we're talking about today. We have a number of structural long-lasting factors weighing on physical retail. Obviously, the shift to online, the shift of consumers' behaviors, the store traffic decrease. Of course, there are on top of that, a number of conjunctural factors, which are exacerbating all these pressures. Obviously, inflation, recession looming, here, actually there. Price war as the result of both, by the way. Energy costs surging and labor cost, or even worse, labor shortage. All this is putting an intense pressure on physical retail.
I think that we, you know, to start with the beginning, those companies have totally changed the scene. Those companies have changed consumers forever. The reason why I'm mentioning that is that, you know, those companies have just reset the expectations of user and customer experience. From now on, the tolerance of consumers for friction is history. No wonder that the big shift in all our space, in all our sector is actually the shift to online. This is what's going on. There are ups and downs, but basically, e-commerce is growing at a very steady pace. It's eating over physical. You see it's not going to stop. It's going to double. The share of online is going to double in the next five years. There are differences between categories, but it's going to double.
That means an additional $2 trillion of e-commerce, of online revenues. Now, the question is not whether that's good or bad, right? Because of the previous slide, you know it's not gonna be stopped, right? The question is, where is this revenue gonna go? That's the biggest question that we have to answer. Right now, for sure, part of the answer is that digital is eating over physical, and you can see the impacts of that on store closings, falling retail space, et cetera. Obviously, you know, a number of risks, social risk associated with that due to the retail employment disruption that is related to the substitution of online versus offline by online. There is another risk here, which is environmental.
I'd like to stress this one because you probably not have heard a lot about that. This is actually from an article we published on the World Economic Forum website recently. You know, raising attention on the toxicity of the current model of e-commerce as it grows. If it continues to be based primarily on central platforms and our direct-to-consumer logistic model, the increase of e-commerce we're talking about is going to require the construction of more than 300 million square meters and a huge emissions of carbon, and that is what's going on right now. Nobody talks about it, but it's going on right now.
This is another risk about what's, what could go on. Finally, obviously with lowering profitability, well, you know, the other risk is simply that it might be difficult for retailers to have access or to get access to the capital needed to fund their their transformation journey. You know, I don't want to sound too negative here, but as a matter fact, does that mean that retail is bound to physical retail is bound to decline? Are we stuck into that negative circle in which, you know, less profitable stores will drive less investments, you know, poor shopper experience and then less traffic and then et cetera? Are we stuck in that? Well, you can imagine, we think totally differently.
You know, we think a number of visionary retailers today are showing a very different story, are investing in their stores, are actually betting on their stores as their primary even e-commerce asset. We believe that it's possible to trigger a much more positive cycle and a much more virtuous circle instead of the one that we sometimes see actually playing out right now. At this point, you know, I suggest, Declan, that it might be useful to, you know, gather external perspective, right?
Indeed we shall. Thierry, thank you very much. Let us move on to our panel discussion at this point.
Yep.
Thank you. Ladies and gentlemen, Thierry Gadou. I'm now going to welcome three external voices to the stage. They are Mark Ibbotson, Colin Peacock, and from SES-imagotag, Roy Horgan. Give them a round of applause to make them welcome. Let me give you some introductions as they settle in. Mark Ibbotson, just raise your hand so everybody knows who you are. He's a leader of formidable experience and insight in omnichannel retail. He was a senior operational figure at Walmart for 5 years. Before that, the Chief Operating Officer at the leading U.K supermarket, Asda. He's now an advisor at McKinsey and to SES-imagotag. Next to him is Colin Peacock, who brings the retailer and supplier's perspective, and also has a wealth of experience.
He has 30 years behind him in key operational roles at Procter & Gamble, and he continued to be an advisor to that global consumer goods giant. He's also Group Coordinator of the ECR Group, which is an industry-wide initiative. Colin, just tell us what the ECR Group is?
Well, I'll start. It stands for Efficient Consumer Response, and some of you might know that it started in America in the 1980s. I've led a group since 1999 that focuses on retail operations and improving retail losses. It's made up of about 250 retailers and some producers, and we combine academic with the retailers and the producers to create research papers on things that really matter. On-shelf availability, efficiency, self-checkout, losses. That's what we do.
Thank you. Those are things that we'll develop in this and later discussions as well. Next to Colin is Roy Horgan, who's the Chief Marketing Officer at SES-imagotag. He was the founder of a company called MarketHub, which is an ePOS data analytics business, which has since been acquired by SES. Roy, we'll hear from you presently. I just want to get some thoughts from Mark and from Colin. Mark, we'll start with you. We saw what Thierry was talking about in his presentation about the current climate and environment in which business operates. These are undoubtedly tough times, but as we know, in tough times, there are also opportunities. You've got your own beside you, I think.
There we go.
There we go.
I have it here. I think that that's a great start, and I think the title of this was The End of the Beginning. I think, you know, retailers should really challenge themselves at the moment to seize this opportunity they're presented with. I genuinely believe that innovation is the answer to that question. Thierry talked through the possibilities of the electronic shelf edge label. I'm very excited about it for many reasons. Principally, actioning price changes is laborious and expensive in a supermarket. In a large store, you could have 2.5 people full-time solely doing that job. In a small store, 1.5. It's inaccurate, and it's laborious. The ultimate winner is the labor cost in the store, and the accuracy for the customer.
Beyond that, I think where I'm really excited about the future is the connected store. This is the pivotal building block to connect the associate, the customer, the shelf edge, and the store itself, and everybody will be able to see everything. It's gonna reduce friction for the customer. It's gonna make things easier for the associate, and I genuinely believe we will liberate the associate to do higher value task to serve and sell. I mean, there's no such thing as a silver bullet, but this is as close to it that I've seen for many, many years, and I'm very excited about the deployment and the possibilities of this technology in the future.
In the more immediate circumstances, are we seeing a scenario where high inflation, high food inflation in particular, will make retailers that may not have looked at this type of technology in the past think, "We've got to improve our efficiency, and technology is how we do it. Digitalization is how we get through this period of economic difficulty"?
I think the answer is in the data that you presented earlier. We are seeing a lot of retailers that previously might have put this into the long grass and thought about it in the future, are talking to us, trialing with us. The answer is yes. I think, you know, there's three things you ask yourself all the time. Will the sales go up? Will the cost go down? And will I be better at what I do? I think you can answer yes to all three of those with this technology, and inflation and the cost base is driving that to a decision point and an execution point.
Roy, actually, if I can bring you in at this point. As Mark mentioned the data, you of course know what the data is saying on this. What is it telling us?
Yeah. From a data perspective, I think, as I said, we've reiterated in terms of the challenges that people are seeing. Right now we're starting to see, from a store-to-store basis, profitability half. That's not sustainable. You know, you can go at this in a couple of ways. You can either raise your sales and maintain lower net margins. You can obviously increase your gross margins, or reduce your cost base. What we're seeing in terms of retailers that are, I would say, at the early stages of ESL adoption, I think they're obviously reducing their costs, and they're maintaining some of their gross margins because they're able to take prices quicker, and deal with the inflationary issues.
Now what you don't want to have is obviously the basket spend, and it is going down in terms of value. The basket spend is still stable, but the actual, the gross margin for the basket is lower. What we're starting to see is retailers that are going further. We talk about underpinning the IoT technology and then starting to look at IoT plus data plus, say, visual analytics and or even in-store fulfillment. We're starting to see something really interesting. We're starting to see actually they're outperforming. We think you need to be about 15% higher in terms of your gross margin to maintain your profitability right now.
What I'm starting to see some of our retailers, and actually I heard one of our customers today that is starting to, and they've been our customers for five years, they're starting to build now stores by data. That's kind of incredible, that they're actually starting to use data in terms of how they build and how they've merchandised their stores. One of the pieces of insight from that is that we saw that in this particular store, that their stock utilization or the amount of products that they're selling every month is up by 8% because they actually have the right products in the right shelf. Data is easy, insights is easy, but actionable data is hard. That's what we do, and that's what's really benefiting our customers.
What's fascinating, Mark, about that insight is that actually when you look at traditional stores, many of them are data poor. They're just not collecting enough information about what customers are doing, what's on the shelf, what the availability is.
Yeah. I mean, you know, and it's crucial for the product to be on the shelf. The price has to be right. You know, and we're improving both of those. You know, availability is a challenge, and you saw that through COVID. You're constantly trying to improve it. You know, the optimal amount available, you wanna be about 96%-97%. If you're under 95%, we can see a 1% improvement in availability is a 1% improvement in sales. This is a very, very valuable tool that's driving sales insight. It's a great line from Roy, you know, a data-driven store. Act on the facts, and the ultimate winner is always the customer. If the customer wins, the shareholder wins.
Colin, what are your thoughts?
I, you know, in the constant rounds of meetings we have with retailers is, I'll just underline the point about labor. Most retailers are really struggling to find the labor. Either they've taken retirement or they've found work with Amazon, who pay probably 25% more. Finding labor is really problematic. The inflation, we just did a study with Wharton School. The estimated wage inflation over the next five years is 22%. They're getting more expensive, if you can find them. Our study sort of found that, you know, retailers were targeting a 16% improvement in productivity. This technology, I think, has got a lot of things going for it.
It's got these tailwinds of inflation, which actually leads to requirement to do more price increases and price changes, through the year. Rather than maybe one or two a year, you'd have to do every day.
Mark has talked about from his retail perspective, helping to run the world's biggest name in food retailer. With your supplier perspective, is this also a key, a burning issue for them?
Well, yes. I've got Procter & Gamble printed on me, and so we have the zero moment of truth, the first moment of truth, and the second moment of truth. The first moment of truth is when the consumer looks on the shelf and tries to find it. Frankly, if it's not there, they'll go and find an alternative brand or perhaps go to an alternative store or go online. This is really critical that the product is there. Right now the tools by which Procter & Gamble can influence that could be through the forecasting or through, you know, sending people into the stores to ensure the execution is made on time. Or any other vendor can influence it, could be through the forecasting or through, you know, sending people into the stores to ensure the execution is made on time.
Mark, your thought about the digital store, that's a much wider canvas than to the day-to-day operational challenges that can be solved.
I think, you know, that figure wherever we believe online penetration gets to, the picking that in the store is the model that's worked beautifully in the U.K for a long, long time. The ability to reinvent your core estate is the most profitable thing a retailer can do. What we do is we connect the consumer, the associate, the picker, the stocker, and the customer beautifully. I think this. As I said earlier, this is a building block to that connected future. Picking from a store, stores are great because they are close to people. Proximity is our key point of difference. We are making that a connected experience now, and that lowers the cost, lowers the friction, and improves the sales.
Colin.
Yeah, just to build on that, I think that a paper written by Professor Marshall Fisher maybe 20 years ago. In the paper, he called out that a store is both a factory and a theater. For sure, if the stores are gonna differentiate themselves online versus an online offering, they need to build theater, they need to build excitement, and I think you'll see some of that later on in a video that will be shown. It's about the factory. Here is where I think this technology has got some important roles to play in terms of automating those work processes, eliminating them if possible, or indeed improving them. That's where I see this technology fitting in very well to the needs of the market to think about stores as a factory and then to improve the factories, you would do if you're doing lean engineering.
Roy, is the pitch effectively that every store can be run better?
That actually coins a phrase that I love the self-learning store. Every store can learn. Every store and that's what gives me hope, actually. Every store underperforms and every store can learn. Our job is to effectively bring our retailers on that journey. The underpinning that is, you know, I think the first things first is they've made the right decision in terms of the infrastructure, which they have. Now it's our job to bring them through that journey, and especially now more than ever.
Okay. Gentlemen, thank you very much. Please join me in thanking Mark Ibbotson, Colin Peacock, and Roy Horgan. As they make their way down from the stage, we invite Thierry Gadou to return to the stage for his next thoughts on the vision for the future.
I'm back. It's... Shall I dance? Yeah, just a quick word to say that, you know, at SES-imagotag, we have, you know, essentially innovated with our customers. I must say, you know, Mark, who is on stage, has been a very demanding customer. In the past, he made us make tremendous progress. He's been tough to us. He's now apparently happy with what we're doing. It's been a journey. It's been fantastic. He's one of the greatest, you know, manager in retail that I've ever met. It's great. Anyway, I think we're now picking up on where we were just a few minutes ago. You understand that yes, we think very differently.
We think this virtuous circle is going to be triggered definitely. We think that for all the headwinds and there are headwinds, you know, definitely, there are bright future and that the potential value of physical stores is vastly underestimated. They are underperforming and there are ways, you know, of improving that. In fact, everything we do and store digitization in general has never been more at the top of the agenda. You see all the headwinds we've talked about. Everything we do, we're gonna present some of that later in more detail. Everything we do is totally relevant, is totally at really the top of the agenda. We have been right also to start the journey with ESL.
We have been right to think that ESL would be that basic infrastructure, that enabling backbone infrastructure of the digital store. I take very often a comparison like SAP as being basically transforming the complete IT system. I talk about SAP because they're a great partner of SES-imagotag. They have been transforming the whole IT system of companies by transforming it from the bottom up, from the back office. You know, 20 years ago, there were lots of very sexy but best-of-breed solutions for supply chain, for CRM, for, you know, everything. Look at where that is now in SAP. Because transforming has to come from the very best foundation, and ESL is the foundation for digitizing the store. We see, first, a huge market, you know, 10 billion units, addressable market.
You know, we see an acceleration of the adoption just because ESL is the perfect enabler of all, you know, the processes that need to be optimized in store. Obviously, the future model we see winning for retail is actually hybrid, obviously, hybrid and store-centric. In fact, the store that will be at the heart of this hybrid retail, you know, is going to be naturally augmented by technology. It's gonna be cloud connected, it's gonna be monitored in real-time, it's gonna be data-driven, it's gonna be frictionless for shoppers and personalized. It's gonna be, you know, a local center for e-commerce, a fulfillment center for local e-commerce. It's gonna be a center for local services, returns, repairs, refills. Think about the, you know, the fight against packaging, refills.
