Two major supermarket chains could begin rolling out electronic shelf-labeling systems -- one chain to 50 stores and another to 30 stores -- within the next year, SN has learned.
H-E-B Grocery Co., San Antonio, will install the shelf-labeling systems in four stores in Laredo and two in Victoria, Texas, beginning this month. If successful after a six-month test, the retailer will roll them out to at least 44 more stores, said Dick Silvers, H-E-B's vice president of management information systems.
Edwards Food Stores, Windsor Locks, Conn., will decide this month if it will install the systems in 30 stores in its Connecticut division, said an executive at the chain who asked not to be named.
The two rollouts would be the largest to date of the high-tech labeling systems, designed to increase accuracy and cut labor costs. Two months ago, Vons Cos., Arcadia, Calif., announced it would install the tags in 26 of its stores in southern California.
A large number of retailers have been testing electronic shelf labels in limited, primarily single-store, tests for a number of years. But the labeling systems seem to be catching on now, not only because they cut costs but because they help automate the center of the store. More sophisticated systems are multi-
functional and can be used in conjunction with planogramming.
"We think there are labor savings. We think [electronic labels] may be great for customers if they work right. They give us a high scan integrity. They ensure that the price on the shelf equals the scanned item," Silvers said.
"The future of these things could aid in a lot of other store areas as well, like with planograms. They could be used in conjunction with automated ordering systems. They could play a central role in a lot of things we're doing to reduce costs at store
level," he said.
The labeling systems eliminate the manual labor needed to change prices on conventional shelf tags and they ensure pricing accuracy between the shelf price and the register. Price changes are sent from headquarters to the retailer's computerized pricing system and subsequently transmitted simultaneously to the shelf labels and point-of-sale systems.
H-E-B had tested the system in one of its 30 stores in San Antonio for three years. "We agreed to do six stores in a closed environment -- four stores in one town where we have four stores. The other two stores are in a smaller town, same thing," said Silvers. "It's hard for us to really determine our return on investment in a town where we have 30 stores."
The Texas retailer is using electronic shelf labels supplied by ERS International, Wilton, Conn., one of two firms supplying the systems in the United States. The other supplier is Telepanel, Markham, Ontario.
First National Supermarkets is testing equipment supplied by both ERS and Telepanel. It chose Connecticut as a rollout site because the state granted an exemption to retailers using electronic tags from having to individually price each item. Massachusetts and New York are considering similar legislation, which could prompt the chain to install the systems there, as well, an executive said.
ERS' systems typically cost between $100,000 and $125,000 to install, depending on sophistication. Each system usually incorporates between 12,000 and 15,000 labels. The payback period is between one and two years.
H-E-B is using an ERS system based on a spread spectrum technology. It has a distributed gondola controller architecture connected to powered rails at the shelf edge.
"I believe the market is beginning to take off because we are able to offer retailers a complete solution. And by that I mean meeting all the retailers' operating needs to easily achieve 100% pricing accuracy," said Bruce Failing, president and chief executive officer of ERS. "Equally important is the ability to have an upgradable system, which can offer multiple applications. New technology must offer the retailer multiple benefits."
