VEB Innovations to Invest up to 200 Million Roubles in ESL Producer

VEB Innovations will invest up to 200 million roubles in Kompo, a producer of a new generation of electronic shelf labels for retailers.

Introduced in 2014, Kompo’s ESL production technology based on e-ink has been pilot-tested successfully with Russian large retail chains.

“The core of the product developed by Kompo is a technical solution that was entirely created and first introduced in Russia. Such technologies provide the basis for the faster growth of the retail business in this country, which fully fits the commercial logic of the digital economy, and form the basis for Russian technology companies gaining entry into foreign markets,” Kirill Bulatov, General Director of VEB Innovations, said. “We expect that our financial support will help Kompo to achieve the export potential of the promising technology with confidence. The automation and digitisation of processes is currently one of the most attractive areas of investment in technology development. For example, US-based Amazon and Chinese-based Alibaba opened several staffless stores, with most processes automated and unmanned.”

The first commercial deliveries of electronic shelf labels are scheduled for the fourth quarter of 2018. According to Alexander Belous, General Director of Kompo, the use of this technology will allow retail chains to increase their turnover by 3–5%.

“With intense competition among retail chains, the digitisation of dynamic pricing will give a big advantage. Electronic shelf labels enable retailers to substantially improve their economic performance and automate data collection, record-keeping and planning,” Alexander Belous said. “Such technical solutions also open up the possibility of introducing additional functions, such as shopper navigation or advertising.”

Foreign-made ESLs currently used by Russian retailers are uncommon due to the unavailability of efficient technological solutions on the market: they are lacking in versatility and not customisable. The Russian technology, by contrast, makes it possible to cut the costs of electronic shelf labels, can be customised and allows previously purchased and installed equipment to get new functionalities without replacing its components.

According to Alexander Belous, this means more than electronic shelf labels, involving complete retail space automation, although ESLs today are the flagship product essential for digitalisation in the retail trade. They not only replace the paper price tag and display current prices and other information about goods, but also interact with the shopper directly in the shopping process, following the global trend towards automation.

In addition to cooperation with Russia’s leading retail chain operators, Kompo has representative offices abroad and conducts intense negotiations over entering the Chinese and Iranian markets and setting up a distribution network in the CIS. In partnership with VEB Innovations, the company will be able to use Vnesheconombank Group’s contacts and infrastructure worldwide, which will facilitate entry into international markets. The company has plans to supply the market with up to 20 million ESLs a year, continuously ramping up production in the next five years.

As part of strategic support from VEB Innovations, Kompo will receive not only investments but also a tailored leasing programme from VEB-Leasing, which will enable Kompo to offer its products on more attractive terms.

“VEB Innovations can provide Russian technology companies with not only venture capital financing mechanisms but also access to a wide range of Vnesheconombank Group’s financial instruments, offering a one-stop solution for innovation project support,” Kirill Bulatov said. “In the case of Kompo, it is specifically about the fact that partner retail chains will be able to acquire the company’s products on favourable leasing terms.”

Apart from high-technology electronic shelf labels, electronic ink can be used in the future in any other areas where energy-efficient graphic display devices are in demand, including the production of advertising media, vending machines and industrial equipment. Using e-ink technology for the production of advertising media will also make it possible to create inexpensive and ergonomic solutions for advertising and information materials.

VEB Innovations was established by Vnesheconombank in 2017 as part of the reform of activities related to financing for innovations. The new subsidiary is intended to provide a one-stop solution for applications for innovation project support from Vnesheconombank Group. VEB Innovations priorities include financing projects of the National Technology Initiative and the Digital Economy of the Russian Federation programme and helping Russian innovation companies to gain entry into international markets.

Largely as an innovation and design company, Kompo develops and introduces related retail space management technologies: service quality management tools, local positioning technologies, dynamic pricing, automated stock management and other systems that raise offline retail profitability and reduce retail staff workloads.

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