With retail increasingly becoming a data-driven business, Paul Milner, marketing director of Displaydata, explains why Electronic Shelf Labels (ESLs) are becoming familiar features on grocers’ shelves as they look to price in more strategic, agile and profitable ways
Pricing: the old new battleground
Ask any marketing student about the relative merits of the 4Ps of the marketing mix and most will argue that ‘product’ reigns. But in the grocery market, I’d argue that price is king – everyday low pricing, buy one get one free, and the fact up to 50% of goods are on some kind of offer in most supermarkets – underlines the importance of price.
But let’s be honest, pricing’s a curate’s egg:
- Accuracy is an issue: Given the sheer volume of promotions it’s not easy to ensure that prices at the POS align with labels in aisles or with online channels. And any discrepancies can easily undermine shopper’s trust in brands.
- Pricing is labour intensive: For most of our customers their store staff – at around 66% – are their biggest cost. That being the case, most want their team to focus on what they do best – helping customers, as opposed to changing labels. And with the store team’s time a finite resource, most retailers have to prioritise label changes to certain key lines. This lies behind the stat that 46.7% of stores currently update their prices once a week, whereas 53.4% want to be making changes daily or in real time
There’s something more concerning at play here too: online competitors are able to change millions of prices a day and with the intricate level of data they hold, they can price in smarter ways; ways that are more enticing, immediate, and, profitable. Indeed, with algorithms getting smarter by the minute, price – that’s always been important in retail – is becoming even more so.
The need for agile, data-driven pricing
Think about all of the innovation going on in retail right now. Think too that as much as 90% percent of sales are still made in store, and that we live in an uber-connected internet of things age and you can only conclude that it’s odd that pricing is still based around paper labels that are often unattractive, liable to inaccuracies, time consuming and expensive to update.
I’d argue that stores urgently need a new approach to pricing. Electronic Shelf Labels (ESLs) provide it.
Unlimited price and promotion changes
To date ESLs have not taken off in some markets because of concerns over the low quality of displays previously available. However, this is now changing as a growing number of the biggest and best-known retailers and their customers are poised to benefit from a new generation of ESLs. The easy-to-deploy and centrally managed labels enable retailers to control and drive in-store pricing and promotions with speed, agility, and consistency. Fully graphic and available in three colours, the labels offer far superior image quality and technical capabilities, such as the option of integrated Bluetooth low-energy beacons, and are already playing a prominent role in creating more interesting, interactive and engaging experiences in the store of the future.
By using Electronic Shelf Labels, retailers can achieve the following;
- Transparency and integrity: retailers want to earn consumer trust – that means ensuring that prices align across channels. It was only a few months ago that retailers were criticised for not ensuring that prices at the checkout matched those on shelves. And with some grocery retailers selling as much as half of their inventory on promotional terms at any point in time, being able to centrally manage the information and pricing on any number of labels, across any number of stores – in seconds – means it’s far easier to ensure price and promotional changes are made quickly and most importantly that this is done accurately. Delivering accurate information and pricing about products builds customer’s confidence that they can budget and plan their shop reliably and leads to a more trusting relationship between the retailer and the consumer.
- Pricing agility: dynamic pricing makes it easier to price by events, time of day and store location, respond to competitors’ activities, clear overhanging stock and reduce waste.
- Improving customer service: by freeing staff from manual price changes, in-store teams can spend more time helping customers and ensuring the store is correctly merchandised. ESLs can also show much more information – such as competitors’ prices, source of origin, ingredients, social reviews, stock levels and much more for both store associates and consumers. The guaranteed consistency between shelf pricing and charging at the POS also eliminates time taken to process refunds and removes this customer irritant.
- Protecting the environment: by having the freedom to remotely change prices on any shelf in seconds, retailers can graduate pricing based on sales velocity and inventory levels to ensure they reduce waste by the end of the business day. What’s more, huge savings are made in paper and ink when replacing paper labels with electronic ones.
- Giving customers more: using ESLs with Bluetooth beacons, retailers can send customers more personal and engaging offers to shoppers’ smartphones. In our always-connected world, ESLs are integral to deploying price and promotional strategies in engaging ways that appeal to today’s tech-savvy customers.
Swift, accurate and engaging
While we cannot predict the future, we can say that retail will only get more competitive. I also believe that tech-savvy shoppers will increasingly expect to receive the kind of highly targeted offers they enjoy online in physical stores. Being able to centrally manage prices and promos with the flexibility and speed, while also offering more personal and rewarding offers, will be critical at a time when the phrase ‘survival of the swiftest’ could have been coined to describe the fast-moving and data-driven world that retail has become.
(A Retail Times’ sponsored article)