It's going to be also enabling full transparency of inventory because today in the whole supply chain of CPG and retail, the single point of failure is the store. It's where the accuracy of inventory is the lowest. We're talking about lower than 70%-60%. That's where the point of failure is. It's gonna enable that digital transparency. It's gonna also support local producers and foster local for local economy. Finally, those stores will have much better jobs with people who will be more focused on service and customers and, instead of, you know, doing jobs that are, or tasks that are very low value-added and automated. That might solve another thing we were talking about earlier, which is the fact that retail is going to be able to attract talent again.
I think that incidentally, these stores are going to be much more profitable, you know, with higher margins, higher, you know, local e-commerce revenue, higher availability, lower costs, lower inventories, lower out of stock, lower, you know, waste. That is not all. I think the store is going to be, you know, actually driving benefits for CPGs, for consumer goods companies because every improvement in-store transparency, in-store data available is actually generating huge savings. Colin was very rightly mentioning that point, and we have a lot of great representatives of CPG today, so we'll see one on stage again, in a minute. Anyway, stores are definitely going to stay. They are, anyway, going to remain the main channel.
Technology-enabled stores are going to stay and that's a very good news for obviously retailers because it's their main asset. It's a good news for consumers, it's a good news for brands because the ultimate brand experience is in stores. It's a good news for, you know, the communities because healthy stores makes healthy communities, you know, and for the workforce too. You know, I'd like to come back on this very important thing. You remember the question, where is going to go the $2 trillion or EUR 2 trillion, not big difference nowadays, of additional e-commerce? Well, they're gonna go in stores. Believe it or not, they're gonna go in stores. The stores are the future of e-commerce because they are very, very efficient when they are enabled by technology. They're very efficient e-commerce centers.
As a matter of fact, there is such a density that, you know, it's an obvious answer. Stores in e-commerce are part of the solution, not part of the problem. Think about where we are today. Think if you need anything right now. You're gonna search on Google on your mobile. You're gonna make a search. What's gonna come up? It's gonna be probably an online order that's gonna be fulfilled 30 kilometers away, you know, be prepared in 6 minutes and take 4 hours to get there probably tomorrow. As a matter of fact, anything you want is probably 200 meters away from here, but you don't know it. That's the response. That's why we believe that the digital transformation of physical retail is gonna actually make the best and most sustainable e-commerce. You will see e-commerce will come from physical stores.
I'm not the one saying that, actually. You know, one of our biggest customers is actually just putting their stores at the heart of their e-commerce strategy, not only for performance but also for sustainability. That's also the case of other retailers like IKI you see here, and I could go on forever. There are many visionary retailers I said who are showing the way. The store digitization case, you know, it is actually coming up now, coming out in a very broad sense, you know. Store digitization is about obviously making stores much more profitable. It's about consumer experience improvement. It's about enhancing the retailer and brand collaboration, and it's about sustainability and positive social impact like we described. That is essentially the agenda of the Vusion 2027 plan.
Contributing to that good is actually what we aim at doing. Our plan is structured around, you know, five very simple pillars. You know, the growth and the leadership, which has been always in the DNA of our company. You know, the customer, obviously. The value add, the search for permanent, you know, value add, higher value add, particularly in the software. The operational performance, and the positive impact. I'll go very quickly. I'm sure most of you have read the press release today, so no big scoop here. EUR 2.2 billion target. We want to build the largest IoT connected network with a 1 billion connected devices out there. Obviously, that's a significant growth over the next five years. Second is customer first. We have a very simple target.
You know, I think Mark said earlier on stage, customer happy, shareholders happy. We only have one metric. If we reach that NPS, we need to bother about nothing else. That's gonna be. There is so much needs, we just need to deliver that great experience and return to our customers. Then, of course, we need to improve our business model and center it like we've been starting to do it five years ago, continue to shift to a cloud and VAS-centric business model. Our ambition is also to be, you know, applying the recipes that we recommend to our customers to us. You know, it's not only for the others that you need to digitize your operations. We are a very complex company to manage and to operate. 600 people, 19 countries. You know, this is. We need to put the company in the cloud.
We need to digitize every process. We need to improve that, and we need to continue to build a superior supply chain given the, you know, hundreds of billions of devices that we are preparing to manufacture, to ship. That's basically nearly it, except the most important is actually that we want to make sure we have a measured, proven contribution to our customers' net zero goals, and we want to make our people super happy. Right. We'll talk about that in a minute. People is one of the pillars of our company. Our performance, you know, past and our performance in the future would not, you know, exist if we didn't have a very strong focus on people and on the fact that for us, having motivated and happy people is just the first driver of performance.
I just would like to quickly say a word about that aspect. You know, it's not because it's a kind of, you know, obligation to talk about ESG. It's actually much more deeply rooted in our history and our beliefs, you know, this thing about sustainability. Frankly, we're a company sometimes a little bit worried about the absence of retail in the climate debate, in the sustainability debate, because we think it's so important. Let me start by that. You know, we have an ESG plan which is structured around three pillars. One pillar was launched with our advisory board in 2019. It's what we call the roadmap for positive retail. It's about contributing to retailers' net zero target.
It's about developing ourselves low-carbon IoT devices, and it's about having the positive impact socially that will, that goes with making better and more sustainable stores. Great place to work, I will have Marianne, our HR EVP, come on stage, in a minute. Long-term stakeholder value, we will talk about that, with, one of the, stars we have today here, Peter Brabeck-Letmathe. I'll just start with this. We are very purpose-driven company. I know sometimes people laugh because, you know, we often come up with that. We are convinced that the physical stores, actually the 20 million stores out there, are a very essential fabric of our economy and our society. We think that revitalizing that fabric, which by the way is very vulnerable, is actually a very meaningful purpose.
It can bring a lot of positive impact. Reversely, if it doesn't happen, there can be a very negative and very gloomy scenario ahead of us, and probably faster than climate warming. We believe in that purpose very much, and it's driving us for years, and it's going to drive us because for sure it's not the end. We think it's urgent for the world to be realizing retail is the biggest industry, the largest private sector employer. It is also responsible for 25% of the global GHG emissions, according to the World Business Council for Sustainable Development.
You know, I think that it's not a surprise if it has been now a priority for retailers to really set ambitious sustainability targets, and we're gonna help those targets to be achieved. You know, the contribution of retail to sustainability is huge. If you think about the number of things we've already talked about, enabling local and low-carbon e-commerce, you know, fostering local production and consumption models, reducing food waste. Food waste, 5 billion tons of food produced every year, 2 billion tons lost and wasted. 2 billion tons, right? 20% is in commerce, is in the retail part. We're talking about 400 billion tons. We're talking about more than 2 gigatons of our carbon emissions, just that food waste, and it's very to reduce with technology in stores. Enabling end-to-end supply chain transparency.
Don't forget, store is the single point of failure of the whole supply chain, is where we don't know what happens, basically. Paperless, obviously replacing paper is very significant. Influencing responsible consumption at the shelf. Well, you know, this is simply because we have all these ways of communicating at the very moment of purchase. I can't go much, you know, longer in all these things. We have so much things to say. What I'm telling you is that there needs to be ambassadors to put that, you know, topic at the top of the agenda, and we're doing that. We've been participating, you know, in the sustainable summit of the World Economic Forum in September. That's where, by the way, the article I was mentioning earlier was coming.
I'll be next week at the COP27 saying, "Yeah, there will not be sustainable cities without sustainable stores." You know, obviously, there's gonna be sessions around that topic at the Davos Annual Summit. We are absolutely trying to do our role here. The first role we are also doing is actually our net zero plan, our own net zero plan. You can see here are two parts. First, decarbonizing our products. Right. You would say, well, you would be right to say, "Look, you're gonna flood retail with billions of IoT devices. That's carbon. That's carbon at the end of the day, right? What's the return on this carbon investment? Because you're going to do that, right?" We've been doing the work very carefully, you know, very seriously with Carbone 4.
Everybody in France knows Carbone 4 and its visionary leader, you know, RDC and Trace, tooling the approach, having our Scope 1, 2, and 3, you know, carbon footprint, and working on a number of things to remove carbon from our solution. We are removing carbon, we are removing servers, we are removing access points, we are removing cables, we are removing. You know, we are refurbishing and giving a Second Life. We are also working with our Vusion E program on reducing that. That's one thing, you know. Reducing by 30%. Well, we'll see the numbers later. Anyway. The other thing is all the drivers that you see is helping retail to decarbonize.
We've been doing a certain, you know, exercise of measurement in order to give us a target for these next five years, which is to reduce by -30% to -40% our carbon intensity regarding our products, which is already a very ambitious target. More than that, we have evaluated, at least on part of the levers, you know, the return on carbon, how much carbon we can offset with every one kilo of carbon we're putting out there in the atmosphere, and that is a very high return. We need to move on. I'd like to, you know, talk a little bit about people. People are by far our most valuable assets. I've started this journey, you know, 10 years ago.
It's been essentially about, you know, bringing people together from companies, from many countries. The partner with whom I've been doing that is Marianne. I will ask her to come on stage. I've known her before. She was probably my first recruit when I arrived. Marianne, maybe you can talk to us a little bit about this ambitious plan.
Thank you, Thierry. Thank you. That's right. We all joined the company 10 years ago, so it was in 2012. At that time, it was a company with around 100 people, essentially located in France. Today, 10 years later, we are a fantastic group of more than 600 people based in 19 countries in 4 continents and with an incredible culture. I think we can be very proud of that, and we have done that with an organic growth, but also with 4 big acquisitions. I think we can be very proud of having all the entrepreneurs and the CEOs of this acquisition today in the room. I can see Michael here from Germany, and also Andreas from Austria, and I can see Scott here from PDI in Taiwan.
The last one is Roy. Where is Roy? Yes, from U.K.
Ireland.
Ireland, sorry. Ireland is not U.K. Well, we have two subsidiaries, one in Ireland and one in London. All together, I think what is fantastic is that this acquisition has also grown a lot, so we have invested in people in that countries. All together with the internal growth too, we have now a fantastic international teams. I insist on that because it's a big asset for the company and for our business in the world. What we can say also is that we have built a common culture, a philosophy of management, and I think we are all here to build this company all together and for the next five years. No, sorry.
Yeah, we can sum up our HR policy with this five pillars. First, we believe in long-term human capital development, and I think it's very important. We believe that motivation is the first driver of our performance. We offer one of the best place to work, and we value diversity and gender equity inside the company, and I hope you feel it. Thanks to a high quality of social dialogue, I think we can say we build the company all together. Let's have a look of our current reality. More than 600 people, you know that already. 19 countries, 4 continents. All together, we represent 43 different nationalities. It's a big number. We have so international teams. It's a big asset for the company.
We have a nice mix of generation, and it's very important to have this mix of generation to innovate also in our sector. In terms of attrition rate, I think we can be very proud after this COVID crisis with this incredible employment market to keep a stable and a low attrition rate at 9%. We have also happy people, Thierry. With our employee net promoter score, we have a score of 25, and we target much more. We have also another pillar of our HR policy, which is our shareholding program. We share the benefits of the company with 30% of people and this 30% people represent all the key people and all the managers of the company.
If you look at how it decreased the attrition rate from 9%- 3% of attrition, you can feel how it's powerful also for a long-term development with all our key people and managers. It aligns everyone, it gives a sense of ownership, and we are all focused on the company targets thanks to that. I insist on that because I know that Thierry and the board members are going to present another new shareholding plan, and I think it's very, very important for us. Last percentage, we are proud to have 33% of women in a retail tech company. It's a good figure for a retail tech company, but we can do more. We can do much more. To do more, we have recruited 40% of women this year.
We have also 40% of women on our board of directors, and I can tell you that they are all behind me and behind the team to make us more diverse. We have already 29% of women in management position. I'm sure that next time, we will have much more women on stage like me today, and I'm sure we can do it. My last slide is a sum up, but I guess we don't have the time to develop that. What you have to remember is that we have launched in 2017 a lot of programs to, let's say, push the company to an international spirit, with a lot of programs.
This year, we have launched other programs to support the next step of the company, especially for the U.S., and it's going to be a huge growth in the U.S. too, and we are going to do it all together. You have seen our achievement, but we target much more for 2027 with 50% of women recruited, 50% in management position, and in NPS up to 50, and an attrition rate low to 7%. Thanks a lot.
Marianne Noel, thank you very much. Thierry Gadou, if I can invite you back to the
Yes.
We're also delighted to welcome for our discussion Peter Brabeck-Letmathe.
Welcome, Peter. I just had a few words before inviting Peter, but that's fine because, you know, those chairs are actually much more comfortable. It's the earlier the better. Yes, I mean, the third pillar is about, you know, governance, and very often, you know, it's like not necessarily very focused one actually for us. What it means, governance is ensuring long-term stakeholder value. It goes with the right governance bodies, very independent, very competent governance bodies. It goes with having measurable targets, and it goes with a transparent, very detailed, very serious quality of reporting on these standards. We wouldn't have, I think, been able to achieve everything I presented earlier.
Without the scrutiny of a number of government bodies, there are two essentially, of course, on top of the management of the company, but there are two. There is the international advisory board, which is chaired by Peter, and some of our representatives are here today, so Viviane Reding is with us today. Maybe you can just raise so that everybody sees you, Viviane. I think Candice has left for a minute. Candice is here. You are supposed to be okay. Then we have Hélène. Candice is the chair of our ESG nomination remuneration committee at the board, which is that committee here. Hélène Ploix.
Hélène Ploix, it's important, you know. What is great about our advisory board, I tell you, and our board is very easy, they're so famous, no need to present them, right? They are a great person in China. Couldn't come today, but anyway. Peter, just a word before actually handing over. I just wanna say a very personal word because I have the privilege of knowing Peter and having guidance of Peter and of all the advisory board members. I have a great admiration for one thing in corporate companies. You know, I've been a consultant, I've been an investor. There is one thing I admire and only one thing I must say, and that is long-term high performance. All the words count, performance, high, and long-term.
