Every supermarket manager has to deal with a multitude of daily tasks. Consider a 6 AM delivery of a new pallet of avocados with a new cost. Simultaneously, the manager must deal with a live promotional flyer that requires extensive price updates. Finally, a competitor has triggered a price update on laundry detergent that must be addressed. Managing 40,000 SKUs in a store is a logistical nightmare.
Staff attack the issue with print batches, label rolls and scanners. For hours, they walk the aisles to find specified locations to remove old stickers and apply new ones. Tags can be misplaced, leading to long checkout processes. Lost tags, incorrect prices and regulatory fines all add to the issue. Combined, the tasks take thousands of hours yearly. Repeat it weekly and pour it across hundreds of locations and stores. It is one of the largest operational risks Supermarket Managers face.
The ever-increasing number of ESLs (Electronic Shelf Labels) creates new opportunities for many businesses. For example, in the grocery B2B sector, the question is how to use ESLs for positive returns. It is a fundamental shift in approach, moving from a manual system to something digital, smart, and better.
Why Manual Pricing is Failing at Scale.
Large retail supermarkets run on margins of between one and three percent. Thus, every small efficiency gain is critical, and errors mean losses. Adding manual paper-based pricing systems in large stores creates pressure in the following ways:
- Labour Intensity and Cost: The manual process of changing pricing tags is very time-consuming, and often, analysts estimate it takes between two and four minutes for a worker to change a single paper price tag. This is a significant factor considering the thousands of tags that need changing every week and in multiple stores.
- Error Rate and Its Consequences: Mistakes in pricing and labeling are bound to happen, whether it’s posting the incorrect price on a shelf, using the wrong labeling gun, or forgetting to change a price after a sale. These human errors lead to price discrepancies that annoy customers, slow down the checkout process, and even violate certain pricing laws that can get a store fined. Worst of all, it can lead to losing the trust and loyalty of many customers.
- Operational Rigidity and Speed: Pricing strategies can lead to an operational advantage over competition. Being able to adjust pricing in response to a competitor’s promotion, or on a time-sensitive basis for things like flash sales or soon-to-expire perishables, requires speed. Everything about a paper-based pricing system is slow. It takes hours or even a full day, leaving a supermarket with no ability to quickly respond to pricing needs. Digital pricing, on the other hand, can be done in minutes from a central point.
Advocates for Electronic Shelf Labels are highlighting the negative impacts of outdated operational strategies. These strategies are ever present, costly, and scalable in a negative way and in operational efficiency.
Display ESL Systems integrated into Supermarket Operations
Modern ESL systems in supermarkets function as integrated systems rather than a disparate collection of components. When integrating ESL systems in supermarkets, understanding the individual components is essential.
- The Tags (The Hardware): E-paper screens function as display tags placed on the shelves. Supermarket tags need to be durable, easily readable, and have long battery-life. They need to be durable as mist, cleaning chemicals, and over scrubbing will wear on the tags. Supermarket tags come in a variety of sizes with smaller display tags functioning as sku tags and larger tags as promotional display tags (gondola end caps). Tags should have a battery life of 5 – 7 years at a minimum.
- The Communication Network (The Nervous System): This is the technology that provides the synchronization of the tags. Most systems utilize a proprietary wireless (2.4GHz) and low power technology that builds a mesh throughout the store. Tags serve as nodes along the mesh to improve signal strength at supermarket and ESL tag construction. A gateway in the store manager’s office bridges the communication network to the internet.
- The Management Software (The Brain): This platform, available as cloud-based or on-premise, acts as the center of command. From here, pricing managers deal with change files from their ERP or pricing optimization software, schedule updates, allocate prices to particular aisles or zones, and supervise the health of the tags. Its primary integration with basic retail systems (POS, ERP, PIM) remains the critical part.
A complete view is necessary when assessing potential systems. A diligent https://www.zhsunyco.com/pl/electronic-shelf-label/ .
Calculating the Tangible ROI: Where the Savings Come From
Although implementing an electronic shelf labeling (ESL) system can be expensive, large supermarkets can expect a payback period of roughly 18 to 36 months. There are several areas from which the investment returns, including:
- Direct Labor Savings: ESL systems provide immediate and quantifiable system benefits. The system avoids the manual and labor-intensive price changes, saving hundreds of labor hours per store every year. A chain with 50 supermarkets can reallocate labor saving the equivalent of dozens of full-time employees to higher-value activities like customer engagement and inventory management.
- Costs of Pricing Errors: Accurate synchronization between shelves and the point-of-sale (POS) system helps supermarkets avoid margin loss by selling items below the intended price. Supermarkets can also avoid the costs of regulatory fines and reduce the administrative time involved with customer pricing disputes.
- Lower Material and Operational Costs: Supermarkets can maintain dry erase boards, handle the repetitive administrative tasks, and incur the labor time to run prints (which includes paper and toner costs). Supermarkets enjoy ongoing and persistent savings.
Implementation Strategy: A Phased Approach for Minimized Risk
Successful implementation across the chain warrants a careful strategic plan. A “big bang” approach could prove to be quite risky. Instead, a phased approach is advisable.
- Pilot Program: Begin with one location or one specific high-velocity area such as dairy or promotions. This serves the purpose of testing the tech and identifying store-specific challenges (such as network issues in certain zones), and training a core staff. The aim is to create internal champions and have a validated playbook for the rest of the chain.
- Rollout by Category Within a Location: Within a single store, execute the rollout by category. This allows the operations team to control the physical implantation in a structured fashion without causing a burden on the store employees.
- Chain-Wide Deployment: Building upon the success of the pilot, implement the system at every location in a customized controlled order. This phase depends on the ability of the installation partner and the store managers’ communication plan.
- Integration and Optimization: Finally, this phase is about continuing to integrate more deeply with other systems (e.g., loyalty programs for customized pricing) and optimization of system data regarding update success rates and tag status.
Anticipated challenges include the deployment’s wireless needs in freezers and coolers, avoiding disruption of day-to-day operations, and the need for store-level users of the system to be trained and on-boarded. Working with Zhsunyco, who specializes in this phase of the project, is beneficial to solving these challenges.
The Future Shelf: Where ESL Technology is Heading
The ESL is more than a price tag. For savvy supermarket chains, ”today’s investment is tomorrow’s opportunity”:
Engagement through NFC and QR Codes: Tags may contain codes for customers to scan and receive information related to a product (allergens, where the product came from, how to prepare it, etc.) or to add the product to a shopping list.
Lighting and Promotions Based on Presence: Along with shelf-edge lighting, an ESL may turn on when a shopper is nearby to promote a particular offer or a product with a higher profit margin.
Sophisticated Loss Prevention: Sensors with tags could inform staff when a customer takes a high-value product from a shelf and doesn’t scan it at checkout for an extended period.
For B2B grocery sector leaders, the time to use electronic price tags is now. The technology has developed past the early adoption stage and offers demonstrable and quantifiable ROI.
It tackles the most basic operational shortcomings in large-scale retail and lays the groundwork for a more personalized, responsive, and efficient commerce. The supermarket that excels at managing the digital shelf will not only gain operational mastery, it will gain a significant competitive advantage.
