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Retail Smart Shelves: Dynamic Pricing with Electronic Shelf-Labeling

Ryan Hall Published 6 Aug 2018

Digital transformation is impacting the way brick and mortar retail stores successfully conduct business. With this transformation come new pain points for retail brands surrounding the in-store shopping experience, but new and innovative technologies have emerged to address these challenges.

Electronic Shelf-Labeling (ESL) augments the in-store experience for customers, while delivering a flexible, scalable solution for retailers to stay competitive in today’s economy. 

What is it ESL? Simply put, electronic shelf labeling is used by retailers to electronically display the pricing of products on their respective shelves.  Typically, electronic display modules are attached to the front edge of retail shelving, and use electronic paper (E-paper) or LCD displays to show the current product price to the customer.  A communication network allows the price display to be manually controlled or automatically updated at the business’ discretion.  The wireless communication can be based on radio, infrared or even visible light.

Adoption of electronic shelf-labeling is increasing significantly among retailers, as the products become more available and more affordable. A recent report estimates the global ESL market will grow at over 15% CAGR between now and 2024, reaching USD $1.2 billion. 

So what’s driving the use of Electronic Shelf-Labeling in retail, how are businesses benefitting from investment in these technologies? 

ESL offers a cross-section of benefits to businesses and their customers, including:

  • Seamless & Paperless Pricing:  ESL allows businesses to manually update product pricing seamlessly; it also allows pricing to autonomously update with changing market conditions.  These alone saves organizations a considerable expense on printing paper tags, in addition to the time spent manually updating the new labels.  Both reduce the overhead costs associated with traditional paper labels.   
  • Dynamic Pricing: one of ESL’s biggest benefits for retailers is enabling dynamic pricing, or the ability to price products based off internal and external factors.  Dynamic pricing helps businesses keep up with market trends and competitor pricing, it allows businesses to boost stagnant sales during slow periods or easily raise product prices to maximize margins (when there’s an opportunity to do so), not to mention equipping retailers with an understanding of how scalable their pricing strategy is over time and across locations – ensuring sustainability and long-term success for the business. 
  • Enhanced Shopping Experiences:  ESL is just one of the many ways retailers are using technology to personalize and augment the in-store experience, but it certainly deserves a place on the list moving forward.  Within an individual store itself and for brands with multiple locations, customers are provided a consistent brand experience throughout.  Some ESL solutions have the ability to recommend similar, “frequently bought together,” products in addition to including built-in product reviews – experiences that complement what shoppers are accustomed to while shopping online. Ultimately the intent is to deliver a stronger shopping experience, and retailers like Kroger are already piloting interactive shelf technology across their locations to do just that.         

The approximate ceiling of the ESL market is unclear, as well as how the functionality of these technologies will evolve.  It is evident, is with the availability and sophistication of electronic shelf-label solutions increases while the cost of investment decreases, ESL technologies will be seen more and more across retail stores.        

For more resources related to leveraging strategic technologies for enhancing the in-store shopping experience, be sure to check out the links below!

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