Electronic shelf labels: Towards efficiency and simpler stores

For around 15 years, price information has been displayed using a single piece of paper sitting on the shelf edge under the product. It was cheap and simple, replacing the price tagging of individual products by unskilled labour. Moreover, paper labels could mould to diverse sizes and shelf types. In fact, all one needed was a plastic strip along the shelf edge, a motivated staff member and the slip of paper.

However, against this competitive market environment, large grocers have been prompted to look at means of increasing their profitability and productivity to counter eroding market share. On the one hand, they are pursuing more effective management, focused on both the purchasing function and control over selling prices. On the other hand, they are pursuing a simpler store as they embark on incorporating marketing and customer service programmes. Such trends work against paper shelf labels - since they need to be manually updated, they offer limited flexibility, errors can creep in, and they take up valuable staff time. These factors, plus the move towards more centralised price control makes electronic shelf label (ESL) automation the logical next step.

French retailers are some of the few that have gone truly global. Although their saturated home market has provided little opportunity for market share growth, France remains core to their operations, providing strong cash flows to finance international growth... that is until the past few years.

High price sensitivity, discount voucher acceptance, labour issues, onerous government restrictions, these and more have left the large retailers with few options but to rethink and rationalise their home operations to retain their customers and market share.

Add to this fierce competitive mixture a government measure to force retailers to lower prices, and you have a price war that knows no bounds.

Carrefour has been one of the early adopters of ESL automation. Management initially wrestled with the change: does price automation have a place on the retail floor? Can it improve sales? Can it improve service? Can it help shelf control? Can it help stock control? How will customers react? How could it pay for itself? Can it quicken checkout queues? Can it reduce complaints?

However, after four ESL pilots, six months of study by various departments and national customer surveys, Carrefour finally decided to roll-out ESL technology in its 42 Paris hypermarkets in 2004, as well as launching pilots throughout its other European markets.

The change meant mobilising already overstretched staff, teaching new skills, rethinking its shelf-edge format and installing store communication infrastructures. Despite this investment, it is fast becoming obvious that the switch as been worthwhile.

Carrefour has committed itself to improve the price management of its products to regain its customers. That calls for keeping a very fine pricing balance between high volume popular products and slower moving ones that are still necessary. By controlling and watching their trends, and implementing instantaneous selling prices, Carrefour is mastering its game.

There is a definite shift in the urgency of ESL implementation from French hypermarket retailers who are eager to ensure they get the basics right - manned checkouts when necessary, fully stocked shelves and reactive prices. High labour costs, high job turnover, low job expectations, centralisation and price strategy are combining to make ESL adoption a fundamental step in store concept development.

In fact, ESL is fast becoming a trusted method of simplifying store processes along with the likes of automatic store replenishments, handheld units and bar code scanning. And the customer comes out with better, more reliable shelf pricing, while the retailer has a tool that knows no limits. We have seen large store formats go from a policy rule of no more than 250 price changes per day, reflecting labour impracticalities, to 6 000 price changes per week. And we have not seen, nor do we know, if there is a limit to what the customers can handle.

The South African retail industry is not unique and experiences similar challenges than Carrefour. Price errors between the shelf and cash register are extremely high in the stores in this country and cannot be ignored as competition for market share is intensifying. Store managers are faced with operational problems. The push to increase sales volume and maintaining margins has been a drive for sustainability and focus on productivity and efficiency.

The large retailers in South Africa have been monitoring the progress of ESL technology for many years. The positive growth in South African economy has let to retailers enjoying an increase in buyers willing to spend more and increase on credit buying. This had two effects: (1) A huge increase in new stores and evidently more competition between stores as there are more stores in same areas; and (2) Retailers are forced to expand IT systems, be more in control of prices, margins and stocks.

ESL will guarantee 100% price accuracy at shelf level, which can be controlled from headquarters. It will also offer the store the possibility to use ESL in order to run promotions more regularly which will be very hard for the competition to keep up with when only using paper labels, as all price changes are done manually today. ESL will ensure customer loyalty as complaints will reduce drastically, and missing labels will become a thing of the past.

The question that retailers should ask is: Can they afford the current revenue leakage incurred due to these store inefficiencies? These inefficiencies can be taken out or reduced considerable by using ESL, therefore saving millions of rands per year.

Pricer AB (publ), founded in 1991 in Sweden, has a leading position as a supplier of electronic display and information systems to the retail industry. Pricer offers electronic information systems which significantly improve customer profitability and productivity.

With the largest product range on the market, Pricer ESL systems are installed in more than 1 100 stores in three continents. Customers include the second largest retail chain in the world (Carrefour) and some of the largest retail chains in Europe and Japan. Pricer, in co-operation with South African partner XON Group of Companies, offers a totally integrated solution together with supplementary products, applications and services.

Driven by the intense retail environment, retailers have demanded an ESL system which removes all obstacles to effective and clear shelf edge price and supply chain communication. One that brings scale, feedback and accuracy as well as enhancing both the customer experience and store systems.

Pricer has responded with the new C^2 platform and the new ESL families which are supported by it, named Continuum.

Building upon the Promoline platform best of breed solution, the C^2 platform and Continuum ESL benefit from a high performance processor and high memory capacity.

Continuum brings to retailers advanced in-store marketing possibilities through display animations and transitions, as well as providing easy secure access to supply chain information directly at the shelf edge.