It's very easy to have short-term high performance. It's very difficult to have long-term high performance. The companies I admire are companies like L'Oréal or Nestlé or Accenture, the company's very high long-term performance. Well, I mentioned the company that Peter basically built. Didn't build, but you know, made the largest company in Europe and the largest CPG company. I just wanna thank him again, and it's great to you know to have him on our board and to have him accept to chair our advisory board.
Thierry, thank you for those. Peter, of course, for more than a decade, the transformative Chief Executive of Nestlé, then elevated to the role of Chairman and continued to shape the company's direction and strategy until his retirement from the board. He's also vice Chairman of the World Economic Forum. From that position, Peter, you advocate greater action by business to preserve and protect the world's supplies of water and food and to develop a shared value. Of course, as we talk, they are also talking in Egypt at COP27, the latest global conference on climate change. The U.N. Secretary General, at the very start of the conference, said that we were driving on the road to climate hell with our foot still on the accelerator. What's the challenge for business, for the investors in this room when they hear comments like that?
Well, I have two reactions to those comments. The first one, I'm very happy that politicians are apparently waking up, because if you look backwards to the other COPs which we had before, it was the private part which was already saying to the politicians, Glasgow, if you remember, there were public statements signed by hundreds of CEOs saying, asking politicians, "God sake, take action. This thing is serious." It was the private sector, it was private enterprise who was pushing the politicians to take actions. That they are starting now to say action has to be taken because we are driving against the wall, I mean, it's at least a sign they have heard the message. Otherwise, I don't expect very much. I expect a lot of talking. 40,000 people traveling all over the place. It's not necessarily what will diminish the CO2 output.
You could have done the same thing perhaps on a team like you are supposed to do it now in our cases. I think it will be another one of a lot of discussion promises and nothing really coming out. When the solutions, if you would, if this would be a business issue, the solutions would be relatively easy. Okay? The first thing, we have said this now for more than 10 years, put a price on carbon and let the free market work, and it will work. Very clearly it will work. Okay? Put a mark on carbon. That's it. Even companies like Exxon has demanded this, okay? All the free enterprise are saying we need a price for carbon because you have to understand one thing.
As a businessman, if you want to make an investment, you have to justify your investment in economical terms. As an entrepreneur, you're not allowed to make investments which are producing losses, because then you're not sustainable. Your business is not sustainable. You have to have an investment justification which is based on a pro-profitability. If you put a price to carbon, an investment which diminish carbons is economically justified. If you don't do it's very difficult to justify. The same story goes with water. Okay? How do you want to make investment into water when you get the water free of charge? Okay?
Yes.
This is the first and fundamental thing. If you want to diminish the carbon output, the first thing, put a high price on the carbon, and then let the market work.
Does business need to do this independently of the political climate? If there's a sense that when the politicians are talking, it's going backwards, is it for business to drive it forwards?
Yes, it is of course. I mean, we are certainly a very important part. We are not the most important part, but we are a very important part, and we have a responsibility. I think the presentation today by Thierry was very clear. In today's world, to run a company, you cannot do it if you do not have a certain social sensitivity. If you only have social sensitivity, you cannot run a company either. I think for everybody, it is quite clear that we have a responsibility towards society, because it's the society who allows us to be active. Okay? Perhaps we have forgotten that it's not so long ago. Before the Berlin Wall was falling, we didn't receive the right to act in more than half of the world. Okay? We could not act there.
Now then, after the fall of the wall, we received the possibility to act, to become active. The society allows us to be active, and therefore we have the same responsibility towards a society than we have to our shareholders. One gives you the money in order to be able to act, and the other one allows you to act. The responsibility of a CEO has to go to both sides. Environment is part of the societal responsibility that we have.
Is the investment community playing its part?
I would say there has been a big change in the investment community over the last couple of years. There are still, I would say perhaps today, a minority, which is short-term traders, quarterly profit and all these things. Mainly activists, which we all know and which we have seen. We have been victims from activist attacks. I would say if you talk today to the big investors, BlackRock, Blackstone or Fidelity or whatever, the big ones, the most part of the discussion goes about what is your environment? What is your ESG commitment? Is this public? Is it being audited? Are you transparent? Those questions are now in any shareholder meeting or in any analyst meeting.
Are your promises on ESG accurate? Are they deliverable?
Well,
Because every company talks about ESG nowadays.
Well, that's already a good thing, no?
Yeah.
At least there's a consciousness.
Yes, but-
Okay?
Some of them don't mean it.
I don't think that somebody is voluntarily putting this fake news out. What can happen is that they are starting to make promises, like they're making financial promises, which perhaps they have not thought through whether they can really deliver it. The second thing is that society is changing the expectations. When you said that, for example, ten years ago, you're going to reduce the water consumption by 80%. You have been concentrating with reducing water consumption by 80%. You achieved it. Five years later, nobody wants to hear about it. He only wants to hear what are you doing about CO2.
Once you have the CO2, the next thing, the meeting is going to be, "I don't care about your CO2, which you're doing, but you are still producing the most plastic in the world." You see, the demands are changing also. Therefore, it's not always, when you are proposing something, the expectations already for something different. This is why the idea about this greenwashing comes out. I mean, perhaps like in any part of society, perhaps is one or the other one who is putting fake targets out, but I don't think so. I think the reality is trying to be as honest as possible because it knows that it's going to backfire if you are really not performing up to there.
Thierry, as well as introducing, Peter, you also highlighted the other great members of your-
Yeah
Advisory council, it's great that they are with us as well today. What do you learn from them, from him?
Well, I think that is a very key question. I think that if I was an investor, I would ask myself what kind of guidance has the CEO of a company. It's very good. It's very important to have the very, you know, guidance. Obviously, you know, it's fundamental for me to be able to, you know, gather advice. Not only for me, by the way, but also for the executive team of people who have been incredible achievers in their own domain.
You know, either the political domain like Viviane Reding, who has been three times EU Commissioner and Vice President of the European Commission, or Peter Brabeck-Letmathe, who is one of the greatest leaders I know in business leaders, or Candice or Hélène Ploix who has been the first woman at the board of the International Monetary Fund. I mean, I'm so lucky to have all this experience helping me to stay focused, avoid the, let's say, being derailed into too much, you know, sort of being biased or. It's a very important thing to be able to have guidance.
20 minutes, you know, of time with somebody like Peter, who's seen every situation in management of a company in every topic, you know, is just invaluable.
Do they challenge you?
Yeah. Enormously. You know, enormously, permanently. I feel every time I have, especially, you know, the board and the advisory board, I feel totally exhausted for three days. I can't recover. It's like, you know, a stress test of many hours, and they're smiling because it was the case of the previous one, actually not so long ago. You see, I can recover. No, they are permanently saying no to me. No, but in a good way. Again, I, you know, you need to have enthusiasm and energy to drive a company, you know, especially a company that goes fast, that needs to be. You need experience and not only experience, you know, but also experience of people who have done so much. I mean, we have extreme achievers here, right?
Even now, you know.
There's another reason why we're doing it. Because we are all shareholders.
Yes. Absolutely. That's it. Well, you know what? No, no, but it's like the price of carbon. You know, it's here in this room, whether it's the team, whether it's you investors, whether it's the board, we're all shareholders. We're actually having the same currency in the pocket, and that's very important. We're aligned, you know.
Okay.
That's very important.
Thank you. Let's open this up to some questions from the floor. We have some microphones, so for our investors, our analysts, and our associates here in the room, if you have a question that you wish to ask Thierry or indeed Peter, you'd like this microphone. That's fine. I'm very happy to give that to you. Question for Thierry or for Peter on the first segment that we've had so far, so on the market, the strategy, and ESG. Who would like to take the first question? Just put your hand up, wait for the microphone. When the microphone gets to you, then tell us who you are. I'm not seeing any hands in the room. Is that a good sign or a bad sign?
Very cute.
It's a sign that they are shy.
It is a sign perhaps of shyness. I've never heard of investment analysts described as shy before in all my times reporting from the city. We have a hand here. Just keep your hand up, sir, so we can find you with the microphone. Thank you so much. Tell us who you are.
Good afternoon. Aurélien Sivignon from ODDO BHF. Thanks a lot to the speaker. I will have a first question to you, Thierry. During the presentation, you mentioned a lot inflation, labor cost, data as well as driver for adoption for the ESL. I was wondering how the return on investment is evolving recently for your solution. Meaning if I am a U.S. retailer, how long could be the return on investment to switch from paper to electronic labels. Thank you.
It's a good question, and the answer is very simple. It's never been so high, you know. Today with the inflation, with the labor cost and the labor shortage again, which might be even worse than the labor cost growing, it's actually, you know, much higher, and this is why we anticipate, as you maybe have noticed, a very strong increase, and you will hear from our CEO in the U.S. shortly. The ROI is quite high now.
Thank you. Thank you for your question. We'll take one or two more if we have them. Otherwise, we'll move on to the next segment. The last call for any questions in the room. Pop your hand up right now or forever hold your peace. Right. We are concluded with that segment of questions. Thank you very much. Please join me in saying thank you to Peter and to Thierry as well. Thank you. On a personal note to Viviane Reding, thank you so much for reducing my mobile phone bill. Because I know it's your work that has done that across this continent. When we were in Europe, we appreciated it as well. Things have moved on a little in history since then, but thank you for that particular action.
We move on now, I think, to the technology and products section of the presentations. We're going to hear about R&D strategy and we hear about that from the Group CTO, that is Andreas Rössl.
Hello, from my side. My name is Andreas Rössl. I'm originally one of the co-founders of imagotag, and I joined the group, 2014. Since 15 or 16, I don't remember exactly, I'm leading all the engineering efforts of our teams in the group. I'm happy to be with you today to give you a bit of insight about our technologies and R&D roadmap. First of all, I want to give you a bit of insight where our teams are based. As Marianne said, we are quite an international company, a very distributed company, and we have teams, and my teams are located in several different sites. Here in Paris, in France, in Austria, in Graz or near Graz. All the team which came with the Magatech acquisition.
The team in Ettenheim in Germany. That's the team which came with the Findbox acquisition. The team in Ireland, Cork, it's another acquisition, so that came with MarketHub. A recent, a very recent team we built is in Croatia, in Zagreb. That's not far away from Austria, so very convenient for me to travel there. Another big team and a very nice team we have in Taiwan, in Tainan. That's the team and the company of Pervasive Displays, which has been founded by Scott, who we also will hear in a few minutes. We've also started to build a team in the U.S., so in Chicago, which will serve our U.S. market and a team which will grow also very fast in the next years.
Altogether, we have like 200 people. No, more than 200 people in the R&D team in the meantime. That's about 30% of our global staff. This year we spent around EUR 30 million on R&D, which is about 5% of our group's revenue. Let's talk a bit about our core technologies and our core expertise. You see, we are a very, very deep tech company. That's the reason I'm the only one who is allowed to wear a T-shirt on stage. Yeah, we have very, very deep knowledge about low-power displays. That's all the technology and all the experience which came with the team in Taiwan. We have very, very deep knowledge about ultra-low power IoT and edge devices.
A lot of knowledge about, and a very high expertise in connectivity, so everything around radio and communication protocols. That has always been a key differentiator of SES-imagotag, so always a very key asset of our company. We have very great knowledge and expertise about high scalability cloud. We have built up that knowledge over several years in the meantime. We have great know-how and expertise in the computer vision and artificial intelligence space, and also great knowledge about big data analytics, which came with the team in Ireland and Roy joining the company. What all those technology areas have together is really a common mindset. We always think about ultra-low power, very long lifetime products. Security has always been in our mindset. High scalability, real-time, and interoperability.
Interoperability, especially between our own technology areas, but also with external stakeholders. Really being compatible and interoperable with third parties. Yeah, no surprise, all those technologies are feeding our product portfolio, our Vusion ecosystem, all our products, and yeah, that's quite logical and no surprise. What we are also very proud of is our big portfolio of IP assets and patents. So that has always been in our DNA and the DNA of the company to protect all our innovations. In the meantime, we have more than 110 patent families and more than 500 active patents in our portfolio, covering all our main innovation areas. We really try to spread and try to protect everything.
We're also very high ambition to double this number within our Vusion 2027 plan. Also important to highlight are the dots on the left, lower bottom, that's our competitors. We really have a multiple times of the patent portfolio of our competitors. That's not only our opinion, that's also proven by external analysis. All those technologies really feed our ambition to make the physical store a digital asset. We have heard about that already. Stores must become much more data-driven, much more automated in future. We all know that will require a lot of IoT technologies.
We have to put sensors, IoT devices, connectivity, infrastructure, cameras into the stores to enable additional processes like pick by light, stock to light, out-of-stock detection, sensing, temperature sensing, humidity sensing. That all requires a lot of IoT technologies. You probably will wonder why those technologies have not scaled until now, because it's complex. It's really complex. Apart from our own technology, apart from the ESL technology, a lot of other technologies like robots or beacons, for example, beacons was a very hyped topic a few years ago. A lot of these technologies had problems to scale because massive scale is an issue. We have thousands of stores to cover. There is billions of shoppers every year, billions of SKUs. That's really a problem for technologies. Then the ultra-low power aspect.
These technologies, the products and the IoT devices you put into a store, they need to last in the meantime for almost a decade. Still you need the important processes in the store, they rely on those technologies, so they need to be accurate and highly reliable. Security, I mentioned before, you probably heard already about that. Like METRO Germany was part of an attack in the last weeks. They had an outage for almost a full week. Another retailer in the Nordics had an attack or has been attacked a couple of months ago and had an outage in 600 stores for almost a week. Security with the rise of these IoT technologies really becomes an issue. Last but not least, affordability.
All those retail we know is struggling. It's a challenge. It's a low margin business. These investments in IoT are still very CapEx intensive. That's a challenge. Really almost the only technology which has scaled until now in retail is electronic shelf labels. That makes us a perfect backbone technology, like Thierry already mentioned, to also put more other technologies into this ecosystem. What do we do as SES-imagotag to really help our customers to solve those key problems? It's our products. We have invented a bunch of devices and sensors, smart labels, which are now really very long lifetime, super miniaturized, you know, even able to go on garments in the meantime, so super slim.
