Comment: Electronic shelf-edge labels finally an overnight success
Electronic shelf-edge labels (ESLs) have been around for about 30 years but only now is their value becoming more fully appreciated as they are starting to have a major impact on more efficiently running stores.
One of the more impressive shops to use them is Kavanaghs grocery store in North London that is very much a test bed for the technology – supplied by VusionGroup in this case – with 7,200 ESLs scattered across a shop stocking around 8,000 products. It is leveraging value from these digital labels by connecting them to a plethora of cameras on the ceiling and mounted on the shelf edge and using data analytics and AI to help the store manager make promotional and inventory management decisions in real-time.
The early, rather flimsy, argument in favour of ESLs was that they saved paper. Yes they do but now there are so many other upsides that the paper bit is almost immaterial. At Kavanaghs they have calculated 80 hours are saved per month on employees not having to change paper price labels. In reality that is just the start of it because the ability to link the sales data of items and the images of the goods on the shelf from the cameras means that prices can be discounted and promotional messages sent to the labels from the central system with no fuss. The impact is impressive.
Out-of-stocks can be highlighted to shop-floor employees by flashing ESLs. This capability can also be used by in-store pickers fulfilling e-commerce orders. Being able to reduce out-of-stocks in this way can have a serious impact on store profitability. For every 1% improvement on availability below 95% adds 1% to sales, for 95% to 97% it adds 0.5% to revenues, while above 97% does not increase sales but it does improve the NPS as customers clearly appreciate a well-stocked store. At Kavanaghs availability has been pushed up from 95% to 98/99% through its ESLs.
Never Miss a Retail Update!Boosting revenues through maintaining margins and cutting waste is particularly relevant in the bakery section. Arguably the front-line for waste in grocery stores is the croissant and other pastries. At Kavanaghs they have a policy of reducing the price on the ESLs in this category at 6pm to help clear the shelves. Along with the ability to painlessly apply reductions on the labels, the camera data and AI enables a bake-plan to be implemented based on forecasted sales each day. When this is applied the waste levels can be reduced from around 30% to 10% across the pastry section.
So far so good for ESLs but things could get even more exciting. I’ve made no secret of my belief that dynamic pricing will ultimately play a major role in the retail sector when the media industry finally stops referring to it as surge pricing and consumers recognise it as a tool that retailers will invariably use to reduce prices and not increase them. When customers scan the QR codes on larger ESLs promoting certain goods the product’s digital label will flash thereby making it easy for the shopper to locate the item and ultimately make a purchase. Now if this activity was related to a retailers’ loyalty programme then the individual could be offered a dynamic price, personal to them, that is determined by their value to the retailer.
There are some tech integrations required for this to work seamlessly of course but the way in-store technology and Retail Media Networks are moving apace it is surely a relatively modest step forward to implement this type of personalised dynamic pricing for shoppers.
What’s clear is that ESLs look set to play a major role in the in-store environment as technology in the physical space becomes much more prevalent. It’s only taken 30 years for their overnight success but ESLs now seem to have finally been recognised by all the major grocery retailers as essential weapons in their armouries.
