Digital Smart Label Maker Expands Across North America, Europe

E-paper and software provider Danavation Technologies Corp. (DVN:CSE; DVNCF:OTCQB) announced it is expanding its relationship with ACE Hardware, completing new installations of its Digital Smart Labels™ technology for a chain in Mexico, and securing new contracts for supermarkets and pharmacies in Canada.

The company will install its technology into the first of more than 40 locations owned by an independent retail group operating under the ACE Hardware brand umbrella across the United States. The installation in Ohio is expected to be completed by Q1 2024 and could be followed by more installations at the group's other stores.

"The ongoing trust and confidence placed in Danavation by retailers under the ACE Hardware brand . . . demonstrates the benefits realized by implementing our Digital Smart Labels solution and our ability to nurture strong business relationships," Danavation Chief Executive Officer John Ricci said.

ACE Hardware has more than 5,000 stores worldwide, independently owned and operated by local ACE entrepreneurs.

"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," Technical Analyst Clive Maund said.

Danavation also will complete an additional six small-format installations for Impulsora, Mexico's largest distributor of electrical and lighting equipment. The full installation is expected to be completed by the first half of 2024. Impulsora has a large and fast-moving inventory with more than 100,000 square meters of warehouse space throughout the country, Danavation said.

Earlier this month, Danavation announced it had secured four new installations for the labels in Canada, including at two locations of Btrust Supermarkets and two different pharmacies under the MPL Group banner. Btrust has four locations across Quebec and southern Ontario, with an inventory of more than 40,000 products. BeaverBank Pharmacy and Hutchins Pharmacy, both part of the MPL Group, are in Nova Scotia.

The Catalyst: System 'Tried and Tested'

The main attraction of Danavation's labels is that the technology automatically updates the prices of merchandise on the shelves, Technical Analyst Clive Maund wrote.

"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 said.

Automation can "reshape retail business models and provide value chain opportunities for players operating in the market," Allied Market Research 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 that the "low-priced tech-type" stock would not appeal to everyone, "but those of you who are interested should look to buy immediately."

Dozens of retailers, brands, and businesses are now using the labels, the company said in a recent corporate update. They span in size from local family-owned businesses to large, multi-national corporations.

Impulsora contracted Danavation last year to complete a full rollout of the labels at 11 locations after a successful initial installation at one location.

Retail Automation 'Gaining High Traction'

According to a report by Straits Research, 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%.

"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 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. 

Danavation's 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.

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

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

Ownership and Share Structure

Management owns roughly 34% 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 154,000 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$6 million with about 120.8 million shares outstanding. It trades in a 52-week range of CA$0.29 and CA$0.04.

Important Disclosures:

1. 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.
2. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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