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Is the Time Right for Digital Shelf Tags?

February 21, 2013

Are the costs that come with implementing digital shelf tag technology justified when weighed against the expense associated with changing current labels every time prices change? That's a question every retailer considering a move to digital tags must answer before taking the next step.

As manual tags for every item on the shelf were replaced by bar codes and computerized registers, then by simpler shelf tags, customers thought they knew what everything cost. But there were inevitable mismatches. Going "completely paperless by putting small, battery-powered digital price tags on the shelves," as author and business professor, Randall Stross, wrote in The New York Times, means "price changes can then be received wirelessly from the store's network, ensuring that the price displayed on the shelf and the one called up at the checkout counter are the same."

Addressing return on investment, Mr. Stross said that a store with 20,000 to 25,000 digital tags priced at $5 a piece could expect to achieve labor savings that pay for the investment in the new technology within two-and-a-half years. Kohl's is one U.S. chain that has made the investment, recently installing digital signs showing prices.

Frank Hayes of StorefrontBacktalk explained how British department store John Lewis' put in "hundreds of e-paper shelf tags that will display both prices and QR codes that customers can scan to get offers and product information," adding "customers won't necessarily notice that these tags are electronic. That makes them less distracting and possibly less likely to be stolen, both of which have been problems with electronic tags in the past."

Also in the U.K., although designed for rollout in Hungary, Retail Week reports Tesco's trial of electronic shelf pricing that "allows it to update prices minute-by-minute." Focusing on fresh produce, a so-called "Broccoli Cam" monitors the produce aisle to let staff know when trays are empty. A spokesman said, "Every week ... we change between five and 10 million labels and that's an awful lot of labels. The future is electronic."

Discussion Questions:

Are digital shelf tags ready for retail prime time? Where do you see the greatest potential benefit? How quickly must digital tags pay back the investment made by stores before the technology becomes ubiquitous at retail?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How much will the use of digital shelf tags improve the shopping experience for consumers in stores?


Kohl's is a great example of a retailer that has embraced this technology. If you go into a Kohl's store you will probably agree that it's a good idea. Many retailers can benefit from this technology: supermarkets, office supplies, home improvement, department store, big box, etc.

When you think about advances in pricing technology and the ability to change prices based on real-time data, then using digital technology to change shelf pricing makes complete sense.

I think Kohl's 2 1/2 year ROI is very reasonable. Of course, we all hope that the retailers will find more effective ways to use store employees to boost sales and the customer experience, rather than eliminate jobs.

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Debbie Hauss, Editor-in-Chief, Retail TouchPoints

I just cannot justify it, as there are many needs to improve capital investment, including new cases and compressors that lower utility bills immediately. I would bring in some for key top 200 SKUs, just to highlight them on the shelves. Unless you're part of a big chain, most small independents would think very hard before investing in these, until technology brings the price way down.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

The labor savings generated from ESLs have been documented and accepted for a number of years, but the ROI still was not strong enough for the huge capital outlay needed to install. Now, with technology improvements, particularly wireless capabilities, retailers are taking another look.

What should not be left out of the equation is the expanded use of ESLs to encompass broader digital messaging on end caps, an other locations throughout the store that could perhaps even interact with the shopper's mobile device. Clearly the momentum is heading towards reaching shoppers with targeted, relevant content at the point of decision. ESLs and companion digital technologies just might be the ticket for such interaction, not to mention expand the ROI beyond the labor savings associated with hanging today's paper tags.

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Mark Heckman, Principal, Mark Heckman Consulting

I have more questions on this topic then answers. The $5 tag may not be real. What about the freezer, dairy and various sizes for things like spices. E-ink makes the ESL technology look very attractive, but can they be implemented without a paper overlay for bar codes, pack and size not to mention unit price per measure requirements in many states. If a paper overlay is needed for any reason, it does not take away much of the cost. Too may suppliers change pack and size to avoid a price increase on the item itself.

Lastly, I do not know many retailers wanting to invest in technology with a 2.5 year payback.

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Frank Riso, Principal, Frank Riso Associates, LLC

This is likely inevitable over the next several years although not necessarily immediate for many segments.

We are moving toward an "Internet of Everything" future with connected products, connected fixtures (i.e. shelves), connected associates, and connected customers all interacting in ways we have not yet fully imagined.

Advances in wireless, location, and video sensing technologies coupled with big data analytics and cloud architectures will significantly increase the pace of the digital transformation of the store.

Paul R. Schottmiller, Senior Vice President of Strategy, Retail and Consumer Goods, Merkle

Digital tags are ready for prime time. In addition to labor savings, real-time price changes can positively impact sales and/or profits depending on the nature of the change. I am surprised that retailers have not approached manufacturers to pay at least part of the costs, especially if product information such as nutrition facts and marketing/couponing capabilities are built into the tags.

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J. Peter Deeb, Managing Partner, Deeb MacDonald & Associates, L.L.C.

