Quebec Pet Stores To Get Co.'s Smart Digital Labels

Micro e-paper and software provider Danavation Technologies Corp. (DVN:CSE; DVNCF:OTCQB) has signed a contract to install its Digital Smart Labels™ into eight franchised pet stores in Quebec with the possibility of as many as 30 stores eventually getting the technology.

The eight Pitou Minou & Compagnons (PMC) locations in Quebec offer Global Pet Foods products, the largest Canadian-owned pet specialty retailer.

The store installations represent an opportunity for Danavation to see up to CA$500,000 in revenue, the company said.

"Partnered with an active and high-quality franchisee group benefits both PMC (Global Pet Foods) store operators as well as Danavation as together we elevate the benefits associated with utilizing our Digital Smart Labels™ by reducing costs of inaccurate shelf pricing, freeing up staff time to focus on customer service, and streamlining operations, all of which can contribute to enhanced margins and improved bottom lines," Danavation Chief Executive Officer John Ricci said.

Digital Smart Labels™ enable companies to automate labeling and price and product promotions in real-time, significantly reducing paper usage in the process.

Technical analyst Clive Maund wrote, "With the company's automatic price updating system already tried and tested, it is highly likely that it will receive orders for its system from at least one big retailer soon. This is truly a company that will benefit from the effects of hyperinflation."

The first installation at a PMC store is expected to be completed by early August, the company said. The remaining seven locations will be outfitted at a rate of one to two per week after that.

Richard Bégin and Daniel Villeneuve founded PMC more than 16 years ago in response to a lack of affordable and nutritious pet food products in Quebec. The pair formed a strategic partnership with Global Pet Foods to offer high-quality, domestically manufactured merchandise to cater to the Quebec market. Today, there are over 40 stores in Quebec, and the chain hopes to open its 50th franchise location in 2025.

"This objective is not only possible but very probable," PMC noted on its website. "The market has been in full swing for the past 20 years, and we expect it to attain even greater importance in the next 10-20 years."

The Catalyst: Need for Technology 'Urgent'

The main attraction of Digital Smart Labels™ is that the technology automatically updates the prices of merchandise on the shelves, said technical analyst Clive Maund of CliveMaund.com.

"Although already in widespread use in Europe, this is not the case in the U.S., and with inflation having taken hold and trending in the direction of hyperinflation, the need to implement this technology in stores nationwide across the U.S. is becoming urgent," Maund wrote. "With the company's automatic price updating system already tried and tested, it is highly likely that it will receive orders for its system from at least one big retailer soon. This is truly a company that will benefit from the effects of hyperinflation."

Maund noted last December that he recognized the "low-priced tech-type" stock would not appeal to everyone, "but those of you who are interested should look to buy immediately."

According to a report from Mordor Intelligence, the IoT market is expected to register a CAGR of 10.53% during the forecast period (2022-2027).

Digital Smart Labels™ are powered by proprietary automation technology and an underlying Platform-as-a-Service (PaaS) model. The company said using the technology enhances data accuracy and improves performance by optimizing inventory and removing the high labor costs and low productivity traditionally associated with labor-intensive merchandising workflows.

"We believe that technology should make life easier, not more complicated," Ricci has said.

The company has introduced its solution to retailers across North America, including True Value and Ace Hardware. It also said it’s targeting new markets, including healthcare providers, manufacturing, and logistics companies.

The labels offer high-resolution, high contrast, wide viewability, and vibrant color displays for price labels. The displays, which allow for both text and graphics, are housed in durable and strong polycarbonate housing.

Danavation has announced several other contracts this year, including retail food markets and a Timber Mart.

Internet-of-Things Market Set To Grow

The global retail automation market — which also includes electronic shelf labels — was valued at nearly US$15 billion in 2021 and is predicted to reach US$34.5 billion by 2030 with a compound annual growth rate (CAGR) of 9.8%, according to a report by Straits Research.

"Retail automation is gaining high traction and expanding at a rapid rate," the report said. "The need to provide exquisite shopping experiences that can help retailers increase customer retention is fueling the need to adapt to ongoing digitalization strategies such as automation."

Automation can "reshape retail business models and provide value chain opportunities for players operating in the market," Allied Market Research wrote.

Internet-of-Things (IoT) devices like the smart labels are poised for growth. According to a report from Mordor Intelligence, the IoT market is expected to register a CAGR of 10.53% during the forecast period (2022-2027). 

"Enterprises and service providers have been looking at IoT as the key enabler to augment digital transformation and unlock operational efficiencies," the report said. 

Ownership and Share Structure

Management owns roughly 36% of the share base. The company reports no institutional owners.

Strategic investor T. Sean Harvey holds 11% or 13.31 million shares. Independent Director Vivek Jain owns 0.13% or 150,000 shares, and Independent Director Michael Della Fortuna owns 0.02% or 30,000 shares, according to Reuters.

Danavation has a market cap of about CA$16.56 million with about 120.8 million shares outstanding. It trades in a 52-week range of CA$0.325 and CA$0.12.

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Important Disclosures:

1. Danavation Technologies Corp. iss an affiliate and has a consulting relationship with Streetwise Reports and has paid a consulting fee between US$8,000 and US$20,000. 
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Danavation Technologies Corp. 
3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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