We have invented cameras and sensors. My colleague, Michael, will talk about our Captana product range in a few minutes. We've invented digital signage products which go on the shelf to help digital marketing, and my colleague, Scott, will talk about that in a few minutes as well. This all has been really also supported by the great know-how and the great expertise of our team in Taiwan, really helping us to bring always the latest display technologies into those products. Now talking about Vusion E and our sustainability program. Thierry already mentioned that this is very important for us as a company. We do not only talk about it, we're really launching a next generation product line next year, which is improving the power efficiency for a few times.
Not only improving power efficiency, we will really make a complete crazy innovation in retail. We will have the first product on the market which has no batteries anymore in the IoT devices. It's really the first and only batteryless solution for ESL on the market. Also I'm very proud that this pays off and that we have been awarded with the EcoVadis platinum sign. On the connectivity side, we continue to invest a lot into connectivity. As mentioned before, that has always been a key asset for us as a company. Those investments in low power RF, cellular technologies, for example, we're investing a lot in NB-IoT, in cellular connected devices. Also we invest a lot in Bluetooth Low Energy in the meantime with our partner, Qualcomm.
All those investments in connectivity will help us to provide a real first retail IoT hub. Now let's talk about cloud, and I'm really happy about that topic, so that I can spend a few seconds, because we have really been the key innovator of Software as a Service solutions in retail. We have started a few years ago already to invest massively in this topic, and we have already come very far. For example, we are already 1,000 stores under management in our cloud solution and in our cloud service. That's so far only 30% of our installed base, but it's growing very fast. We have already 50 million devices under management. Our ambition, as we heard before, it's 1 billion devices by 2027.
Even 50 million devices is already the largest IoT network in retail by far. There is no one even close to that. We are doing more than 3 billion IoT health checks to our devices every day. We permanently ping our labels if they're still there, if they're still in good health. We are offering more than 99% availability on our cloud solution, which is really very. Our customers are really happy about that. We're not stopping there. We continue to invest on the cloud aspect. We continue to invest in serverless elastic cloud technologies, making sure our backbone is really able to maintain and to manage the billion devices ambition. We continue to invest in AI technologies with our team around Captana, with our ESL management team.
We also continue to invest in trading insight technologies and peer analysis with our team in MarketHub in Ireland. Let me stop here for a few seconds. We talked a lot about the challenges about scale before, and I have to borrow a statement of one of my favorite role models, Steve Jobs, who already used a quote in one of his keynotes, "People who are really serious about software should make their own hardware." We think in a very similar way, we think that all these challenges in this high scale IoT area can only be solved if we really bring all the intelligence of the hardware into software. That's why we have invented VusionOS, which is our retail IoT operating system. VusionOS is.
It's part of our operating system is in the cloud, and part of this VusionOS is on the device itself. This technology really helps us to drive and manage millions of devices across the whole store fleets. It helps us to provide real consistency across generations of hardware, and it really helps us to transfer the intelligence from the hardware into the software, and helping us to drive this open ecosystem. Because we also want to bring this VusionOS technology to third-party IoT vendors and really make sure that this can help us to push forward this open ecosystem. Yeah, in a nutshell, this is really an open ecosystem, and at the end, you can think of it about like your iOS on the iPhone. This VusionOS will help us to permanently bring new features to our customers.
It will help us to have the devices always managed, and it will help us that those devices are always up to date and managed from our cloud backend. Here is a good example how Vusion OS helped us already to make a breakthrough in our Infraless product range. In Infraless, I think I need to give a bit of context. A few years ago, we have only installed our proprietary access points. Proprietary access points, you know, first of all, it's an additional piece of hardware. It's something the retailers must manage, and it really is always a problem when you really deploy thousands of stores. There is an ecosystem of Wi-Fi AP vendors, so the big guys like Cisco, Meraki, Aruba, and those guys are already in the retailers.
We have created partnerships with all those companies, and we have brought our VusionOS technology into the existing access points, so retailers can really benefit from their existing infrastructures and basically roll out our ESL solution with the press of a button by deploying VusionOS on their existing hardware. It also helps us to reduce the carbon footprint because we don't need to do extra cabling, we don't need to do extra installations of access points. That's really a great advantage. I'm also happy to announce that next year, 2023 will be a remarkable year for retail IoT because we are bringing all those technologies together and really bring them in a new platform which will be the first unified store IoT hub. It will be the first platform which is based on an open, secure standards-based platform.
It will be the first IoT sustainable platform which does not rely on battery-powered hardware anymore. It will also enable to be the first retail media platform and a first platform for real-time shelf data. Both topics will be addressed by my colleagues, Michael and Scott, in a minute. The last thing I wanted to highlight because we are inventing technologies and those technologies are not only for retail. We are really thinking about innovation beyond retail, and we've already started to bring our technologies into other areas than retail. For example, healthcare, office signage, industrial logistics. We've already started to create a team around that, and we're already doing this year around EUR 10 million of revenue on those non-retail segments.
We've decided to not put that dedicated in our Vusion plan, but you will probably hear about those topics in further plans and business updates in the next years for sure. Thank you from my side, and I'm going to hand over to Michael.
Andreas, thank you very much. We're now going to hear more about Captana, which is part of the SES-imagotag group, its Chief Executive, Michael Unmüßig.
Thank you very much. You probably heard it, the name Michael Unmüßig. It's hard to pronounce. That's why most of the colleagues just call me Mu. That's a very international and very useful short form of the name. We talk about the transparency of the shelf and talking about Captana. Captana stands for Capturing and Analytics, and the basis is what we would like to deliver is the shelf transparency. I hope this works. Okay. What we would like to deliver is we see that the absence of data is one of the biggest challenges for retail. What we would like to deliver, we would like to close this gap and say next to promotion, execution data, transactional data, shopper experience, all the things that which are already available, we would like to add real-time inventory data and real-time shelf data.
This is the missing point, and exactly this is what we address. What we see is the missing data leads to a big, big problem for retail, especially when we see that around, and that's the basis from the IHL Group in the U.S., that Amazon gets 24% of the revenue because the product is not available at the shelf. Could you imagine the growth, how differently would the growth of Amazon would look like if the product would be really available in retail? It's a big, big impact for retailers and as well for e-commerce. We see that especially in retail, between 4% and 8% of the not realized revenue is related to an out-of-shelf situation. We heard this from Mark Ibbotson, 1% of missing availability at the shelf leads to 1% missing revenue.
It's a huge, huge impact if you see that retail is one of the largest, or it's the largest industry of the world. It happens for all of us. If you go and shop, and you see every twelfth product, thirteenth product is not available, it's a bad customer journey. It's a bad shopper experience. Exactly this is what we address. That's what we developed. That's why we developed a real holistic system comprising the sensors, a holistic and easy-to-use cloud platform. We give the data in the hand of the shoppers, and we have an instant connection to the leading ERP system, to the leading checkout system. That's simplified because what we hear and see is that one of our largest customer, Monoprix, installed the system by themselves. We showed it this morning in the stores of Monoprix. How does it work?
We use the existing ESL bases. We install the camera. You just click it in, and within a few minutes, ESL Morse code their article number to the camera, and instantly the system works. It's just amazing, and that's what we heard from everywhere in the world. It's so easy to use, and it's so easy to solve one of our biggest problems we have since years. That's not just the story because we're really seeing this everywhere. But what are we doing? We're taking a photo and converting the photo into structured data. More or less, we're converting it in an Excel table, but we make it useful. We build actionable insights for the retailer, and we give this actionable insights in the hand of the associates because we have this very easy-to-use app. It's not just telling a story.
I would like to show you some real insights from our customers. We're currently active in 250 stores, and one of the biggest assets of our group of SES-imagotag is that we have a huge footprint in the market. We are existing since 30 years, and we have a lot of customers and retailers, and already 82 of the 350 are testing our solution or are with us in active talks. That's purely amazing if you consider that we started this initiative just a year ago. You see there is a foundation in the industry. There's a foundation there. Let me show you some very nice tests we did. That's even a start of a rollout in one of the most famous, I would say, the second-largest retailer in Germany. Let me show you a video.
[Foreign language]. Captana ist ganz einfach zu verheiraten mit dieser Preisauszeichnung. Einfache Installation, kabellos, einfache Bedienung. Wir können es dabei auf allen bekannten Endgeräten nutzen, ob Smartphone, Laptop oder PC. Dabei schätzen unsere Mitarbeiter die einfache Darstellung und somit auch die Möglichkeit, es, ja, ich sag mal, schnell und einfach analysieren zu können. Wir haben 'ne ganz einfache Diagrammdarstellung, tolles Farbbild und dies ermöglicht uns, den Alltag ganz anders und neu zu priorisieren. Unseren Mitarbeitern sind Dinge wichtig, die ihren Arbeitsalltag erleichtern. Ich als Verantwortlicher hier im E center Warnow Park freue mich, meinen Mitarbeitern mit der Lösung um Captana ein weiteres Werkzeug an die Hand zu geben, was ihren Arbeitsalltag erheblich erleichtert. Wir konnten dabei als E center Warnow Park in der Zusammenarbeit mit Captana tatsächlich unsere Artikelverfügbarkeit um ganze 3% steigern und somit unsere Fehlartikelquote entsprechend natürlich auch senken.
[Foreign language]. Ein weiterer ganz wichtiger Punkt ist, dass unsere Mitarbeiter davon berichten, dass sie heute mehr Zeit haben, sich um unseren Kunden zu kümmern. Das ist ja für sie ein ganz entscheidender Vorteil dabei. Wir schätzen die Zusammenarbeit mit Captana. Arbeitsprozesse verschlanken sich, unsere Kunden sind zufriedener und in dieser Technik liegt auch ganz viel Innovation. Daher freue ich mich auf die gemeinsame Zusammenarbeit mit Captana.
Perfect. I have to say, that was the word of Mr. Keneis, was not a storyboard we wrote. He's so convinced that he recommended the solution to the whole crew. The why is very impressive, because we started in February, and now in June it was already 3% improvement of OSA. He felt it, because he had more in the pocket. It ended up a 2% increase in revenue, and that is really impactful. Even more, we heard about the shortage of people, the shortage of employees in the store of associates. This is how he optimized his working schedules. You see, this is the times when he have opened and the times, and the hours.
You see the black and red areas, that when he have the highest or the most horrible out-of-stock times, and he optimized his work schedules and then it ends up in a better and improved store and a higher efficiency there. Not just this. We have more than this. We also have a store in France. We heard about Monoprix today, and at Monoprix, we started to implement the solution already last year of Monoprix in rollout with us. They installed a camera everywhere. For the ones who was with me this morning have seen there are 125 cameras already there. Monoprix uses this technology ultra efficiency. In the areas where they use Captana, they improve their revenue by 1.9%, but not just this. They use it every day to improve forecasting, replenishment.
They use it for their associate, so it really improves their day-to-day work. This is really impressive, because installing 12,000 cameras, not by an ISV, not by us, by themselves. They installed it by themselves. They have a huge benefit return on investment below 1-1.5 years, significant improvement of the OSA. Last but not least, their customers, their shoppers are more happy, 30-40 points more on NPS. That's really impressive, and that shows how impactful this solution can be. When we summarize this, we see, one, our customers, our shoppers, which using this technology can reduce 1-3 full-time employees or do not hire them or use the other ones even better. Full-time in average improvement on on-shelf availability, 30-40 points, more loyal people, more net promoter or better net promoter score.
Last but not least, up to 2% incremental sales increase. Very impressive data. We talked about abundance sometimes in the last year. What we do is very easy. This is the tipping point when we talk about ESG. You have the word where you said, "What is the best abundance?" The best on-shelf availability versus you're creating waste. What we do, and this point actually is around 93%. Our technology moves this line up to 97%. That means we improve the revenue by reducing waste. This is the most effective technology you can currently buy on the market. We heard a lot. We have two McKinsey persons here in the room. It's nice to say that even McKinsey confirmed what we are doing, that this technology have the potential to procure.
To improve the EBITDA by 2%-4% in in-store labor automation and 1%-2% in the inventory management. That's just impressive. We are very confident that we grow fast. Currently, we have 1.5 million SKUs monitored all over Europe and starting in the U.S. Yeah, we have a huge pipeline, huge roadmap, and that makes us believe that we can grow rapidly with the Vusion 2027 plan to over 200 million monitored SKUs all over the globe. An impressive roadmap, that fits or goes in line with what Thierry already said.
We are very confident that we are moving from an ESL company to a digital shelf company, where we then say, "We need more, and we can do more." As Andy said, there is a lot of them in the pipe, and we now say the camera only have a 2D view. We only see the product in front of it, but it would be good if we see also what is behind. We now expand the feature set from a visual, computer vision perspective into a real-time inventory management system. That means we have SKU-level-based inventory taking. That means we deliver real-time information, and we are the ones which makes the CFO most happy because we know exactly what they have on shelf. We know exactly what e-commerce needs and the availability also for e-commerce.
We've built the whole holistic out-of-the-box real-time digital shelf managing system. Thanks for your attention.
Michael, thank you very much. You remain with us on the stage, so please take one of the comfortable chairs. I'm going to invite back to the stage to join our discussions, Colin Peacock and Mark Ibbotson. Welcome back, Mark and Colin. We have met before. Of course, Colin at the ECR group has decades of experience at Procter & Gamble. Mark Ibbotson, retail strategist. His background is Walmart, Asda, at McKinsey, and Michael has just been presenting. Mark, give us the sort of the external point of view on what you've seen in this segment so far. You talked earlier about the digital store. Is this closer to the image that you had in your head?
I think it augments it. I think you know, anything you can do to simplify the task in store. You know, if you take a traditional supercenter in North America is 180,000 sq ft sales area. Walking that on a daily basis is laborious, tedious, tiring. If you can direct people, you know, work with purpose, by exception, where the opportunity lies, you will improve availability. You'll improve associate satisfaction as well, because I am actually going to do something. I have a chance to win. Don't underestimate that in retail at the moment. You start to liberate your associates to do higher value task. I think it is a big part of the connections and improving availability, and Michael gave the figures.
