Bend, Ore. — Will retailers' desire for “greener” stores be what finally gets them to adopt electronic shelf labels?
ESLs — plastic modules that display digital prices and replace paper price tags on shelf edges — have been around since the early 1990s, promising to simplify price changes and to ensure agreement between prices on shelves and those at checkout. But the cost of installing ESLs storewide has put off most retailers, except for stores in Connecticut, where state law waives item pricing for stores that use electronic labels.
But now one retailer — Newport Avenue Market, an IGA plus one-store independent based here — has installed about 18,000 battery-powered ESLs throughout its store, in part because of their environmental benefits: They eliminate reams of traditional paper labels, to say nothing of saving the energy and ink required to print the labels.
“It is all part of our effort to reduce the size of our environmental footprint,” said Rudy Dory, owner of Newport Avenue Market, in a statement on the store's website (newportavemarket.com), where a local TV news clip about the store's use of ESLs is posted.
“Paper labels are not something you can recycle, so it's just waste,” Spike Bement, Newport's store manager, told SN. In an environmentally active state such as Oregon, shoppers appreciate the store's efforts to conserve paper, he noted.
Bement acknowledged that the store's installation of ESLs — which took place in late May — was prompted by other considerations as well. In particular, the store prizes the pricing accuracy made possible by ESLs. “If you have something at $4.99 at the shelf, it will scan $4.99 at the checkout,” he said. “The same system runs the labels and the scanning.” Incorrectly scanned items are presented free of charge.
Previously, the store's prices were about 99% accurate, Bement said, with an occasional error occurring when temporary price reductions were used.
LABOR SAVINGS
In addition, there are labor savings, which is where the return on investment comes in. Newport does about 1,000 price changes per week, some for promotions, some for price increases, including monthly price changes for beer and wine items. The ESLs are installed in Center Store and in coolers, as well as for dairy, some packaged produce and some fresh meat and seafood items.
The ESLs use a blinking red light to denote a promoted item, with the original price and the savings scrolling at the bottom of the label. For the first year, promoted items are also being highlighted with generic red laminated tags.
Bement estimated that the store saves about eight hours of labor per week by not changing paper tags manually. Changes are implemented electronically from a back-office computer.
Newport invested about $125,000 in the ESL system, which includes tags, ceiling disks that relay pricing data via radio frequency to the tags, and back-office software. The system's provider, StoreNext Retail Technologies, said the labor savings produces a payback on the investment in two years, though Bement said he believes it is “longer than that,” without being specific.
Newport's ESL system is manufactured by Pricer, a Swedish company, though it is marketed by StoreNext, Plano, Texas, a provider of retail technology to independent food retailers.
Newport, whose slogan is “life is short; eat good food,” is the only supermarket in its market with ESLs and one of the few — if not the only — ESL users in Oregon. “We like to be first, best or different,” said Bement.
StoreNext reports that interest in ESLs among independents is growing. But Greg Buzek, president, IHL Consulting Group, Franklin, Tenn., believes that ESLs are still too expensive for most food retailers. “The issue is not so much the technology itself, but that there are other technologies that get that limited IT budget each year because there is more low-hanging fruit out there for ROI,” he said.
Newport's shoppers have adjusted well to the ESLs, said Bement. “Whenever you change something, people usually complain, but we haven't heard anything negative about this.”