Rise of the Electronic Shelf Label (ESL)

By: Andy Dickinson at Data Cash Register

By now, you have been in a big box or home improvement store and seen the variable-sized e-ink devices that replace the paper hanging tags that tell you the price of an item. This is not new technology. Your kids aren’t aggressively trying to get you to buy them RF-connected shelf tags so they can finally complete their home-built Meta-Tok-Stream-VR-Holodeck. [NOTE: I will be purchasing a Holodeck as soon as they are available.]  

It might not be the newest, buzzwordiest, or sexiest technology to come along, but the ability to utilize them to their full potential is finally and definitely here. These devices are more than just a more expensive way to tell someone a price. 

Let’s first talk about some of the pitfalls an independent grocer or retailer has to deal with on the old shelf label system. You are reliant upon your supplier or warehouse to send you updated pricing on items that are showing up on the truck and items that you are already stocking. Likely, you are also dependent on them to send you the physical tags. Hope they sent them all!  These tags land in the hands of an employee(s) that are responsible for making sure they are hung in coordination with the actual POS system pricing updates, another process often not controlled at the store level when part of a group or chain. Did they get hung for the correct item? Did they get ignored and put in a drawer? Did that person even show up today? If the cost of canned goods is up 30%, and you don’t have systems in place to efficiently update your POS system and tags,  you can be running at a loss for a considerable amount of time. For what initially sounds like a simple process, there are a number of hard-to-avoid points of failure. Here is another angle, the customer will always let you know when you are charging too much for an item, but they will never let you know when you are not charging enough. Talking with folks familiar with independent grocers will tell you all these things routinely happen. 

Now, the new system: You are again receiving regular pricing information from your warehouse. They are sending it to you in a formatted, consumable piece of information that is automatically imported into your POS software. Your costs are updated, and next is where the magic really happens, you have software in place that checks to make sure you are in line with expected profit margins. More specifically, it checks the margins you expect for different categories. Produce will be different from sodas, and seafood will be different from breakfast cereal. The correct pricing can be quickly configured, and scheduled to update at the registers, as well as on the tags at the same time. All of this can take place in seconds with the right solution. What independent grocer or retailer would not find value in this? 

There are some other features that should be taken into account as well. The look of the device can be customized. You can display your store logos, dual pricing, WIC-eligible items, coupon offers, and even QR codes that offer more product information to the consumer. Embedded flashing LEDs within the device can be activated on-demand to help stockers find item locations or help order pickers grab the correct product. You will also start to see the rise of rail cameras and other detection devices that can report stock levels. In other good news, you stand a good chance that the communication with the ESLs can run on an existing Wi-Fi network. 

There are some basic objections to ESLs. There is a sizable upfront expense to implementing this technology, and you have to have the right solutions partner and software in place to use it to its full potential. Batteries and rails are the other major hurdles. I would expect the retail stores in the near future to have power-equipped rails so that batteries are no longer necessary. Today manufacturers claim that the battery life is typically 5 – 10 years, but even if they die, the batteries can very easily be replaced on the unit.   

Fire up the ROI calculator because a comprehensive ESL solution can eliminate numerous problems for a retailer.