If your availability is below 95, it's a straight one for one. If you go from 89 to 95, it's 6% on sales. It then starts to the law of diminishing returns kicks in. This is a significant number for retailers struggling for volume, struggling to improve their overall satisfaction. The more you pick in store, the better the availability, the more you improve the velocity of fresh foods, the better the quality. Monitoring availability, improving availability, there is no downside, and it is part of this overall connection and simplification of the operation.
Colin, this is sort of the key point, really. The presentations so far have been saying, "You have problems with product availability, we can help you with that. You have problems with stock outs or merchandising, we can help you with that." How big is that problem? Does it actually require the solution that's been offered, or is this a solution that's just in search of a problem?
Well, you know it's a real problem, I can tell you that. Many industry studies have pointed out that the average out of stock rate is 8%, and that turns into extra sales and profit for retailers and for the CPGs. It's a big problem and, you know, companies, well, Nestlé and other companies, Procter & Gamble, you know, would resource this problem as sending in people to audit, to count, check, to fill the shelves depending on which markets that we have. In U.S.A, I think still 20%-25% of all the volume is direct to store deliveries. Again, this visibility creates an enormous opportunity to improve the productivity of those. Because you know you're visiting a store that has a problem.
As well as it being a solution, there is also a cost to a lack of data.
Yeah. Well, is there a cost to lack of data? What do you mean by that? Just so that I can-
Jump in.
I think absolutely. You know, walking around a store is a tough job. You know, people ask you questions, you get sidetracked. You are inaccurate. You know, this is a problem that we have always had. We've had more people thrown at it. Those people are difficult to recruit, difficult to retain, and are more expensive than they've ever been. If you can do a better job with less resource, direct people to where the problem is without them having to mine it themselves, it is very valuable. I think in the presentation, Michael was saying 1 or 2 people less in the head count. You can do the math on that. That's significant. I'd venture it's probably more than that.
I'd venture a lot of supervisors, a lot of management. This is their core part of their day, and if we can liberate them to do it more accurately in less time, we can either harvest the hours and return it to the shareholder or we can give them higher value task to do. Simple, repeatable, sustainable.
Michael.
Perhaps I jump in here. I just wanna say some 100 store, around 40,000 hours per year. It was interesting talking with you, and what was the outcome is that the management talks every day about this problem. There is one thing which we can measure, that's the 40,000 hours, but it's also the management attention this problem gets during all the day. Mark said before it was. It's a topic for my last 30 years, and I'm very proud to say it could be that this technology solves these problems forever. That's perhaps also an answer on the solution.
I think it makes the data less arguable. I mean, that's one of the problems we have with the existing data on out of stocks. It's quite arguable. Well, how did you come up with that algorithm? How do you know that statistically that's a confident prediction based off the POS data? Having a picture is there. But this technology does give you, as a CPG, one other huge advantage, which is actually understanding your planogram compliance. Very often that was a very difficult measure to get hold of. But because of the ESLs and because of the cameras, you really get a sense of whether the planogram you agreed with the buyer is actually being implemented. That first moment of truth. That's a real breakthrough.
Michael.
What we've also seen is when we talk now about saving time and the absence of data, it's also that we're just starting with the e-commerce in a store. It's not that it's on a broad basis. Could you imagine you need to pick products in a store and it's just not available? You have a shopping list, your wife did a shopping list, and the store can't find the product. That's not a nice shopper journey, so it doesn't solve only the problem of being that a product is not available, that you have to refill and replenish it. You create a bad shopper experience.
That's why it's so important to work with companies like SAP, forecasting and replenishment companies, and e-commerce companies like Salesforce together to make a great experience and make a 360 degree experience if you're in a store or in e-commerce. That's another point which we solve with this technology.
Colin, we know that for suppliers and for retailers, particularly, in difficult economic times like today, that promotions are of immense competitive importance. Is there a role for technology like this in that?
Well, for sure. Measuring compliance of promotions, whether they're actually put on display at the right time.
Mm.
whether they're empty during it, and then, you know, what percentage of stores actually supported it is critical, because you can then optimize your TV or your media investment. This would create another way of being able to measure some of that promotional investment.
Just, sorry, go ahead.
One last word. KPMG announced yesterday a very great report that is saying the CPGs investing EUR 200 billion in revenue growth and trade promotion activities, but the efficiency is at 30%-40%. Could you imagine how many billions Peter Brabeck-Letmathe just said we need? We need the basis. We need something to count, to calculate a business case. It's already there. That means we're talking about EUR 114 billion of inefficiency, which we now can address with a clear CapEx and OpEx model and a clear plan how to solve it.
Those stores that you showed us where it's already in use, how big were they? The question that's in my mind is how scalable is this? Is this still something that's niche for an operator or retailer with a handful of very nice, very clearly defined stores? Or can it be rolled out for the big time?
I think the answer is we are used to roll out IoT technologies in 30 years. The camera is part of an overall IoT ecosystem. Yes, we can roll it out everywhere. As you can see in Monoprix or in this store, even we as a technology provider was not involved in the rollout because the retailers does it by their own. Yes, it's scalable, and as Thierry said, we have an impressive supply chain, and the cameras are produced in the supply chain.
Just to bring it back to, you know, the themes that we talked about some previously up here around labor. I think, you know, for many retailers, having cameras producing alerts that send people to the back room every five minutes is probably not going to be sustainable for some of the large organized retailers. How you integrate the camera information and the data into your inventory replenishment processes and perhaps autocorrecting those gaps where you see some phantom inventory, I think that's the breakthrough. Where cameras become part of a bigger system around inventory replenishment. I know, Mark, you've got experience.
I don't see any problem with that. I think the Monoprix I visited in Paris was a complex large store across two floors. It changed their associates' lives. They found it simpler. They found their work days working. Don't underestimate what it means to achieve something in a store. That an associate can feel good about making a difference. That's what I came away with from the store. You know, in a big complex store, there are many department managers. If you're giving them accurate data in a timely fashion, it will scale regardless of the size.
That's the point, right, Mark? That's why it needs to be integrated in upstream.
100%. Yeah. This is part of your day-to-day way of working.
You can't send them false alerts all the time.
Not at all.
Thank you all very much. Just to say to our audience, we will welcome your questions from our investors and our analysts in about 10 minutes or so. For now, please join me in thanking Colin, Mark, and also Michael. Gentlemen, thank you very much. We now look further into the future with a presentation on the next big digital media is the store, and we get that guidance in the company of Scott Soong.
Hi, my name is Scott Soong. I'm one of the founders of Pervasive Displays. It's really an honor to be here with everyone. Thank you. I'm here to talk to you about Engage and what I am very passionate about, which is basically how do we make the physical store the next big digital media? What if I were to tell you that retailers are overlooking millions of revenue, high margin revenue, every day? You know what? The key to capturing this revenue is through the people that are walking through the store and the data they generate. You know, I was reading the Q2 2022 U.S. Census, and it said that 85% of all shopping dollars are actually still spent in the physical store.
That 85% of that dollar, 85% of that revenue of that, 82% of all the decisions are actually made at the shelf. What's very evident is that you have to get the right message to the right shoppers at the right time, at the right place. Decisions happen at the shelf. What you have is brands and retailers spending $ millions trying to move this funnel here. Trying to move consumers to help them become aware of the brands and the product to give them reasons to buy. They do it through basically touch points that are all throughout the internet, right? You go on the internet, you watch connected TV, you're on your phone, you're on your social media.
Those are all touch points out there that are trying to convince you that you should go buy. Yet when you walk into the physical store, what triggers do you have, right? If you think about that broader advertising as a whole and think about the global advertising spend, it's EUR 866 billion. That's a huge number. If you look at this chart that we show to the upper right-hand corner, this little pink line here, it says that basically digital as a medium is eating advertising. It's taking over television, newspaper, you name it. It's digital. Why? Because digital offers the solution to the evolving shopper journey, right? The demographic is changing. People are starting their shopper journey all over the place. Only through the digital medium can you deliver target reach, transparency, control.
You get a lot of data on how people are behaving, right? Then everything's automated, and then you can learn more about the shopper. If you think about it, and if you've heard the news of late, a lot of retailers are becoming retail media, and they're taking the cue from Amazon, and they're saying, "Hey, you know what? We could benefit from selling our data too." What they're seeing, these retail media are seeing is that basically Apple, Google, they're saying, "Look, we're gonna take away the cookie. You can't share third-party data anymore." Retailers are saying, "We got information.
We have POS system data, we have loyalty data, and we're gonna sell that information to digital." A few of the large retailers that have large websites like Walmart and Kroger said, "Look, we're also gonna try to make money from our website traffic." If you look at the overall traffic of retailers as compared to that of Amazon, it's non-comparable. Beyond selling data, what else is possible? What's next? I argue basically that the next thing in retail media is about the footfall, right? It's about tapping into the potential of the audience. If you were to put your ad tech hat on now, you're no longer retailers, you're ad tech media.
In the U.S. for example, there's on average, daily, 30 million shoppers who are walking through the stores. If you're an ad tech executive, wow, that's 30 million missed opportunities, right? What does that mean in terms of dollars and cents? Well, in the ad tech world, you measure everything in terms of CPM, impressions per thousand. That $20 CPM is basically for Netflix, right? Amazon Prime, $80. If you were just to do the simple math, 30 million times 20 CPM is $600,000 per day. There's how many days in a year? How many products in a store? It's a huge number.
We think, and we're working on basically creating new digital touch points that are in the store where people shop and at the shelf, right? Delivering that moment of truth that Owen talked about. How we do that, basically, we run all the dynamic campaigns digitally, automatically. We enable interactions at the shelf. We monitor all that information, and we generate a lot of information, and we keep that information also, and then we help the retailers monetize on that. I'm gonna take it one level down, okay? This is how we do it. High level displays and sensing at the shelf. Then we manage everything in the cloud, and then we analyze that data for maximum impact. Sounds like what everybody's saying.
The way I think about it is that SCS has a lot of Lego pieces that is all about optimization of operation. We're just saying, "Look, let's make that a different Lego set. Let's reuse that Lego set and use it to optimize profitability from revenue generating on retail media." We do so through basically ESL tags. We have the rail that has in-aisle sensors, large screens that we drive everything from the cloud. Using VusionCloud and Publisher, we leverage the Captana camera, and then we use the system in Captana and Pulse, which is MarketHub, to analyze the information and give it in a meaningful way back to the retailers. The journey actually started a long time ago. We started with the AD Shelf, right? The ads were...
We gave basically retailer the opportunity to engage their customers at the shelf through flashing, through QR code, NFC, and then that enables sponsored content and more information that's meaningful to the shopper in a personalized way. We introduced four color e-paper displays of what we call Engage tags. These basically not only do they do promotion to provide promotional information, they actually can show very rich, very familiar pictures of brands and their products that you're used to seeing all throughout the different touch points. Coming back to the most recent solution in terms of the digital end cap, this is what we're launching at NRF, right? Is this digital end cap, and the idea again is to display and sense, manage in the cloud and analyze.
Here's a recent example of that, basically up in Finland with a well-known brand. Those little boxes are actually products. They're 4-packs and 6-packs of Red Bull. We're talking about providing the medium, but also what's important is the message. Together, the message and the medium delivers the impact, okay? What we have in the pink down here is basically the levels of uplift that we delivered throughout the different types of content medium combinations. We've had an opportunity basically with our friends at Monoprix and at EUROSPAR, really to test out the concepts, and here I'll walk you through it.
On the left, it basically was a generic content that we said, "Look, how do we move its consumers from a lower costing wine to a higher costing wine?" We were upselling basically, just through generic content. We got 70% uplift on that. With the Garnier, basically what we did was we said, "Well, what if we just add promotion and then generic content?" Right? Content that said, "Look, Garnier, great product," a little bit of promotion, and we got 29%. We moved to the next one where it wasn't a video, but it was again, just it's triggering the ideas and concept or the concepts that, you know, the awareness, the consideration, we're triggering that at the shelf. Just by showing the Doritos plus that promotion says to the shopper, "Hey, I've wanted to try Doritos.
Now it's on sale, maybe I'll buy it." That triggered an amazing 61% uplift. Lastly, we put everything all together, right? This is really a Revitalift is not cheap. It's not a bag of Doritos, right? It's branded. The content is benefit-oriented. It recalls the message that you can see on the internet, on TV, right? Through the various different touch points, and it really is an amazing result. What's key here is that the medium provided by the retailer and the messaging by the brands, it requires collaboration between the two to make sure that there's an uplift and there's real tangible impact. Where do we go from here, right? Let me kind of talk to the left here.
Engage really for the retailer is about driving new revenue streams via retail media. We do that through digital touch points and everything automated, monitored in real time, which is not easy, and they never had before. We think there's an even larger play in working together with the CPG brands. Basically, we want their ad dollars to work harder for them, right? We had talked to the, you know, for example, Colin had talked about campaign compliance. Folks printing advertising, but it never gets implemented, and then you hire a third party to sit there and check boxes and do valuations. We have Captana now. We have reports that gets generated from a cloud. All that basically delivered on transparency.
If there's no product on the shelf, why do you wanna promote? Right? You could take that dollar back, right? More importantly, now this is the part I'm really excited about, which is A/B testing and then getting insight. We're gonna be introducing new sensors that are anonymous that are safe that gives brands and retailers insight into how, you know, how many people walk by, did they stop? What was their dwell time, right? A lot of granular information that you would not have previously in the aisle. To sum up, this is a quote from, you know, from basically a copywriter who is talking about brands, and it's really true. Brands are stories unfolding across all customers' touch points.
What Engage is about is delivering that digital touch point at the shelf in the store, okay? We wanna do it digitally to measure and monetize foot traffic, and we believe that this is gonna be a significant revenue stream basically for the retailers. For the brands, it's a win-win really cost-effective targeting, so when they spend their money, it's really gonna deliver that uplift. Thank you very much.
