Over the past few weeks, we have focused our articles on various tips, processes, and technologies which, when used as part of a retailer’s margin management strategy, can help you protect your bottom line. We’ve described ways to use data to optimize a prepared food strategy, trim unnecessary waste due to product recalls, even protect profit margins against the invasion of the dollar stores.
Today we’ll talk about a different retail technology to help improve your margins: electronic shelf labels. What are they, what can they do for a retailer, and more importantly, what are they going to cost?
Why go electronic in the first place?
To shoppers, electronic shelf labels (ESL) appear to be a cool, high-tech way to display item prices on the edge of a grocer’s shelves. But to a savvy retailer, these little gadgets lower costs and reduce inefficiency in a different way, by curbing labor and material costs.
Decades ago, grocers stopped using pricing guns to put sticky price tags on every single item in favor of applying a single tag on the edge of the shelf. This was a great productivity gain for stockers. But as these printed shelf tags included the products’ UPC barcodes, ordering inventory also became faster and more efficient, simply by scanning the tag.
Digital signage technology, such as ESL, is the next big milestone. While the technology isn’t exactly new, it is still a relatively untapped area for retailers. ESL allows retailers to end the practice of manually hanging out printed shelf tags, printing new ones, and replacing old ones each time prices need to be updated. Those activities are labor intensive and error prone, plus missing even a single change can cause headaches for checkers, stockers and shoppers alike.
With digital signage, there’s no more printing hundreds or even thousands of new tags each week, then scrambling to get them all switched out in a timely fashion. Grocers can change prices across an entire store within a matter of minutes—even if every single item were to have a new price at once. The store receives all the relevant price changes electronically, then at the appropriate time, a single click transmits them to the ESLs, which immediately update the prices displayed to shoppers.
What retailer wouldn’t want to save all that time and labor, not to mention increasing the accuracy of pricing for every item in the store? But as with any new technology, the inevitable question is how much will all this cost?
A better question to ask: How much will ESL save?
The actual cost of installing electronic shelf labels and the supporting infrastructure depends on far too many variables to throw out a simple answer. For example, how large is your store—and how many locations? How many different items do you have shelf space for? Will you have ESLs for all items, or only those you deem have regular price changes? And there are many more.
Perhaps a better question is this: How much will it cost you to not install ESL?
Having been in retail myself since 1978, I can give you a real-world example of what’s involved in maintaining printed shelf labels over the course of a typical week. On a Monday, we’d receive between 2,000 and 4,000 price changes, another 2,000 more on Wednesday, and around 1,000 follow-up changes on Thursday or Friday. Each time the store received a batch, someone had to import the new prices into the system, do a lot of data entry, and recalculate new retail prices. Then someone else would go print the new tags, sort them, then remove and replace each old tag with the new one. Even working as efficiently as humanly possible, all those functions are labor intensive and thus costly. And that doesn’t even count the cost of the labels themselves, the printers, the toner cartridges, and so on—nor the effects of constantly discarding such materials in our landfills.
With grocers dealing with rising labor costs, the question shouldn’t be how much electronic shelf labels cost. The question is: Can you really afford not to consider digital signage to boost your margin?
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