Electronic shelf labels : Towards efficiency

Can you imagine, a local grocery store retailer changing the prices of the products for a happy hour sale, at the click of a mouse, and then turning the prices back to normal with a second click? Quite difficult to believe! But it isn’t that difficult to believe if we’re talking about the US or any European country. Though the concept is yet to take off in India, Electronic Shelf Labeling (ESL) technique has found much favour in the west.

ESL is a modern system used by retailers for displaying product pricing on shelves and these are attached to the front edge of retail shelving. ESL units are typically compact credit-card sized devices designed to replace traditional paper shelf labels or individual sticker pricing. The ESL process involves the use of a liquid crystal device that replaces paper shelf labels at the retailer’s shelf edge.

Shelf labels to electronic shelf labels

Changing thousands of paper shelf labels per week is a costly and a lengthy exercise. Since the prices are updated manually, there is always scope for error, besides the process being cumbersome and consuming precious time. In today’s competitive market environment, retailers are prompted to look for means of increasing their profitability and productivity. As a result, they are pursuing more effective management, focused on both the purchasing function and control over selling prices. Such upcoming trends work against paper shelf labels. Commenting on paper labels in question Mr Sandilya Gopalan, AVP Retail and Manufacturing, Cognizant says, “When there are frequent changes in price / promotions, when a store manages a large number of SKUs and when the store needs a sophisticated feel to complement its image, ESL has an edge over paper labeling.” Highlighting the benefits of ESL over paper price labeling, Mr Suresh Singh, AVP Marketing, Polaris Software Lab Limited opines, “ESL is a wireless, paperless, accurate technique. It allows retailers to instantaneously update price changes on the shelves and checkout stands of one or multiple stores, which further allows these retailers to run real time promotions such as at the regular price, a promotional price, comparison shopping, promotional information, etc.  This activity creates a customer pull towards additional impulse buying, which means increase in sales and reduction in overall operational costs.”

ESL implementation

ESL management system helps store chains in strategic and dynamic price management. The system includes hardware like base stations, transceivers and electronic shelf labels. The system supports both serial and Ethernet-based communication channels. A communication network allows the price display to be updated automatically, whenever a product price is changed. Small digital or plasma display screens are shelf-mounted in front of the products. ESLs operated by wireless, low-frequency signals, fed from a centralised computer, allow instantaneous display changes. The technology is based on radio frequency and infrared systems which link the master checkout with the shelves – an extension of Radio Frequency Identification (RFID). Expressing his views on the concept Mr Gopalan says, “Typically, the technology involved is not very complex. It requires a Local Area Network (LAN) and specially fabricated shelves to accommodate and connect the card-sized ESLs. The communication between the ESLs and the server may be wired or wireless, depending upon the requirement. The master store operations software is required to ensure that the ESLs are in sync with the POS price and the planogram. The investment required depends upon the scale of operations and the type of ESLs required.”

ESL scope in India

Driven by the intense retail environment, retailers have necessitated ESL implementation to get there basics right - manned checkouts when necessary, fully stocked shelves and reactive prices. According to Mr Singh, “As far as India is concerned, it is something new which is yet to be introduced. The reason is simple – the Indian retail industry is at a very nascent stage, where people are yet be educated about the principles of modern retailing. In India, people are not willing to invest much in technology because the operational costs in running modern retail are as it is very high, i.e., high rentals, expensive manpower, price war competition and pilferage.” Adding to it Mr Sunil Thundathil, Consultant, TransWeave, Inc. says, “ESL continues to be a bit pricey for Indian retailers, as costs of additional shelves that are ‘electrified’ to accept the ESL tags, are not readily available from ESL vendors as cost effective solutions. There is lack of presence of ESL vendors in India as compared to the US, Europe and China, to help keep competitive ESL pricing alive. I sincerely believe that it is only a matter of time before ESL vendors set up major operations in India, creating demand for Indian retailers.” 
There is a definite shift in the urgency of ESL implementation, which removes all obstacles to effective and clear shelf edge pricing and supply chain communication. 

Annotation

To stay in tune with modern retail technology, ESL technology is vital. However, the Indian retail market is going through the initial phase of growth and stabilisation. The priority of the retail strategists today, is to first expand and consolidate themselves, before embarking on technological updates. However, within a few years, Indian retailer companies will be able to bring themselves to the level of international retailers, in terms of technology. That time is not far behind and we would soon see ESL as a regular practice in Indian retail stores.