Scott, thank you. You're remaining on the stage with us. Andreas and Michael are also coming back up. If I could invite both of you. Please take one of the comfortable chairs over there. This is our second opportunity now for the analysts and investors in the room to ask their questions. Questions on the technology and product presentations that we've had. If you're watching us remotely, by the way, please continue to ask your questions using the chat box on your screen. We'll do all the written questions at the end of the day. As before, questions in the room, raise your hand. Just keep your hand up until we get the microphone to you, please. Thank you.
Yes. Hi, I'm Stéphanie Brunel from Financière de l'Échiquier. How is it possible to have a batteryless device?
It's a trade secret. Now, we invested over many years in this technology and we basically. Yeah. I think since this presentation will be public, I think I cannot really answer how it's been done, but you will hear much more about that very soon. It will be public in stores very soon.
Thank you. Thank you for your question. One over here. Go ahead.
Hi. Arnaud Alini, from Lombard Odier, Investment Manager. Two questions, maybe one on the market for Thierry, and then another one on the product. The first one on the market is, you know, you talked about the market opportunity and the digitalization of retail, but could you comment on your vision on the competitive landscape? Obviously, you're a market leader. Some people have tried ESL and failed. How do you see your current competitive landscape and how it may evolve over time?
We have a kind of moving competitive landscape because you remember it's a little bit. I take the comparison with SAP. We're kind of digitizing the store bottom up from the ESL infrastructure. I would say compared to our ESL competitors, I'd say the big difference is simple. The software is way ahead. There's no comparison in terms of the software and the cloud platform. The breadth or the scope of the solutions we have is also much larger. We do digitize stores, really. We don't sell, you know, ESL. That's the big difference. Now, compared to the other parts of the landscape, 'cause obviously we're entering, you know, the computer vision, we're entering the other things.
A little bit like, if you remember SAP entered the CRM, entered the supply chain, basically now they own it all. At the end, you know, I think, compared to these players, the new IoT commerce coming from the software, they will discover, I think, why, you know, somebody was saying earlier on stage, the IoT world is an, is a world completely new, of very deep, intimate integration of software and hardware. Without a very strong experience in IoT, you can come with software, you'll just, you know, sort of scratch the surface of the problem, never get there. And that is why so many very good ideas have never scaled. They just are not, you know, sort of fit for the problem of scalability, of absence of energy. That is the reality of mass retail. That's it.
I think from the ESL, we're far ahead in terms of scope and software, thanks to the five years we've just gone through. For the other players who are coming in also from other space, the fact of not having this infrastructure of ESL is gonna be very limiting quickly for them. For all the other retail tech, you know, we're not competitors, we are partners.
Okay. Thank you.
Maybe just one on products and technologies. Do you feel like you have today all you need in terms of, you know, technologies and products? Are there some specific, you know, bricks that you're still missing and potentially are looking to develop internally or, you know, through acquisitions? Thanks.
Maybe I'll take this one too. No, just very briefly, in the past, we have been always very pragmatic about, you know, completing our portfolio of technologies when it's a great time to market. You know, we might be continuing to do that. Definitely, there are very interesting things happening in, you know, in artificial intelligence, in data analytics, very interesting things. We'll be. You know, that's the strength of SES. We're a listed company. We are able to afford interesting, you know, opportunities. Why not? We've done it in the past. Frankly, we've done it in the past four times. They're all here, by the way. Yeah, that's how we. It might happen. Certainly, we're not the kind of company who says we have it all and we never need, you know, acquisitions.
Okay, thank you. Last one.
Hubert Maté, I'm an investor in SES for about 5 past years. Michael, there was a figure that was released this morning, which was something like the cost of visiting physically the stores for CPG's brands was about 5% of revenues. Is that a figure you can confirm or is it that magnitude or not? Visiting a store means you control your revenue cross and trade promotion measures. That costs you. A visit costs you in the average, depending on the region, between 60 and 80 EUR per visi
Of course, it's always depending to the vendor. If you're a large vendor like Nestlé, like Mondelēz, it's a different scope of revenue which you monitor. Definitely, you need to monitor your trade promotion spend. I said KPMG just announced it's EUR 200 billion with efficiency of 30%-40%. There is, on one side, a cost, and on the other side, just improve the efficiency of what you're doing from both sides.
Okay.
Maybe Colin can complete that. I mean, how many people in Procter & Gamble, you know, are paid to visit stores? Is it what-
We're just getting a microphone to you, Colin.
For most CPGs, you know, there would be a considerable expense. Possibly, I'd say the 5% number is higher than I could imagine. Again, depends on which part of the world, but you would see a lot of vendors providing support in countries like Mexico or China, you know, where the vendors would provide a lot of resources to fill the shelves and to check the shelves. The cost can be as high as you say, depending on which markets, and can be a bit lower.
Okay. Thank you very much. Thank you for your questions. I'm sorry, we have one more, do we?
I have a question. Sorry to complete the question, so.
Briefly, please.
It's very straightforward. I mean, what percentage of savings you could, let's say, sell to the CPGs to that respect, and can you sell the Captana service as a Software as a Service?
Two answers. We will show next year on the EuroShop, which is the largest retail tech show, together with SAP and partners, a solution where we strongly optimize the route to the customer. What it means, sometimes you have a sales force on the streets, and we can say a big beverage company here in France have 200 people, just one company on the street, to control and serve the customers. What they do, they have cars, and it's 200 people. They create CO2 footprint. That's one thing. Through optimizing the stores, because we are the customer's eye and eyes, and as well the CPG eyes, we can reduce the number of sales people on the street and therefore reduce cost and CO2 emissions. That's important when we see this, that it's a holistic approach, not an isolated one.
Holistic means we need to see do we have availability, how is it part of the overall supply chain. That's what we show together with SAP at the next show in end of February. Why is that so important? If you see overall, it's a huge challenge. For example, I mentioned the report from KPMG. Retailers do in the average 3%, have an average 3% EBITDA margin. The CPG is in the average 18%. So an out of shelf situation and wrong planograms harms both sides. On the one side, if you have not that much, it's really impactful. But on the other side, if you earn a lot, it harms your balance sheet. What we do is we need to come out of this isolated approach to a broader holistic approach.
That's what we show together with SAP, because supply chain, planogram compliance, all that goes in line with a significant improvement. This is not easy to quantify on a single number. That's a real change in the organization, and I would not say it's a change. It's a strong improvement in your organization and the overall flow of how you manage such a, such an organization. The impact, what Colin said, 5%, I would also add. I would definitely add 3%-4% more in a strong improvement. Yes, it's a SaaS solution. Yes, as Scott said, the data are valuable, and we need to see how and with whom we manage this data.
Thank you very much. Thank you for all your questions. There'll be another opportunity to ask questions towards the end of the day. We're gonna take a break now for 15 minutes, so let's resume our discussions at 4:45 P.M. Thank you.
Welcome back, everyone. If you can find your seats here in the main room in Paris. Those of you, I know the cakes are delicious, but please do join us. Ladies and gentlemen, this way, please. Thank you very much. The final set of presentations, we're gonna take a look at the detailed financials. We've got another opportunity for your questions. I know there were quite a few hands at the back of the room for questions at the end of the last session. Please do remember the question that you wanted to ask, as there will be time for it before the conclusion of events at around 6:00 P.M. We're now going to look forward to the new long-term strategic plan for the company, and I invite Thierry Gadou to tell us more about this.
Sorry, it's me again. We have a little bit of time to catch up. I'll go faster. About the rest. The rest, we're gonna talk about two main regions. The two regions that represent, you know, 90% of our revenue in 2027, so Europe and North America. We'll talk about financials with Thierry. I'll just make a brief introduction. First, I wanted to pick up on the last presentation, just to remind you about basically this. It's the last thing about, you know, influencing customers at the shelf. Just realize what in fact we're building. What we're building, and again, I know Scott has not mentioned that, but is the most pervasive display connected networks in the world in history.
You see how it compares or how it will compare in 2027. Although this, I think, is conservative, but this will compare with the rest. It's very important that also these, you know, displays are very well positioned at the moment of purchase, every one of them. Just to finish on that. Anyway, going forward on the market, I think my colleagues are going to be explaining how. I'll just. This is just to summarize essentially where we are going. 2.2 million. You know, a lot of growth in Europe again. A ramp-up in North America. I would say a catch-up in North America, but always at the speed of America when it starts.
could start late, you know, like some technologies, but when it starts, it goes really fast, and it's representing more than half of our growth in the next five years. Then the rest of the world. You know, it's growing fast too. You know, 25% per annum. You should not be thinking it's more. It's a little slower than North America. This is America. But it's growing, and we will focus on selected countries, very selected countries here, in North America and Middle East and Asia. Then, of course, also focusing on only the very top accounts in those countries. We will leverage our regional hubs there.
I suggest we move on to Sébastien for a word about our domestic market. I would just say just a word about Sébastien. Sébastien is the youngest of all of us, and he's yet the one that has spent the longest time in the company, so he really built it.
Good afternoon, everyone, and thank you Thierry for your kind words. Let me frame a bit Europe. Five years ago, we had no. All the sales, meaning 100% of the sales we were doing on-prem. Today, 90% of the sales that we're doing and the store that we are installing are cloud and SaaS platform. Five years ago, we were nowhere in strategic markets like U.K, Ireland, or eventually Germany or the DACH region. Today, we are deploying three of the largest German retailers. We are present in the U.K. We have our own subsidiary. We are present with 16 banners. We have 300 stores already, and this is gonna be a growing market. I'm gonna present, in this presentation quickly, which are our four pillars to grow in Europe. Oh, can I return? Okay.
The first pillar is obviously taking advantage of our install base. We have a huge install base, and I'm gonna present and I'm gonna tell you how we will get advantage of this strong install base. Our second pillar is to add value to this customer base because we have a significant one, and definitely we're gonna add value and my colleagues present the brilliant solutions that we have, and obviously, we will add value to all these customers. The third pillar is accelerating our growth in strategic markets, so as I mentioned, U.K, Ireland, but also the DACH region in Germany in particular. Last but not least, the fourth pillar is the new verticals, and I'll come back to that. Let me tell you who we are in Europe. We are...
I manage a team of 180 people, very talented people. We are present in twelve branches, twelve offices. We are present in covering Europe. We are 30,000 stores equipped at the moment and much more to come. We gonna end this year with EUR half a billion turnover. Thanks to a wide number of banners and customers, and we are very proud that 80% of the top ten customers in Europe have selected SES-imagotag, and we have a very strong footprint in these customers. Now let me, I would say, come back on the first pillar. The first pillar is upgrading our customer base.
If we look today, Andy has been explaining, I would say the SaaS platform and how this SaaS platform is engaging the customers for ensuring a full journey of digital solutions. Today, we already convince 5,000 stores. There is 25,000 stores more to convince, and we are on the way, and these stores will be migrated within the next 5 years. Of course, they will enjoy all the new solutions that we have been presenting. Now let me take, I would say, an example to illustrate my second pillar, which is enriching the value at our existing customers.
The good example, I could have picked a lot of examples, but I used to take Monoprix because some of you visited Monoprix this morning, and you could see the, I would say, the functionalities and how Captana is helping and who presented it in detail, but I could have taken, of course, EDEKA and many of them because we have in Europe already more than 50 pilots running with this technology in the retailers that I mentioned. Obviously, Monoprix is enjoying all this technology and this is what we're gonna do on the 25,000 and the 30,000 and the 5,000 remaining stores that we have. Now this leads me to my second pillar, which is accelerating in some strategic market, my third pillar, sorry, to accelerate in some strategic markets.
If we take the example, I could have picked, of course, Germany or the DACH region, but I picked the U.K, Ireland for many, many reasons. The first one is because now we're present in 16 banners and 300 stores already. Because all the new pilots that we are engaging, we are engaging a lot of pilots with the tier one and the tier two, and all of them started with the digital shelving approach, meaning with the combination of Captana and our ESL solution. On top of that, what we do is that we are, you could see here some banners, which are non-food banners. Why? Because we have started in many new verticals, and this is my fourth pillar. We already started. This is an example. I'm sure you recognize this chain.
This chain is Lidl. Lidl is deploying our solution. This is the largest rollout so far in the ESL industry, and very proud that Lidl selected a SES-imagotag. Obviously, this is pushing the market, definitely the hard discounters. We know the hard discounters are very sharp, but they are investing in our solution, and they are investing in this kind of solution because they realize the benefit this is having for the stores and their employees. Last but not least, there's many new verticals which are developing. DIY is a good example. Why? Because DIY is facing a lot of challenges. Myself, when I go in a DIY store, I have a lot of difficulties to find screws.
Basically, we help because we can, of course, guide the customers, guide the shoppers to the right product, help to serve better the customers, and this is why we are starting with most of the European leaders in this vertical, and definitely we are very proud of it. This is an example of what you could see in Europe, and we have the combination of Captana and our ESLs. Another example of new verticals, this is home furniture. This one comes from Germany as well. This is one of the leading chain. This is JYSK, DBL. This is a merger between DBL, which is a German DIY furniture, home furniture retailer, and JYSK, which was used to be in the Nordics. This company has merged. This is an example.
We have deployed already 1,200 stores, and basically they have 3,000 stores. There's much more to come because we also started with a lot of their competitors because they want to enjoy the same journey, guide the customers to the right product, enrich the content at the shelf, and also have a better shopper experience. Another example is travel retail. Some of you might have come by plane. If you stop by Roissy Charles de Gaulle, you should have seen our ESL. Otherwise, I invite you to stop by and have a look. There's gonna be a lot of new opportunities. Why? Because we are equipping and deploying the solution to many other airports, and travel retail is a huge vertical which is also popping up. Sephora.
