Digital shelf tags, also known as electronic shelf labels (ESLs), have beenon the horizon for over a quarter century. First envisioned back in the 1980s, and seemingly in various states of testing ever since, ESLs offer the promise of lower labor costs and better price integrity at the shelf.
The first testing began around 1985, the same year that The Breakfast Club hit theaters. Molly Ringwald is now 45 and has three kids, but ESLs remain on the horizon. What is the problem?
Here's one clue: pull out your smartphone and look at the screen. You'll notice it's not monochrome. Since 1985, a lot of things have changed: newspapers - those that remain - have gone color. We're all carrying color screens around with always-on connectivity. You can buy a virtual version of The Breakfast Club from Amazon and stream it directly to your TV, or your iPad. But ESLs are still black and white.
A New York Times column from earlier this year quotes the CEO of one of the larger ESL suppliers answering a question about why ESLs haven't been more successful:
[Supermarkets are] treading carefully because the fear is, they'll put 30,000 of these in a store where people are used to seeing paper and it will be a drastic change. They worry that their sales will drop.
Exactly.
There's another problem: ESLs don't really save that much in labor; certainly not enough to cover the massive capex investment required. At $5 a pop for the cheapest tag, a typical supermarket would spend nearly a quarter of a million dollars to outfit one store. That's one store with monochrome tags. Little wonder that retailers aren't in a hurry to take the leap.
Another major change since 1985 is how savvy retailers are using the shelf edge. No longer just a place to put the price tag, the shelf edge has become, driven by the fragmentation of media, one of the best places to communicate with shoppers. Point of Purchase Advertising International redid an old study last year and found that the percentage of shoppers making decisions in-store increased from 70 percent to 76 percent. Paper may be old-fashioned, but color printing technology allows beautiful shelf edge media at a reasonable cost, and it gets the shopper's attention.
The growth of ESLs in Europe is often touted as proof of the coming US revolution. But the rationale in Europe is significantly different, and even then, the most deeply-penetrated country (France) is only at approximately 50 percent. As Tesco recently found out, ideas that are a slam-dunk in Europe don't always work here.
Do digital shelf labels have a future? Yes, but not in their current guise. A number of things need to happen before ESLs can see any real success in the United States.
Digital shelf labels have been waiting for their day in the sun - or on the shelf - for nearly three decades. There is little doubt that at some point in the future the elements will come together and allow them to finally offer benefits that exceed the cost and risk. Maybe Molly's grandkids will see them, but we're not there yet.
For ideas on how you can use shelf-edge messaging to educate shoppers throughout your store, call Jeff Weidauer at Vestcom.
Jeff Weidauer is vice president of marketing at Vestcom, the leading provider of customized shelf-edge communication for the retail industry, driving sales and reducing costs for the nation's top retailers and their suppliers. Mr. Weidauer can be reached at jweidauer@vestcom.com or 501.663.0100.
