The Growing Impact of ESLs in Retail From an Implementation Perspective

A surge of new online shoppers, artificial intelligence and omnichannel retailing have upended retail in only a few years. As the industry continues to evolve, the demand for innovative technologies grows with it, and one tool that’s become increasingly popular is electronic shelf labels (ESLs) — especially in the grocery sector, where the need for accurate and efficient price management is critical. However, as with any technology, considerations are needed before implementing. Furthermore, it's worth investigating how complementary solutions could help offset some of the concerns.

What Exactly Are ESLs?

ESLs are digital displays that let retailers automatically update pricing and promotions from a centralized system. They have barcodes or QR codes that can be scanned to display more product details, minimizing the need for customers to consult staff and making browsing easier. Customers also get a smoother checkout experience because prices are more accurate, boosting confidence in the retailer and leading to fewer customer complaints and lost sales.

Retailers also lean on ESLs because they offer the flexibility to adjust pricing in real time based on market factors and customer demographics, call further attention to discounts, and improve inventory management by displaying stock levels. These benefits can improve the store associate experience by automating tedious tasks, letting them focus on higher-value activities like helping shoppers.

ESL Adoption and Key Considerations

It's no surprise that big-box retailers are leading ESL adoption, with Whole Foods and Kohl's already using the technology and Walmart planning to implement ESLs in 2,300 stores by 2026. Walmart’s shift could influence other retailers to incorporate electronic labels to help reduce operational inefficiencies. However, before retailers start this journey, they should consider these three key factors:

1. Balance upfront costs with long-term gains.

To reap the long-term rewards of ESLs, retailers must allocate significant funds for implementation costs. The budget should also cover new hardware, software, installation and maintenance costs.

2. Bridge the infrastructure gap.

Integrating ESLs with outdated legacy inventory and pricing systems can be complex and time consuming. Compatibility issues with current point-of-sale or enterprise resource planning systems may require significant IT support to bridge the gap between outdated systems and new ESL functionalities. Before investing in an ESL strategy, retailers must carefully evaluate their current infrastructure to ensure it can support the new technology.

3. Address malfunctions with remote monitoring.

Malfunctions, battery life issues and maintenance needs are common ESL concerns, and in high-volume environments like grocery stores, these challenges can be especially problematic. However, many ESL solutions now offer remote monitoring and automated alerts, allowing retailers to identify and address malfunctions as they occur.

Implementation Advice for Retailers

Retailers need to consider the existing devices their associates use for everyday store operations, such as scanning barcodes. ESLs are typically very small, often on low shelves, and suffer from glare under store lighting conditions making them hard to scan. In addition, with regular planogram changes on store shelves, a product needs to be paired to each ESL, which is typically a very tiny barcode beneath the main display making the readability of these an important consideration. A switch to ESLs without considering whether existing infrastructure is compatible could lead to frustration from store associates. Pairing scanning technology that's fast and ergonomic for store associates is essential to reduce friction and improve productivity whether paper tags or ESLs are in place.

If ESLs end up being a sound investment, companies should maximize their benefits by using advanced scanning capabilities to further improve store operations. For example, smart data capture is the quickest and most accurate way to capture data from barcodes and gain actionable insights. Although some ESLs will provide stock information, it can often be out-of-date. Using a smart device connected with backend systems enables retailers to update stock information in real time, ensuring associates and customers can access accurate information.

In summary, ESLs present a promising solution for enhancing operational efficiency and improving customers’ shopping experiences. That is as long as retailers carefully assess the implementation challenges to ensure that the technology aligns with their long-term strategic goals.

Jessica Grisolia is director of retail industry solutions at Scandit, the leader in smart data capture.