Sephora, we announced, I would say in the past year, actually, that they were migrating. This is also part of one of our program, which is Customer for Life. Meaning customers that have been selected as SES-imagotag six years ago. Today they have been replacing or, I would say their solution with the new generation. Sephora starts to deploy the solution in new countries. Obviously there's gonna be, of course, some new stores coming up across Europe with Sephora, but many of their competition is also now implementing the solutions. Apparel and sportswear. Actually, it's public, so I can mention the name. You see that this banner. This banner is a very famous one. It's Decathlon. Decathlon already started. They started Belgium.
Actually, Decathlon is a very interesting one. Only Decathlon is 1,700 stores. I'll let you imagine what's the potential of this market. There is a lot more to come because we already started and engaged with many of their competition. Actually, brands who wants to enrich the content and bridge the online and the offline. Last but not least, gas station. Gas station becomes convenience stores. Here is an example. If you go in Portugal for holidays, one of my favorite countries, they have implemented this gas station. It is a fully automated store, and actually we are very proud to be part of it, to have been selected. There is a lot of their competition which are also implementing this solution. Why? Because with Captana, we can monitor in real time.
In this kind of environment, you have one person for doing everything. Meaning to serve the customers, make sure the store is replenished correctly. Definitely we help serving better the customers. Another type of vertical that we are opening, and nobody thought about it, but we did it. Actually there is a great opportunity. See, this is again a good example of bridging the online and offline business by enriching, connecting, and having the capability to get access to better information. As a conclusion. We have. As you can see, we wanna reach more than 1 billion.
We have the four pillars, and definitely what we're doing is that through these pillars, we are engaging a full transformation of the European retail, and we aim to be the number one geography for the group. I know that our American colleagues are quite ambitious, I would say. Definitely, even though we aim to be and to remain the first geography for the group, we know that we're gonna have a quite strong competition. I love racing, I love competition, and definitely I know it's gonna be a good one. Thanks, and I leave the word to Philippe for the America.
Sébastien, thank you very much. That was the view of Europe. We now switch continents to get the view of North America, and that'll be with the Chief Executives of the Americas, Philippe Bottine.
Hello. My name is Philippe. I'm responsible for the American market, North America, more specifically. I'm based in the U.S. and California. I started my career in the investment community a few years ago. I was not a seasoned investment professional like you guys are. I was doing VC work in San Francisco, investing in early stage startup companies. One thing that I learned while I was doing this work is that what matters in companies are, you know, people, technology, and the ability to scale. When I joined the SES now 13 years ago, that's exactly what I saw in the company. We had an amazing team, an amazing product, and an ability to grow the company to where it is today.
You know, 13 years in the future, today, when I listen to everything I've heard today, it feels like yesterday. We have an amazing team, again, amazing products. I mean, you've heard the technology sessions. They were absolutely amazing. The ability to scale and the scale option ahead of us is, I mean, gigantic. Especially in North America, I'm gonna be talking to you about the scale-up we're gonna be doing there, which was impressive in the past five years, but it's gonna be even more impressive in the years to come. Technology. Here we are. Okay, quick snapshot of SES America. We have about 50 people today, growing the team to about 100 next year, spread over four main offices.
We're gonna have Chicago, Montreal and Mexico City, and we're also opening Dallas, Texas very soon. We operate 4,000 stores across the geography. The revenue growth has been interesting. I mean, we started with, you know, insignificant revenue a few years ago, and we're expecting to close slightly above EUR 100 million, which is a good milestone, but we have slightly higher ambitions. Our client base. This is a slide, you know, every single logo on this slide, we could spend an hour, if not more, to talk about the customer story, the customer journey. What I like about it is, you know, every single client, every single logo is a 5- to 10-year, if not more, relationship.
You know, we've built these relationships from zero, from the ground up, and we have very tight and very strategic relationships with all of them. We're very proud of all the logos we have there, which represent some of the biggest clients in the world, also some smaller ones. They also represent the diversity of verticals that we target, whether it's grocery or mattresses, or gas stations or furniture stores. It's a significant achievement. One specific customer I wanted to highlight when talking about ten-year relationships is Walmart, because they were the first logo on the previous page, but they're also one of our most promising and largest customer. Well, simply because they are the number one retailer in the world by far.
The journey with Walmart interestingly started 10 years ago in 2012. It started in Argentina at a time where the market dynamics was driven by inflation. There were questions earlier about inflation, if I remember well. That's what drove adoption in that country 10 years ago. The relationship grew to the other international markets of Walmart. We developed Mexico, we rolled out Chile, we rolled out Walmart Canada more recently. Earlier this year, we also expanded into Costa Rica. We keep on expanding in Mexico, and we announced, you know, the start of our partnership with Walmart U.S., which is the big opportunity within Walmart.
We're currently, you know, in the process of piloting new technology, deploying new features and innovations and expanding the partnerships to many more stores. It's an exciting partnership. How we win in the U.S. is really about three main parts of our selling and our unique selling proposition. Number one is our technology leadership. We are 100% cloud connected. This is non-negotiable. You know, it has to be cloud. It has to be Infraless, like Andreas was also talking. This is a key part of the differentiation and value proposition. Everything is SaaS and recurring revenue centric. Talking about in-store fulfillment, on-shelf availability and retail media is top of mind for all those retailers. The second is beyond the technology leadership, it's also about service capabilities.
You have to be, I'm gonna make it simple. You have to be American to service an American. The service capabilities have to be localized, regionalized, and very tailored to the local needs. We spent a lot of time and effort making sure that the service capability was top-notch, and it's really paying off. Third, you know, a very partner-heavy ecosystem. We never go to market alone. We always go to market with our partners, whether they're technology, software, merchandising, etc. This is a very key and fundamental part of the go-to-market strategy. Talking about the market a little bit, we estimate that the total U.S. market is about 3 billion devices, slightly 3.2 billion devices. As of this year, our penetration has been below sub 2%.
We have still a lot of room to grow, and we're expecting the market penetration to reach about 30% by 2027, which is an expected 1 billion connected devices. It's a big growth. We're looking at the market segmentation along two different axes. Number one is on the far right, where we look at it from a vertical standpoint. Mass market, which is essentially Walmart and Target, but in reality it's really Walmart. It represents about 22% of the global total U.S. market. Grocery and c-stores are the next big opportunity with 20%. SMBs, 16%. DIY, essentially Home Depot and Lowe's and Ace Hardware because they are a very consolidated market, represents 12%.
Drug is also very consolidated, because it falls under Walgreens, CVS and Rite Aid, 12%. Another important vertical is discount. Sébastien was talking about our success with Lidl in Europe as an example. In the U.S., discount stores are the Dollar Tree and the Dollar General, which are very big and very fast-growing companies that have also tremendous potential. When we look at the segmentation from a client size perspective, the top 30 clients represents about two-thirds of the market, so 2.2 billion tags, and we go to market direct for those clients. We also go to market direct on the next tier of clients, which goes all the way to the top 100 retailers. They represent another 0.5 billion device opportunity.
The SMB is the last missing piece of the market, for which our go-to market is a channel strategy. What it means from a revenue growth perspective is. I mentioned that we closed 2022. Well, we're gonna be closing 2022 at about EUR 100 million. The expected top-line growth is gonna be about 10x, between EUR 0.9 billion and EUR 1 billion in sales. And the most significant market drivers behind this growth is, well, number one, of course, pricing and promotional velocity. I mean, this is a phenomenon happening across the world. In-store fulfillment. This is really about what Thierry was talking about when he was talking about the e-commerce growth.
You know, stores are being leveraged and are being transformed as warehouses in order to support the growth of online commerce. This is really becoming top of mind in terms of business cases. Third is what Michael Unmüßig was talking about with our Captana roadmap. Supply chain optimization is absolutely fundamental. We're still at the beginning of this journey, but it's an extremely fast-growing opportunity. The last but not least is the one Scott Soong was talking about on retail media, because there is a shift of online spend towards in-store spend which is ahead of us, and that's also gonna represent a tremendous market driver.
Thank you very much, Philippe. We will thank you for your presentation, and we now invite to the stage the Chief Financial Officer of the company, Thierry Lemaître.
Hello, everyone. I really wanted to thank you and really praise you for waiting 3 hours and a half to address the financials, which I'm pretty sure you're interested in. Thanks for the effort. Let's get started. First, that's the main KPIs which are going to really frame the ambition for 2027. Starting with the sales, EUR 2.2 billion in 2027, underpinning a 30% CAGR revenue growth over the next five years. The VAS, of course, which is a very key target for us, EUR 650 million. 30% of the revenue, so that's a major increase, almost doubling the performance versus today.
Of course, all this is driven by a very significant increase of volume, so we want to reach approximately 1.15 billion tags at the end of the year 2027, and 90% of them being cloud-connected, so approximately 1 billion. Of course, it means that when you make a very simple calculation, we're going to have approximately 0.6 EUR VAS revenues per ESL per year, which is a quite significant performance, but we're going to elaborate on that. Of course, all this growth, all this profitable growth, also translates into a very significant improvement of the EBITDA, 22% margin at the end of the year 2027. If we have a look at the revenue and the per region, so that's what Thierry already presented. Very strong growth driver in the North America region.
50% revenue growth per year. 50% of the total revenue growth over the next five years. Nonetheless, Europe is still remaining the largest region with a very significant growth, 20% per year. That's also something which is very strong. Of course, the rest of the world, which is also providing approximately 10% of the revenues in the year 2027. All this, as I was saying, is driven essentially by a growth in volume and we want to reach 1.15 billion tags at the end of the year 2027. 90% of it, so 1 billion being cloud-connected. If you just take one second to see the chart, you see that we have increased the number of ESL by approximately 200 million over the last five years.
We want to increase this figure by EUR 800 million. It just means that we're going to quadruple the growth over the next five years versus the five previous years. That's a very significant achievement that we want to deliver. Of course, it has an impact on the impressive growth rate that we're going to experience. Another way to see the revenue is to split it between the VAS and the ESL. Here again, the performance is quite impressive. It means that we're going to have a growth on the VAS revenues, which is approximately 47% per year on average and 23% per year on the ESL. It means that the VAS revenues is going now to represent approximately 30% of the revenues. That's a massive achievement.
Of course, as you will see, it has a positive impact on the EBITDA margin. The VAS revenues, I think it's important to make a deep dive on that because that's the main driver for the profitability enhancement at the company level. We want to reach 0.6 EUR VAS revenues per ESL per year. That is doubling the figure compared to the 0.3 that we currently have in 2022. That's a very good performance. That's even quite very ambitious. We still believe that it is nonetheless achievable, because we already have some customers currently delivering 1 EUR VAS revenue per ESL per year. The purpose is to be able to increase the current level of 0.3 to 0.6. What does it mean?
It means that roughly we're going to get approximately 90% of the tag that would be cloud-connected. We'll get a fee, a recurring fee from the cloud access. On top of that, on all the other products, we'll have a penetration of approximately 20%. Let's see that 20% of the tags will have access to all the service or all the service will be 20% penetrated on the cloud connected ESL base. Where will this revenue come from? Well, mainly from Captana, a bit more than a third out of the EUR 650 million. A bit less than a third coming from IoT and cloud features, essentially in-store fulfillment and everything like that. 10% coming from professional services and others, and the remaining coming from Engage analytics.
How does it all translate into the P&L? You already know we want to deliver EUR 2.2 billion revenues, 22% EBITDA margins, EUR 480 million. We also want to stabilize the OpEx at approximately 10% of the revenues, so that's consistent with the guidance that we gave for the year 2023. We want to significantly increase the VCM as a percentage of the revenues, almost ten points more than in 2022. Moving from 22%- 32%. The way to achieve that is essentially thanks to the higher penetration of the VAS revenues, which show much better profitability than the ESL. Doubling this proportion of the revenues into the total mix of revenues.
We also consider that given the volumes that we are going to manufacture, we should have some scale effects on the cost of the ESL. We are also certainly going to enjoy a much more favorable context in the overall ESL market because we know that, for instance, we come back to a situation where there is more production capacities, less shortages, and therefore we see that the costs are already slightly decreasing at the end of this year. We should also benefit from a much more positive environment than over the last three years. Okay. On the cash flow side this time. What we want to achieve is to have a free cash flow to sales ratio exceeding 10%. For a bit more than 10% of the revenues flowing down directly to cash. How do we achieve that?
Well, we start from an EBITDA margin of 22%. We expect to get a CapEx level of approximately 5%-7%, most of it being the capitalized R&D. The change in the working capital or the working capital requirements, that's going to be approximately 10%-15% of the revenue growth. When you consider that we've got 30% revenue growth per year, it means that we're going to use approximately 3%-5% of the revenues in the change in working capital. Roughly 10%. 10% plus free cash flow generation based on the revenues. Now the financial structure, how do we want to operate in the coming years?
Well, first of all, we want to have a financial structure that will be essentially based upon the back of very robust financials, very robust profitability and cash flow generation. If we were to have some additional financing needs in order to fund some growth opportunities, operations, we will favor debt versus equity, definitely. Meaning that debt, as we are going to grow, we can contemplate different kind of debt, and we want to diversify the sources of financing, not only bullet, not only in Europe. We are happy to consider something coming from the U.S. as well and doing there some financing, not only in bullet, but amortizable. We've got a clear limit. We don't want to exceed the 2x leverage.
We will be happy to propose to the shareholders approval first dividend payment in 2024 based on 2023 results. That will be the beginning of a new era where we will have the possibility to pay dividends based on the cash flow generation that we will generate every year. That's it for the financial presentation. I leave the floor to Thierry.
Thierry, thank you. You remain with us. We invite Thierry Gadou to return to the stage as well. This is the third and the final opportunity now for you to ask your questions of the Chief Executive and of the Chief Financial Officer. As before, if you have a question, then please raise your hand, keep your hand up until the microphone comes to you, then tell us who you are and what organization you represent, and then go ahead with your question. Those who've been watching us remotely from wherever it is that they are working have also been submitting their questions using the chat box. Why don't we take some of those written questions first of all. Raquel, you have them?
Yeah.
You are the superintendent of the written questions. Please go ahead.
