LONG BEACH, Calif. -- K.V. Mart here will serve as the first U.S. test site for solar-powered electronic shelf labels.
The 13-store chain will install the tags in its Top Valu Market store here in August following testing at headquarters, which is to be completed in May. After the 28,000-square-foot test store is fully equipped with about 12,000 labels, K.V. Mart will expand the system to all stores, said Ty Hitt, chief financial officer.
Hitt told SN the technology's ability to ensure systemwide pricing integrity led K.V. Mart to commit about $100,000 to outfit each store. He also cited the importance of potential labor savings and new shelf management opportunities.
Unlike wired and battery-powered electronic labels, K.V. Mart's system is powered by existing fluorescent store lighting absorbed by solar panels embedded in each tag.
A two-way infrared transmitter in the ceiling sends data to the tags and receives confirmation that updated prices were communicated properly to the tags' liquid crystal displays.
K.V. Mart's contract, a one-store commitment and letter of intent for 12 additional stores, represents the U.S. market entry of shelf tag supplier Pricer, Norwalk, Conn. Pricer's sister company, Pricer AB, already has its solar-cell labels in more than 40 European stores, including French hypermarket chain LeClerc, and OBS, a Swedish supermarket.
Until K.V. Mart's agreement was signed last month, the 60 or so electronic shelf label store installations in North America were divided between Telepanel
Systems, Markham, Ontario, and Electronic Retail Systems International, Wilton, Conn.
While many retailers testing electronic shelf tags today say the key to the technology's success lies in its ability to trim labor costs related to updating prices, K.V. Mart is expecting no more than a 5% savings.
"In our first three stores, we're projecting to break even and then after the first three stores we would not expect a large savings, less than 5%. And when I say 5%, I'm talking about a 5% reduction of labor in those departments within the store [outfitted with the labels] -- certainly not an overall savings," Hitt explained.
Initially, the test store will be installed with 5,000 labels in the dry and grocery areas. "We thought it best to start with the high velocity items and then expand it out to the rest of the store from there," he said.
Of primary importance to K.V. Mart is the technology's ability to boost pricing integrity.
"There have been several different chains, not ours, that have had problems over the last couple of years with pricing being different on the shelf than what the customer is charged at the point of sale," Hitt said.
With the new system, K.V. Mart will download pricing data from its headquarters host system to the store point of sale while simultaneously updating prices on the shelf tags on the gondolas.
"That eliminates price discrepancy between shelf tags and the front-end point of sale. In terms of the customer, it will increase their comfort level, that they're being charged appropriately," he said.
After the solar-powered price tags are operational in the chain's Top Valu Markets -- as well as its Valu Plus Food Warehouse stores -- K.V. Mart will use the tags for space planning.
Store personnel equipped with infrared pens will be able to walk the aisles and extract inventory data from individual tags.
Hitt also cited the flexibility of the completely wireless system.
"You're going to continue to need to reset your shelves, readjust shelf allocation as new products come out and old products leave," he noted. "New products might require additional spacing and with solar-powered shelf tags you can make those adjustments very easily" since they are self-contained units independent of any wiring.
Hitt said K.V. Mart had been actively investigating electronic shelf label technology for two years but found it difficult to obtain objective performance results.
"On the one hand you're always a little bit nervous about being a [test] site," he said. "And frankly, our original intent was to wait until some of the larger retailers fully tested electronic shelf programs -- and then move into it."
However, the chain decided to go forward with the price tags after observing the system installed overseas by Pricer AB.