Electronic Shelf Edge display in North American Retail?

Shelf edge electronic displays have been an interesting subject and have remained on the conversation street for now quite some time. There have been few interesting experiments by Kroger which are going bigger now, and other retailers are also warming up to bringing this technology onboard, but overall there has been a lackluster adoption of electronic shelf edge displays in the North American retail space.

Electronic shelf edge displays have seen much better-adoption rates in the European markets, In Belgium, Italy and Spain, but has the time come for this to be adopted at a large scale within mainland North America?

What is Electronic Shelf Edge display?

Electronic Shelf Edge display is a technology which replaces those paper clipped price tags inserted in front of items on the shelves, which you saw all around the stores, with electronic labels which can be controlled centrally. From my viewpoint, The need for paper clipped price, or now electronic shelf edge displays comes from the fundamental principle, that prices in the market go and down. In the modern day, this happens at too rapid of a pace, and often known as - dynamic pricing.

Dynamic pricing has always been around in the business.

In Retail, you may have noticed store personal changing that price tag from time to time. A 25% discount on all sports wear may change to buy one get 20% after 6 pm.

In a typical grocer especially in the foods, vegetables section, you may have noticed store personal walking around with thin paper price tags and carrying out replacements. Typically fruits & vegetable sections see a lot more price change today to keep things moving, as perishables have a limited shelf life.

You also see dynamic pricing in other spaces- airline ticketing, hotel pricing which is based on demand and supply, happy hours in restaurants to drive more foot traffic, etc.

With advent of online commerce, retailers have much better control of this online. However, things have been different in the store.

When you look into the future, electronic shelf edge display is part of a larger smarter concept, which includes smart shelves in first place. The shelf is capable of keeping a tab at product placed on them, their movement with customers, last revisited by a store rep for expiration (in case of pharmacies), signaling back low inventory of a particular item, and so forth. Its an amazing concept, when you think about practical use cases in multiple places like groceries, pharmacies and other subcategories of electronics.

Let's look at some aspects where these come into play & why dynamic pricing is important:

1. Food and lot of perishable items have limited shelf life. Dynamic pricing may help move items coming closer to expiration faster. This is not just a business imperative to reduce shrinkage at the stores, but an important undertaking for retailers to ensure they contribute to the society. That the local produce just is not thrown in the garbage if not sold but is put to some good use even if at zero margin.

2. Taking benefit of price fluctuations in the commodity trading, impacts the retailers and their margins directly.

3. Staying competitive in the space where today the customers can quickly compare prices and keep price and convenience at the forefront while making buying decisions. Being able to sync prices online and in-store would be a considerable use case as well.

Benefits of dynamic pricing through electronic shelf edge pricing:

1. Save huge amount of time for store reps. They can focus the time and attention on serving the customers in the stores.

2. Much granular control on items, their availability, pricing.

3. In future, this technology can be clubbed with beacons & customers profile & their mobile app to offer personalized pricing on an item, etc.

4. Better control at omnichannel pricing [online vs in-store, time of day pricing etc]

Major issues around adoption of electronic shelf edge display:

Infrastructure: You can only imagine that setting up beacons, store wide wifi, and so many other connected devices itself pose a major challenge. Now, on top of that we are talking about smaller electronic pricing devices also relaying information packet. This tends to become big infrastructure challenge.
The high cost of setup: Being able to show enough amount of information which the customer expects, and containing the costs is another huge challenge. I read references that e-ink, technology used by kindle which gives you a feel of paper, is a considerable solution for these setups. however the bigger the display to show more info, the higher the costs.
Infrared vs Radio signals: the third area I learnt is the medium which can be used for all this data to be transmitted. In the past some experiments have been done with Radio signals which have their own challenges. recently more success has been see with infrared based solutions. I need to explore this topic little more in depth.
Rolling out this concept to first the key items where a retailer sees a lot of price fluctuation may be a better approach, as all item categories may not really require constant price change and dynamic behavior.

Key Adopters in North America:

1. Kroger began piloting with these electronic shelf labels and reportedly rolled out to some 14 stores.

2. Listening to the NRF 2018 podcast, I also learnt from the Pricer SVP quoting that best buy is in process of rolling these out in north America stores.

3. I have noticed Similar displays at JC Penny & Kohls but haven't seen those are centrally synced up to control dynamic pricing. Similarly, have noticed this concept rolled out at Dicks sporting goods, Tmobile,WholeFoods.

4. I have seen Walmart advertise discounted pricing on picking items ordered online from the store. This can be an extension of the use case, where key value items are brought down in price in comparison to online, displayed on the shelf edge as an incentive to the customer, to push in-store sales.