Digital tags are used by many major European retailers in several countries, especially France. The current edition of CPGmatters has an article about deployment chain-wide by Cora Hypermarkets.

What do they know that we don't?

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John Karolefski, Editor in Chief, CPGmatters.com

Answers: Yes. Most every format of retailer. 12 months. Do it. Many international retailers have for several years.

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Ralph Jacobson, Global Retail Industry Analytics Marketing Executive, IBM

In order to provide the consumer with consistency and continuity between online and offline shopping, digital tags seem like a must to me. Also, if retailers can use their price optimization tools correctly, they may find that by changing prices more frequently, they will achieve better margins. Just some thoughts....

Lee Kent, Sharing Insights for Success in Retail, YourRetailAuthority

This is a perfect example of where testing is a necessity in retail. No one knows the answer to these questions—because the answers vary so much by retailer. The answer may well vary by store too, with some stores realizing far more gains than others. So the right answer isn't to bet or guess, it is to go find out.

Put digital shelf tags in a set of stores big enough to read the results with statistical confidence. Measure everything—sales, mix, labor, waste, other costs, customer satisfaction, etc—test versus control, using best practice techniques. Segment the test results to figure out where the investment works and where it doesn't. Or try multiple implementations (all digital, digital in key categories, etc.), to figure out what scope works. Then make the right investment once you know the ROI.

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Jonathan Marek, Senior Vice President, Applied Predictive Technologies

Couple of points that aren't clear in this: 1) e-ink labels that the shopper won't notice as being digital are not available for $5 each, or even twice that price; 2) the NYTimes article mentions the major concern retailers have about these labels: they are monochrome and don't allow the shelf edge to be used as a marketing tool.

In short, until an affordable, color label can be had, digital labels aren't likely to supplant paper labels because there's simply too much risk for the retailer to make the needed investment.

Jeff Weidauer, VP Marketing, Vestcom International, Inc.

Electronic Shelf Labels and Digital Signage make the retailer agile -- ready to react to changing conditions: competition, supply and demand fluctuations, currency fluctuations. This agility stems losses from over-promotions or static promotions, and the resulting revenue uplift alone can pay for such a system rather quickly. Labor savings, price accuracy etc. then just become icing on the cake!


At many supermarkets I visit I would be happy just to see a shelf price—digital or otherwise. Kohl's has implemented these electronic tags but for the most part their items are higher priced than the average supermarket item. I would also miss the "free" items I often get at Kroger via their "Scan right guarantee" and their inaccurate shelf tags.


I think digital shelf tags need to do more than "show the price." If a retailer is going to invest in technology and connectivity on the store shelf, it needs to be integrated into a content delivery strategy to the shelf with things like digital signage and promotion, and sensors. As much as you can reduce the price per tag to speed up ROI, the initial outlay on the infrastructure and business process change means it has to be more than labor reduction of changing the prices.

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Kenneth Leung, Retail and Customer Experience Expert, Independent

I wonder whether competitiveness is not the most important issue here: online retailers have the flexibility to change their prices multiple times daily, and brick-and-mortar retailers simply can't keep up due to the physical constraint of the amount of time it takes for store associates to change paper price tags.

In my view, digital signage reminds me of where wireless was a few years ago: when Starbucks first implemented wireless, everybody questioned the ROI because they only looked at it from the cost side of the equation. What they neglected to consider—that Starbucks was prescient about—was the opportunity that wireless would represent for their patrons and the Starbucks environment overall. In order to always be optimally priced, retailers need to look into digital price tags that allow their pricing team to use competitive price information to change shelf prices instantly.

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Alexander Rink, CEO, 360pi

Implement this with RFID chipping. And the rollout of the navigation app on your phone will help you turn by turn and aisle by aisle how to get to your intended destination; then with the scan of the QR Code for product information, and then perhaps an virtual "customer service" agent will appear on your phone wherein you could communicate any questions you might have (which would be unlikely at this point) since all product info will be displayed or known by the qwr, and/or product or service can be experienced via artificial intelligence. Not to mention what the cams or the RFID signals will show when product is low and send a signal to the warehouse.

Also, with some staples such as corn or sugar, etc, that are subject to frequent commodities trading or environmental factors, all these criteria could be programed into the digital price tag for automated real time pricing.

And finally with an automated self check out line via your smart wallet and your smart cart, I foresee the near elimination of all humans. And then with a smart car app, one's voice could dispatch the nearest Walmart or Kohl's or other store and your smart car will deliver you safely to said store.

Implement all this with your smart house and smart appliances and smart meters for total desired effect. All items will be RFID chipped to communicate with your smart house and smart appliances notifying you of personalized deals, coupons or when you are low on whatever you normally purchase more effectively.

The use of Google glasses to direct your thoughts or interact with your phone and surroundings too, will help. Finally with a smart chip in your body to monitor your vitals, physical health and mental status, I think the project will be completed with success.

Greatest efficiency, at the lowest cost, by any means necessary. ROI: yes.


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