Changing the Way Supermarkets Operate with Electronic Shelf Labels

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An employee arranges a digital price tag for vegetables at the Whole Foods store in the Silver Lake neighborhood of Los Angeles.

An employee is seen adjusting digital price tags for vegetables at a Whole Foods store in Los Angeles.

Patrick T. Fallon/Bloomberg via Getty Images

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Patrick T. Fallon/Bloomberg via Getty Images

Grocery store prices are now more dynamic than ever, with Walmart recently announcing the adoption of electronic shelf labels to replace traditional price stickers. These labels empower employees to modify prices as frequently as every ten seconds.

“If it’s hot outside, we can raise the price of water and ice cream. If there’s something that’s close to the expiration date, we can lower the price — that’s the good news,” said Phil Lempert, a grocery industry analyst.

Apps like Uber already utilize surge pricing, adjusting prices in real-time based on demand. The concept of surge pricing has stirred controversy in various industries, with fast-food giant Wendy’s being a recent instance. Electronic shelf labels enable similar strategies in grocery stores, although this is not the sole reason for retailers transitioning to this technology.

Notably, Walmart’s announcement about implementing digitized shelf labels in 2,300 stores by 2026 did not emphasize the flexibility of price changes. According to Daniela Boscan, a participant in Walmart’s label pilot program in Texas, the key benefits of the labels are “increased productivity, reduced walking time, and faster shelf restocking.”

Walmart is not the pioneer in this shift, as electronic shelf labels can already be found in stores like Whole Foods, Amazon Fresh, and the Midwestern chain Schnucks. Such digitized labels are prevalent even across European stores.

Another notable feature of electronic shelf labels is their enhanced product descriptions. Lempert highlights that barcodes on these labels can provide additional information beyond just the price.

“They can actually be used where you take your mobile device and you scan it and it can give you more information about the product — whether it’s the sourcing of the product, whether it’s gluten free, whether it’s keto friendly. That’s really the promise of what these shelf tags can do,” Lempert said.

With rising labor costs making labor more expensive, retailers of all sizes can benefit from the productivity boost enabled by digitized shelf labels, notes Santiago Gallino, a retail management professor at the University of Pennsylvania’s Wharton School.

“The bottom line, at least when I talk to retailers, is the calculation of the amount of labor that they’re going to save by incorporating this. And in that sense, I don’t think that this is something that only large corporations like Walmart or Target can benefit from,” Gallino said. “I think that smaller chains can also see the potential benefit of it.”

While electronic shelf labels offer the capability to adjust prices instantly, Gallino believes that companies like Walmart are unlikely to exploit the technology for sudden price hikes.

“To be honest, I don’t think that’s the underlying main driver of this,” Gallino said. “These are companies that tend to have a long-term relationship with their customers and I think the risk of frustrating them could be too risky, so I would be surprised if they try to do that.”

Instead of focusing on surge pricing opportunities, retailers are more likely attracted to electronic shelf tags to ensure pricing consistency between online and in-store purchases.

“Today, Walmart customers can check on their app once they’re in the store, the prices that Walmart is offering online,” he said. “And if there are discrepancies, this can bring frustration or make the customers get confused.”

Electronic shelf tags should make it much easier for brick-and-mortar stores to keep pace with prices as they change online. And, he says, that consistency should be better for customers.

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