Eldat sells its electronic price tags to French supermarket chain
Eldat Communication has signed a deal to supply the French supermarket chain Casino with millions of electronic price tags for its shelf products.
Eldat, which provides sophisticated communications solutions to the retail industry, will be installing its Electronic Shelf Label system in 73 Casino hypermarkets and 21 of the chain's supermarkets this year.
The deal is valued at some $12 million for 2002 and could reach up to $40 million over the coming years. With the signing of the deal, Eldat received a downpayment of $3 million from Casino.
Casino is one of Europe's largest retail chains, with 115 hypermarkets and 433 supermarkets in France, as well more than 1,000 stores in the United States, Poland, South America, Taiwan and Thailand.
Eldat president and CEO Yossi Smoler said the company would be installing its label systems in more of the chain's branches in coming years.
Eldat develops communications systems for retail chains based on defused infra-red technology that does not require "eye-contact" between the transmitter and the receiver. The company installs wireless transmitters in the roof of a store. The transmitters are linked to the store's main computer and allow for real-time updating of electronic price tags on the shelves. In such a manner, compatibility between the price on the shelf and the price at the till is guaranteed.
In addition, the electronic tag data can be changed so that the standard display is replaced by customer-specific information, stock information, and sales-performance data for the specific product.
Since its establishment in 1994, Eldat has raised some $15 million. Its last capital drive took place in 1999, when it raised $5 million. Shareholders in Eldat include the American company, PSC, which manufactures bar-code scanners; Network Investment Services Co. Ltd., an underwriting financial services company; Israeli VC funds Mofet, Evergreen and Eurofund; and additional private investors.
Eldat has a payroll of 35 workers, 30 of whom are employed at the company's development center in Tel Aviv, with the remaining five at Eldat's technical support center in Paris.
The company's systems sell for an average price of tens of thousands of dollars, Smoler said. However, when a chain is seeking a solution, he added, it usually installs the system in all its branches.
"It is very difficult to break into the large marketing chains," Smoler said. "But the moment a chain takes a strategic decision to assimilate the technology, we are talking about deals of tens of millions of dollars."
Smoler added the deal with Casino has led to contacts between Eldat and other large retail chains in Europe. He said the company is concentrating on the Japanese and European retail chain markets, as they are considered easier to penetrate than their American counterparts.