Thank you. Thank you for that honor. The first question comes from Johannes Riese of Apus Capital, and his question is, as regards ESG, what are you doing with used ESLs?
The used ESLs are collected. They are, as much as possible, refurbished, and this is what we call our Second Life program, and remarketed basically. There are a number of components, especially the PCB, and everything that can be easily reused. Except it requires to have thought this from the beginning in a way that makes it possible. Most of our competitors, and especially the low-cost competitors, have ESLs that are unrefurbishable, and that's going to be intolerable for their customers very soon. Because you can't sufficiently repair them, dismantle every piece, given the way it's structured. You need to think about repairability at the beginning of the design. We basically refurbish.
The things that are not refurbishable will be basically not wasted, but a number of materials can be recycled, but that's not refurbishing, that's recycling. Then the rest will be obviously handed to waste management companies. The objective is really to have a Second Life for in the future literally all the ESLs and reduce by a factor of, let's say, two, the carbon footprint of IoT, which is something I described earlier.
Okay, thank you very much. We'll take a question in the room if we have it. A hand just here. Just keep your hand up, sir, until we get the microphone to you. When it reaches you, just tell us who you are and which organization you represent.
Yes. Good afternoon. Remy Granier from Berenberg. One question probably about the previous part of the presentation on the technology. I mean, in terms of competitive advantage, if you had to choose one or two differentiating factors about SES-imagotag compared to competition, which one would it be? And then maybe a second question more about the financials there.
Let me-
Yeah.
Interrupt. We'll take the first question.
Yeah. Okay, sure.
We'll come back to you for the second.
The first
Just the microphone there, Thierry. Thank you.
Yeah, one or two differentiating factors. If I had to summarize Andreas' presentation, well, first I would say technology. Just to make it a little more specific, I would summarize Andreas' presentation by, let's say, a few words, which are high scale, ultra-low power IoT management. Every word counts, so high scale, ultra-low power IoT management. I think there is only one company in the world for that. It's SES-imagotag. We are the best.
You had a question on financials.
Yeah. It was about the revenues you want to generate on a per tag basis from VAS. I mean, I understand that part of that is driven by increased penetration of new services like Captana, but do you feel like you have a way to increase, like, the prices that you are charging your customers? Because it seems that the solution is creating quite a lot of value added for retailers. How do you think about that?
Increasing the price, sorry, because. You mean increasing the prices?
Yes. On the software part.
No, I think the business plan that we are making do not consider any price increase on the VAS solution. It's just additional penetration of the existing solution across the customer base, which is increasing the VAS period sale per year revenues.
You can get to EUR 1 per tag just by increasing the penetration of cloud and the Captana solution.
Yes. There is no assumption that we're going to increase the tags. It's even rather the opposite in some cases, because we consider that the more we're going to penetrate, sometimes we'll have to do some discounts. The increase that you see is not done on the back of price increases, not on the VAS solutions, definitely not.
Okay. Thank you very much.
All right. Thank you for your question. Is your hand up? No, you're just waving. I'm being guided towards some more written questions.
Yeah, online.
Yes, go ahead.
We have a question from Thomas Engermann at UBS. What portion, which portion of your sales might be recurring in 2027?
That's a good question. Actually, you see, we've got two part of the business. The two parts, ESL and VAS, they both embed some recurring revenues. First of all, on the ESL, because we know that we are replacing the ESL on a recurring basis, so we are generating recurring basis, revenues on the ESL. That's approximately 20% of the revenues of ESLs which are recurring, and every year. On top of that, we've got also the VAS revenues, most of it being recurring. All in all, that's approximately 40% of the revenues of the group, which is considered to be recurring.
Thank you. Do we have more?
We do.
We also have a hand in the room. Let's see who the microphone chooses to select. Here we go.
Thank you very much. Ines from Berenberg. I have a question about the discrepancies that you have in terms of penetration across the different countries. My colleague and I, we come from London, and in England the penetration is really low. Can you give us more information about what's moving the needle here? Also can you say that inflation is pulling forward some discussions with your clients in terms of adoption? Thank you.
Sorry, the last part of your question was.
Inflation, the current inflationary environment.
The current inflation.
Is it pulling forward some negotiations, some potential new contracts that you might have?
Well, yeah. I think the discrepancies in penetration is due to many historical factors. I think it was. There were a number of things like regulations. Obviously labor cost has been a major, you know, sort of, factor in driving, you know, the need for automation. Inflation is a factor, obviously. Labor cost, labor scarcity. Also, I think a number of markets have been very profitable retail markets. When you don't have the pressure of moving, you know, it is sometimes easier not to do a number of investments. You think about U.K as being a very oligopolistic retail market. You know, 10 years ago it was very much more profitable. It's half the profit now.
You know, I think there were not a lot of pressure on retailers to do all these efficiencies. You could imagine, U.S. is a different explanation, but U.S. is also very low penetration. Those are great opportunities for us, you know, because those are just they are going to catch up. They're going to catch up because now all the factors, you know, profitability under pressure, labor cost increasing, tolerance from consumers on price errors decreasing very fast, especially with inflation. All these things are just putting immense pressure. We see, I mean, Sébastien has explained and Philippe has explained, those two markets we see very strong adoption in the conversations we have. Don't only refer to inflation. Obviously, inflation is an additional pain pushing for that.
Yeah, we see fast adoption in those markets.
Is Brexit a factor?
Brexit is influencing in a way because it's creating an even greater shortage of labor, and especially in retail. There is nobody to work in stores. I think Colin or Mark could confirm that, and that is partly related to Brexit.
Thank you. There was someone over here. Here we go. You, sir.
Hi again. Aurélien Sivignon from ODDO BHF. I have three question on financial. First on the revenues.
Let's do one at a time, if that's okay.
Okay.
First one.
Yeah. Great. First on revenues. Walmart, as far as I know, represent roughly 500 million labels in North America. Does your revenue target until 2027 include a full rollout with Walmart in North America?
Of course it does not. No. You said it was a financial question. It sounds like more of a business question. In this plan, in 2027, there is no customer is supposed to be above 20% of our revenue.
Okay. Next question.
Yeah.
Second question.
Next question, more financial. Let's think at the group level, in terms of revenues, how should we consider the growth from 2023 to 2027? Will it be linear or not?
Oh, you want the Excel file inside. Okay. No. You know, it will depend on factors. I wouldn't say it's really backloaded. I would say it's roughly supposed to be linear, but you know, if we haven't given all the details it's because right now we're giving a growth ambition and not necessarily detailed guidance for 2023. Well, 2023 has already a detailed guidance, so a guidance for 2024. So it should be roughly linear, but I think we don't want to go into those details today. Unless, Thierry, you want to-
No, no. Thank you so much for that.
Give our Excel file.
No, just to say that.
We need to give you a little bit of work, right? You are the analyst.
Last question for you, Thierry. On the OpEx side, I think your target is 12% of the total revenue by 2027, which is pretty close to the level of the 12% that you have now. Why there is no further operational leverage on the OpEx?
Well, actually we are currently at 12 in 2022. We said that we wanted to move to close to 10 in 2023 and to stabilize to 10 by the end of the year 2027. There is an improvement versus the current situation. We consider that we're going to stabilize there just because when you see the tremendous growth that we're going to generate, the very large customers that we're currently addressing, we definitely need to have some people on the ground in order to be able to show this growth. We don't want to jeopardize the growth by putting additional pressure on the OpEx. If we can do better, that would be nice. Currently we are very satisfied with the level of OpEx at 10% of the revenues.
Thanks.
Thank you. Could you do me a favor? Could you pass it forward to the gentleman in front, in front of you? There we go. In the red tie. Go ahead, sir.
Hi, Hywel Franklin at Mirabaud Asset Management. Can you just conceptually talk to us about where the natural cap would be for VAS?
Sorry, I didn't get that question.
So-
I realize I'm getting old, actually you know. I'm curious.
VAS as a proportion of sales.
Okay. Yeah, it's gradual. I think there is one slide that shows that this one that our estimation you see of in 2027 is based on you know a penetration assumption of 20% of our install base at that time for any other product than the ESL cloud management. So 90% cloud penetration, but the rest is 20% of every product. You know, you could say certainly VAS you know can go further, much further. As the market will be maturing, you know, the ESL you know might be sort of slowing down in terms of rate of growth, but the penetration of value-added solution is going to continue to increase, obviously.
I think that's a good answer on the fact that there is probably an ever increasing percentage here.
Thanks.
Thank you very much. Thank you for your question. How are we doing with the written questions? Do we have any more?
I think we do.
Let's take some more of those.
Raquel is. I introduce you, our Investor Relations. Might be useful.
Our next question comes from Johan Björk of Sylvain & Co , and his question is: what share of your customer relationships are exclusive?
It's a very statistical question. The question is how much is exclusive by contract or how much is exclusive in fact? I would say a very large proportion of our relationships are exclusive. A majority, de facto. We're the only player. Now, have a complete exclusivity, contractualized, you know, secured for the future with retailers is sometimes a little bit different to, you know, have completely, you know, signed, so. But it's a matter of fact, you know, it's a very close and strategic relationship that we have with our partners in many, many cases, it is exclusive de facto, not necessarily contractualized. Now, I would say that it goes more and more exclusive over time, and this is very important to understand.
The past is essentially a Hardware business of ESL, and so you can see more in our legacy base, you know, large, especially the independent, you know, retailer, franchise retailers where you have every store independently deciding there is a little bit of cohabitation of different players, obviously, in those kind of players. The more it goes, the more retailers choose the software platform, you know, the overall IoT platform, and then the more it goes on exclusive relationship de facto.
Okay. Thank you very much. Do we have any more in the room? Hands up for any remaining questions from our audience here in the room in Paris. I'm not seeing any hands. We're done with the written questions, as well. During the course of today.
Again?
No. By all means.
You haven't been given your Excel file yet.
Did you hear them start serving the cocktails? Is this what happened yesterday?
We are.
We've only got a couple of minutes anyway. During the course of today, and listening to all the presentations and absorbing all the information, as a Business Journalist, the question that popped into my head was, what are you? Are you a retail company? Are you a technology company? Are you a data gathering company? Are you a data analysis company? Because I've heard all four today.
It's a very interesting question because if you look at our history, and I think it's very important to understand who we are, we were not a technology company originally. We've been started by a retailer, you know. The founder, my predecessor of this company, really was grew up in stores, in supermarkets, you know, changing paper tickets on Sunday.
Yeah.
I think it gives us a very strong culture of we are about putting technology in service of something that's real, you know, that's real, that's retail. You know, I've been a consultant in my life and I've seen many sectors, and I've always, you know, people always think more seriously about industry than about retail. I'm always wondering, because I think retail is a much more complex industry to be fair. When you look at a factory, now we work with factories and we don't talk too much about that. When you look in a factory, you have a number of workers, but they're all trained workers. They're all people who have tools, who have trainings, who are employees.
In a store, you know, 95% of people getting in, they don't care about your processes or whatever. They are customers. They are making a mess of your shelves and everything they're leaving, and they're checking out, they're complaining. There are thousands and hundreds of thousands of stores. It's a very complex business, it needs technology. We are a technology company, but we are really a technology company that started you know, from the retail, from the ground.
It gives us a certain view of every time we think about technology having to be not, you know, a scientific breakthrough, but it has to be scalable, it has to be robust, it has to be cheap, it has to be, you know, helping people who don't have time, who don't have necessarily a big background. That's the first part of your question. We are a technology. Sorry.
It's got to work.
It's got to work absolutely without, you know, with low maintenance, you know? Otherwise, you don't get at all in those big stores, especially, you know, where they're very big. Now the rest is the fact that we create data. It's a fact. IoT is about what? My definition of IoT is before, you know, the customer was talking about the project. With IoT, the project is talking about the customer. You know, this is the whole change, the whole revolution. Intrinsically, we create data. Of course, we're not stupid. We want to make sense of the data. We are growing our expertise in using the data, in making sense of it, in, you know. This is a way where we. It's an endless, you know, journey.
We will have to increase our expertise in data. We acquired a company already this year. We are going to probably do the same. We continue. You see technology and service of operations a very important sector, retail. Technology is essentially, you know, IoT. IoT creates data analytics. We're permanently on the move. Nobody knows who we are. Maybe, you know, we don't know who we are. This is why it's important we have a great team, always reinventing ourselves. There is something that is stable.
Mm.
We want to make retailers very profitable again.
In terms of concluding thoughts, what should this audience take away from today?
I think three things. I think the digitization of physical retail is a very big story. It's a very big sector, and it's just the beginning. It's a big story. It's gonna change the world. It's a big sector, which has an important impact on our lives. First thing is the digitization of retail is gonna be big in the next decade. Second, I think we're very well positioned, because we're not a newcomer that just had an idea and just opportunistically trying to, you know, to find solutions. We've been after that for a long time. We've been, you know, showing our persistence. I think we're well-positioned because, I was a bit rapid earlier, but we have great technology. We have an incredible team.
We have incredible customers, a global footprint, and a fantastic momentum, you know. We're well positioned. I think third, we're confident that we're gonna create, you know, stakeholder value because, you know, we're creating value for our customers for sure. We're creating a lot of value for people who are also shareholders of the company. You know, we're creating a whole, you know, value, hopefully for all the shareholders. Yeah, that's the three things. You know, it's difficult to summarize four hours. I'd say at least if we remember this, that would be great.
The-
I want to, you know.
Please.
I want to thank again all our shareholders, of course. One who is not present today, but he has always been a very you know supportive, very patient, very long-term, extremely valuable, and he's you know shareholder and partner, and he's still you know and he's going to be a long-term partner for us. I want to thank all my teams. They are great, and I think one of the other maybe takeaway from this meeting is I'm not alone, and you can see how well-surrounded I am, and this is really something I'm maybe the thing I'm most proud of. Yeah, I want to thank all the board members who are spending a lot of time, who are there today on stage.
Mark, you know, and Colin and all of you. Thank you very much.
Thierry Gadou, Thierry Lemaître. Thank you both very much.