Retail: Benefits and Disadvantages of the Digital Price Tag: Is Electronic Shelf Labeling (ESL) worth your time?

Written by: 
Kimberly Mertlich
Posted on: 
January 9, 2020

Grocery stores and retailers are exploring new ways to reduce labor costs and create an overall better customer experience including new ways to display price information such as Electronic Shelf Labeling (ESL), sometimes referred to as the digital price tag. Large retailers such as Target are even encouraging shoppers in-store to use the mobile app to scan items while shopping to receive the best prices. Both the use of mobile apps for in-store checkout and ESL’s have been successfully implemented in Amazon Go stores and it’s clear these changes are providing a better customer experience.

Globally, the Electronic Shelf Label (ESL) market is predicted to reach $4820 million by end of 2028. The digital price tag is really worth considering when comparing today’s rising labor and operational costs.

Today’s price changes without ESL

Let’s walk through the price tag operational process today. Depending on the size and location of the store, a typical week might include 1,000-2,000 price changes on a Monday, another 1,000 on a Wednesday and follow up changes Thursday or Friday. Every time price changes occur, someone has to do a lot of data entry adding the new pricing into the system, print the new prices, sort them and remove and replace the old price tags throughout the store which takes about three minutes per tag, adding up to hours to complete even a few isles of a store. Not only are we looking at the labor time associated with this process but ongoing product costs for ink cartridges, printer maintenance and paper. Can you really afford to not use electronic labels?

What kind of digital shelf labels are there?

There are two kinds of shelf labels commonly used, LED and e-ink shelf labels.

E-ink labels look similar to a printed label with the capability to change from red or yellow to highlight promotions and sales. E-ink uses battery power to operate but with very low power consumption and batteries can last up to five years. They can even be used in chillers and freezers.

LED shelf labels can vary in size and range across an entire length of the shelf. Since they are LED, full color can be used and more information potentially displayed including customer reviews and ads. Readability of LED labels, however can be slightly more difficult to the eye for some.

Walmart did a test of both types in a small area of their store to gauge what will work best for their business and for consumers. The digital price tag is already used globally.

Image of digital price tag.

Benefits of Going Digital

Switching to Electronic Shelf Labels saves more than just time or money, it’s about a better experience for the store and customers. Below are just some of the benefits of making the switch to the digital price tag:

  • Reduced labor costs

    This is a big one. Less staff is needed to swap out paper price tags and you can save time by automatically scheduling pricing updates. Simple as that.

  • Inventory Information

    Digital price tags may just look like a fancy way to display product pricing but it also has the ability to show more information including how many items are left of the product in the backroom. Stores can also tackle out-of-stock items before they occur by linking point-of-sale and inventory management tools freeing up even more staff time. For example, a shoe store can display all available sizes right on the display without ever needing staff to go check the back room for availability.

  • Improved accuracy

    Due to the easy nature of changing prices across the store, there is less room for error and even if prices are changed incorrectly, it only takes a few seconds to make the correction on a digital price tag.

  • Sustainability - no more paper and long battery life

    No more paper is used with the Electronic Shelf Labels so not only are you reducing the costs associated with paper, there is less ink, printers and maintenance required. What about the battery life for the e-tags? This has been the biggest concern and price influx over the years and it’s now at a place where batteries can last up to five years. Sure, you’re looking at staff time to change all of them out every five years which will sound like a big-time expense at that point but compared to paper price changes, you currently are doing that much work multiple times a week.

  • Dynamic pricing
    Within seconds, prices can be updated across the board for multiple systems. Consumers also expect the best price and digital price tags make it easier to keep up with the online price comparisons and ensures that you are price matching the competition. This can also create a perception of trust by the customer knowing that the prices you display are the best. Not to say that some might take advantage of the process and adjust prices on the mobile app while in the store versus out of the store. Business Insider caught Target doing this based on location last year and found a Fisher price toy was significantly cheaper online after leaving the store.
  • Customer heat map

    Some ESL’s can integrate with Bluetooth Low Energy to track movement of customers and how long they remain at different locations within the store. This is great insight into your customers buying experience and how your store is set up.

Weighing the Costs

What does it cost you now to change paper prices? How many team members does it take and how long? Are the team members changing prices senior managers making them some of the most expensive labor on the floor? There is no answer that is the same since store variables such as size and location are unique for everybody.

Measuring ROI

The initial implementation of e-labels will require staff hours in order for the system to be set up and digital price tags implemented manually throughout the store. Upfront cost to purchase the labels, software and training for the team must also be taken into consideration. After all the set up and implementation, an important metric to consider is if it’s actually improving customer experience compared to the paper price tags?

Measuring customer experience can be tricky because you have to ask the right question, at the right time during the customers buying journey; how do you even know when the right time is? Common sales measures of traffic volume, frequency of visits and average conversion rate are certainly a good baseline but not really a healthy measure of the customer experience. With omni-channel ordering and fulfillment at it’s peak, consumers spend hours researching online before heading to the store. CMS Wire digs deep on what factors are actually affecting those metrics including contact page conversion rates, any online page bounce rates, rage clicks (when a customer clicks a button multiple times with nothing happening), and last contact tone. These are much better indicators of where customers are being affected during their journey and how it can impact the common measures.

Electronic shelf labeling training

Like any new platform, software or technology, it takes time to learn how to use it and truly understand the full suite of features and functionality. Limited use of an ESL system could result in mistakes leading to bottom line impacts, especially if prices or products are not updated correctly leaving customers frustrated and confused.

There’s certainly a lot to think about as retail continues to evolve. Click here to learn more about the new way of grocery and their utilization of internet of things technology in store.