Ryan Yost, VP general manager at Avery Dennison, suggests that three elements should be in place to maximize the potential of shelf-edge technology: labor efficiency, sales uplift, and customer engagement as a means of building loyalty.
Matt Pavich, senior director of strategy and innovation at Alpharetta, Ga.-based Revionics, a pricing optimization solutions provider for retailers, notes that ESLs today have a solid business case behind them as technology and the market have evolved in areas such as price optimization. Even the hardware itself has become more formidable, with longer battery life that can keep an individual ESL working for eight years and sometimes 10.
[Read more: "Using Advanced Technology to Drive Pricing Decisions"]
However, pricing optimization and promotion, combined with shelf-edge technology, can provide substantial returns. According to Pavich, well-managed price optimization and promotion have allowed Revionics customers to outperform the market, gain share and even grab customers from rivals. Pricing optimization strategies using AI to gather relevant data provide grocers and other retailers a better understanding of what prices and discounts have the maximum effect in different locations. They can even save retailers money by demonstrating how deep a discount is enough to generate the sales wanted. Because the use of tools such as price optimization is based on exacting science, grocers can get consistent results and even venture into predictive analysis to deal with situations on the horizon.
“When you talk about pricing optimization, you become more efficient [and] you become more effective promotionally,” says Pavich.
He makes the point that price optimization backed by AI has been around for quite a while, powering the constant price changes that are commonplace in e-commerce. Given the familiarity that today’s grocers have with omnichannel strategy, more executives than ever are eager to apply these types of solutions in stores, as they already do digitally. As its integration in physical stores becomes more sophisticated, personalization becomes part of the equation. Stores won’t be changing prices for individual customers, but a loyalty app can direct them to the promotions that are most relevant to them.
The combination of shelf-edge technology and price optimization can have a dramatic effect in-store. Labor savings on price changes is an immediate result, given that retailers can now change an ESL automatically. Not only does it enable an employee to go from working on shelves to working with customers, it also eliminates concern about how many price changes can be made in a day, given the available labor.
Still, if ESLs get a lot of attention, many grocers have tapped solutions that don’t require investment in individual ESLs but deliver many of their benefits if consistently applied.
Ryan Yost, VP general manager at Avery Dennison, in Mentor, Ohio, estimates that 95% of the work that he does in shelf-edge technology, including with the company’s Vestcom business, involves paper, with just 5% involving ESL. He contends that grocers don’t need to rely on any single shelf-edge technology. In situations with highly promotional goods or those otherwise subject to frequent price changes, ESL may be ideal. Still, for products that typically have only a few regular price changes over the course of a year, the investment might not be worth it.
Paper tags such as the ones Avery Dennison offers, which don’t just offer price, but also have space for messaging, may make more sense for product categories where pricing is consistent. What’s more, the labels are easy to mount and come in a stack that’s subject to an automated process in printing, so that each is sequenced. An employee with a stack of tags can start at the beginning of the first aisle and proceed along the shelf directly, as the tags correspond to the order of products as merchandised. The result is significant labor savings as opposed to the old way of doing things that had employees hunting around the store to find the right place to mount a tag.
The labels also include space for promotional messages and other means of reaching out to the shopper. Messaging can let the consumer know that an item is new, what other products might be purchased in combination with it to assemble meals, and how the company behind the item is addressing social issues, and it can also link to social media accounts and posts.
Yost suggests that three elements should be in place to maximize the potential of shelf-edge technology: labor efficiency, sales uplift, and customer engagement as a means of building loyalty. Today, more capable ESLs, advanced paper tags, and video displays on end caps and even on cold- case doors can be combined as appropriate to provide grocers with positive results on the cost and sales side. Some emerging benefits that shelf-edge technology can provide include the ability to locate where a consumer is on the floor, what their preferences tend to be and what promotions they might consider. Privacy considerations have to be addressed, but when marketers have the ability to offer the consistent purchaser of granola who hasn’t bought any in a while a coupon while that shopper is passing the cereal display, more of the potential of shelf-edge technology will be achieved.